Socially responsible investing

How you can invest in a way that matches your outlook

You’re passionate about social and environmental issues and you want your investment portfolio to match your values.

Enter responsible investing.

Responsible investing is an investment strategy where fund managers follow guiding principles that are about more than just the financial performance of funds. Instead, they decide which funds to select based on environmental, social and corporate governance factors.

There are different forms of responsible investing like socially responsible investing (SRI), impact investing, and environmental, social and governance investing (ESG). These approaches share similarities but are tailored towards different types of investors and fund selection criteria.

The ESG approach

Environmental, social and governance investing (ESG) has one of the widest approaches to responsible investing. It isn’t tied to one specific moral or ethical purpose; it’s a process that allows fund managers to take a more complete look at all of the ESG factors that could impact the performance of an investment. Fund managers who follow ESG principles consider the following factors in their investment decision making process to judge risk and return.¹

Environmental (E)

• Climate change
• Greenhouse gase (GHG) emissions
• Resource depletion, including water
• Waste and pollution
• Deforestation
   

Social (S)

• Working conditions, including slavery and child labour
• Local communities, including indigenous communities
• Conflict
• Health and safety
• Employee relations and diversity
   

Governance (G)

• Executive pay
• Bribery and corruption
• Political lobbying and donations
• Board diversity and structure
• Tax strategy

Today, many fund managers use ESG values in their fund selections. These individuals, including several of our own fund managers, have shown their commitment to this practice through signing the United Nations-supported Principles for Responsible Investment (PRI). These 6 principles were designed by an international group of institutional investors and approved by the United Nations Secretary-General.

The PRI provides a list of actions fund managers can follow to make ESG principles a part of their investment practice. The PRI protects the “long-term interests of its signatories, of the financial markets and economies in which they operate and ultimately of the environment and society as a whole”.²

Want to know more about how socially responsible investing can help you achieve your goals? Contact me today.
 

1. PRI - What is responsible investment: https://www.unpri.org/about-the-pri/what-is-responsible-investment/317.article
2. PRI - About the PRI: https://www.unpri.org/about-the-pri/about-the-pri/322.article