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Sure, yOu ChOOSe OrganiC PrOduCtS when you shop for food and flowers, and maybe even fashion. But how can you take the next step and align your investments with your values? The answer is socially responsible investing (SRI).
SRI considers the social and environmental consequences of investments, both positive and negative. It’s a way to consciously put your money to work to achieve specific financial goals, while promoting a sustainable future.
SRI incorporates three main strategies that work together:
Screening is the practice of evaluating investment portfolios based on social or environmental criteria. Generally, social investors seek to own profitable companies that make positive contributions to society.
For example, positively screened SRI “buy” lists may include companies that have good relations with their employees and the communities in which they operate; diverse workforces; sustainable business models; sound environmental practices; products that are safe and useful; or operations that uphold labor standards and human rights around the world. Conversely, social investors are likely to exclude companies whose products, services, or business practices are deemed harmful to individuals, communities, or the environment.
Shareholder advocacy involves actions many socially aware investors take as asset owners. These efforts include communicating with
companies about issues of social or environmental concern as well as filing, co-filing, and voting on shareholder resolutions. Proxy resolutions encourage management to exercise good corporate citizenship while promoting long-term shareholder value and financial performance.
Community investing directs capital from investors and lenders to communities that lack traditional financial services. In the U.S. and around the world, community investing makes it possible for local organizations to provide financial services to low-income individuals, as well as to supply capital for small businesses and vital community services, such as affordable housing, child care, and health care. 0
Cliff Feigenbaum is founder and managing editor of greenmoney journal, an award-winning SRI newsletter. He is also the co-author of the Investing with Your Values book series.
getting Started with Sri
For individual investors, a good place to start is Pax World, whose mutual funds require only a $250 initial investment. Its Balanced Fund has a good long-term track record. I also recommend these two websites for SrI fund information and insightful articles: SocialFunds.com and my Greenmoney Journal.
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