What is Sustainable and Responsible Investment? 

Every company wants to be green, ethical, responsible, socially conscious etc. Is this possible? And does Sustainable and Responsible Investment really make a difference? Have you already wondered  what all the fuss around SRI is about and wondered what it meant exactly? Read on!

What is SRI ?

SRI was originally associated with “Socially Responsible Investing” but the term has since evolved to cover the notion of sustainable development and so now we would more likely speak of “Sustainable and Responsible Investment”.

There is, however, no unified definition of what exactly is “SRI”. This can mainly be explained by the wide diversity of investors’ cultural backgrounds as well as their individual beliefs and motivations. When discussing SRI in a forum it would not be surprising to hear one, or more, of following terms being employed; “ethical”, “green”, “impact” and “clean”.

Despite what might appear to be a certain lack of clarity surrounding the definition of what is SRI, one thing is becoming more apparent. A recent study by Eurosif (the European Sustainable Investment Forum) has detailed the significant growth of responsible investment strategies over the past five years. Somewhat surprisingly perhaps, this has been achieved in an era of ever-increasing austerity and a struggle to stimulate economic growth. In such an uncertain economic environment, it seems that investors are turning more towards growth strategies that are green, sustainable and responsible.

Some of the strategies used by the investors are based on excluding and/or removing certain types of securities from a portfolio based on a wide range of ethical criteria, like for example excluding direct investments in companies that manufacture weapons or highly polluting industries. Other strategies actively invest in activities and companies that are considered to have a positive social impact.

It really seems that investment are following a more general trend, if all citizens are asked to recycle their waste and economize on energy, it seems logical that investors, institutional as well as private, feel they should also focus on socially conscious companies and activities and not in those that go against all efforts. 

For you as a private investor it is all about your personal choice. If you are a strong supporter of sustainable development do not hesitate to ask your banker about SRI investments.

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