5 Things to Know About Sustainable and Responsible Investing (SRI)

5 Things to Know About Sustainable and Responsible Investing (SRI)

  1. What is Sustainable and Responsible Investing (SRI)
    Very simply, Sustainable and Responsible Investing expands the goals of an investment strategy to go beyond financial analysis and include the impact of an investment in society. This means that social good should be considered in the metrics of any return on investment. Sustainable and Responsible investing (SRI) can include many tags: environmental, socially conscious, impact, governance, political, and others.
     
  2. What is the history of SRI in the United States?
    The history of SRI in the United States can be traced to the 1700s when religious organizations chose not to invest in companies and businesses with practices they deemed detrimental to society, such as slavery, smuggling and gambling. Strong activist movements since the 1960s have targeted various companies and industries advocating for changes in the status quo of issues tugging at the heart and soul of many Americans: the Vietnam War, civil rights, consumer protections, and diversity in corporate America, just to name a few.
     
  3. The current state of SRI?
    In the past, SRI strategies would incorporate a filter that would avoid investments in alcohol, tobacco, and fire arms. Currently, broader investment options are integrated into corporate governance strategies that include ethical and positive impacts on the environment and social good (ESG).
     
  4. Does performance suffer for Sustainable and Responsible Investments?
    Not everyone wants to have a Socially Responsible Investment strategy, primarily because there is a belief that returns can be negatively impacted. In the past, that may have been true. Currently, however, there are a growing number of options that indicate performance need not be an issue.
     
  5. What should I do with my portfolio? 
    If Sustainable and Responsible Investing is important to you, the first conversation you should have is with your Financial Advisor. Share with her your interests, and work with her to develop an appropriate strategy based on your goals and risk tolerance. The strategy can range from being active in shareholder votes to allocating a portion of your portfolio to a cause or strategy that is important to you. To determine an appropriate investment strategy, you and your advisor should review stocks, bonds, mutual funds, exchange traded funds (ETFs), and separately managed accounts. There are a variety of options available. Find a strategy that meets your needs.