Socially Responsible Investing: how to invest according to your values

Making the right type of investments is pivotal to building your wealth effectively. Therefore, it’s important to know your options when it comes to investing.

We thought it would benefit you for us to discuss socially responsible investing (SRI), so you can see if it could be a good fit with your investment approach.

Do note, as with any type of investment, it may be an advantage to speak to a wealth management expert to get appropriate recommendations surrounding your finances.

What is socially responsible investing?

Socially responsible investing (SRI) is a particular type of investment strategy that aims to factor in the ethical nature of a company when choosing where to invest.

There are many things investors look at when choosing which securities to invest in, including the investment environment, market performance and pricing, changes in the economy, and much more.

When it comes to SRI, investors will consider all these aspects, as well as how ethical a company is in its operations.

The measurement of a company’s ethics can cover various qualities, including:

• The type of services or products the company offers
• What the company’s core values are
• How the company treats its staff (salaries, policies, support, etc.)
• How the company tackles environmental issues (waste pollution, habitation, etc.)
• If the company has been involved in any legal action

The aim of SRI is to contribute towards the furtherment of ethical companies, which are making a positive impact in the world. As a result, investors can play a part in promoting positive changes, without compromising on the investments that could help grow their wealth.

How can you invest more responsibly?

When looking to invest more responsibly, a modern wealth manager could be of great benefit.

Your expert adviser will discuss your unique investor values, and take time to understand your financial situation.

They can then tailor their advice to offer you the right portfolios and investment options, which not only meet your values, but also offer the right balance of risk and reward in terms of your current circumstances.

When finding the right ethical components for your investments, your adviser will ensure each company has a high environmental, social and governance rating (ESG) – a measurement of a firm’s impact on and compliance with environmental and social issues. 

Your adviser may offer a range of exchange-traded funds (ETFs) you can invest in, which can also align with the Morgan Stanley Capital International (MSCI) SRI indexes – a key way to verify a highly ethical company.

When looking to invest responsibly, you can also look more closely at a company’s operations. For instance, it may be vital to discover whether a company has a certain history of unethical operations, or whether they might have affiliations with certain groups or organisations deemed unethical.

How can socially responsible investing benefit your wealth?

There are many benefits to choosing SRI as an option for your finances, including:

• Reflecting your investor values – With the right SRI approach, you don’t need to choose between a potentially profitable investment, and sticking to your personal investor values.
• Forward-looking investments – Companies striving for positive change today are often more forward-thinking and adaptable to social changes. This can make them a more suitable option for a reliable investment.
• Contributing towards ethical company development – SRI allows you to play a part in the development of an ethical company. Your investment helps to facilitate an organisation to continue exacting positive change as they operate.

To understand more on how socially responsible investing could benefit your wealth, and if it’s a suitable option for you, why not discuss the choices with a modern wealth manager.

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Please note, the value of your investments can go down as well as up.