My intention with this blog is to shine a light on socially responsible investing (SRI) and help people understand the meaning and impacts of such.

SRI is the practice of investing money in companies and funds that have positive social impacts.

From a young age I was shown the positive impacts of working towards a better community.  I believe socially responsible investments can provide a way for investors to support a positive social impact.

What is SRI?

SRI comes from the belief of your investment generating not only financial returns but also social and environmental returns.

SRI attempts to mitigate the negative social and environmentally impacts through avoiding ‘sin stocks’ this is often referred to as negative selection.

 SRI may also attempt to maximise positive social and environmental returns through focusing on investments which generate high degrees of positive social and environmental returns this is often referred to as positive selection.

History

Socially responsible investing has been around for centuries, dating back as far as the 1700s when Quackers refused to take part in slave trade or investing in weapons of war.

Taking a form more resembling of modern SRI, circa 1750, an early leader of the Methodist church, John Wesley wrote an influential sermon named “The Use of Money” declaring making money at the expense of people’s welfare sinful. Advising people to not engage in usury, gambling or industries which used toxic chemicals.  Industries such as these and ones involved in the production or sale of tobacco and liquor were known as “sin industries”.

This evolved in the 1960s when investors used their capital as a way to promote civil rights and social justice. Perhaps one of the most distinguished civil rights successes involved with SRI occurred in the 1980s when individuals and institutions removed their money from South Africa due to their apartheid policy.  This movement played a major role in the termination of the apartheid.

Objectives of SRI

Socially responsible investments can promote one or a group of the following goals, allowing investors to focus on creating an impact on specific issues:

• Social Justice – through avoiding countries with records of violations of human rights or targeting companies which provide fair wages and decent working conditions.
• Promoting Peace – such as in the case of the abolishment of the apartheid.
• Promoting Health – avoiding companies involved with commodities such as tobacco or alcohol or other industries which pose a threat to public health.
• Promoting Morality – this refers to avoiding industries previously mentioned as “sin industries”.
• Cleaner Environment – also known as green investors, these focus on companies who do not produce environmental pollution and/or minimize their carbon footprint.

In the Next Chapter

I will detail the difference between SRI, ESG and Impact Investing along with the current status and the political polarization of socially responsible investments.

“Be the change you wish to see in the world.”

-Gandhi

I was inspired to write this blog by the my team at Daintree adhering to the movement by steering away from unethical investments and building investment propositions for investors focused on making a positive social impact with their investments, creating a further positive impact on the community.

Thank you for taking the time to read about this important movement. I would encourage an open discussion on your thoughts on the matter.

João Nogueira

Research Analyst