Investing in the new green economy

As the green economy grows, an increasing number of people are expressing their environmental and social concerns by buying products such as organic food and flowers, energy-efficient appliances and hybrid cars. If you fall into that category, you might also want to choose investments that meet your values as well as achieve strong financial returns. The answer is socially responsible investing.

Socially responsible investing (SRI) is an investment process that considers the social and environmental consequences of investments, both positive and negative, within the context of thorough financial analysis of the corporations. Socially responsible investors include individuals, businesses, universities, hospitals, foundations, pension funds, corporations, religious institutions, and other nonprofit organizations that consciously put their money to work in ways designed to achieve specific financial goals, while pursuing a future based on sustainability and the needs of multiple stakeholders, including employees, their families and communities.

Investment strategies

SRI incorporates three main strategies that work together to promote socially and environmentally responsible business practices and to stimulate positive social and environmental impacts across the local as well as the global economy.

Screening

Screening is the term used to describe the practice of evaluating investment portfolios based on social or environmental criteria. Screening may involve excluding or avoiding companies with poor environmental, social or governance (ESG) track records, and positively filtering into a portfolio of companies that have stronger corporate social responsibility (CSR) policies and practices, or otherwise incorporating environmental or social values into the investment analysis process, decision making and overall management.