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Your Guide to Social Responsible Investing

“One’s life has value so long as one attributes value to the life of others, by means of love, friendship, indignation, and compassion.” Simone de Beauvoir

Finding meaning in the life we live is crucial for our satisfaction and overall happiness. As French philosopher, feminist, and political theorist Simone de Beauvoir points out, value is derived from our ability to value others. We value others every day from making breakfast for our spouses to building a career to take care of our families, to helping our kids with tough homework questions. Every kind interaction we have with others contributes to the value we bring to the world.

Many people seek to also add value to the money they make and their investment practices. They are working toward creating an estate plan that aligns their money with what they value most in this world. They want to take care of their families, donate money to charities and causes they care deeply about, and support parts of their community they love. 

Is there a financial practice that embodies investing money in a valuable way? Yes, and the answer is called Socially responsible investing or SRI.

What is SRI?

The practice by which investments mutually benefit the investor and the community is socially responsible investing. This practice calls for an active-investing strategy where the investor profits from increased returns and the overall community wellness is increased. This strategy requires you to take a more critical look at the companies you invest in and allows you to ask yourself questions about who the company is and what they stand for.

Not every company in the world acts responsibly. It’s a sad truth, but you aren’t powerless against these organizations. Socially responsible investing is a way for you to ensure that your investments are supporting businesses that act responsibly and continue to do work you want to support.

Think about the values that are most important to you.

  • What drives you?

  • What inspires you?

  • What philanthropic efforts are you dedicated to?

  • What is your self-mission statement?

Be mindful as you move through and answer these questions. Use your answers as a guide to evaluate the companies you invest in. Look and see if their values are on the same plane as yours, and if not, it may be time to think about reallocating your funds to other companies that better match the causes you care about. 

Does SRI Really Make a Difference?

Think about this: do you believe that your vote matters? Though you are simply one person, exercising your right to vote holds a significant impact on the political landscape of this country. You can think of SRI investing in a similar vein. 

Both withholding funds from organizations who don’t act responsibly and actively investing in companies who ARE doing good has an impact. They key here is your active participation. That is one of the great beauties of socially responsible investing, you are able to assign additional value and meaning to how your money affects the world around you.

Through your socially responsible investment strategy, you can also get involved by making your voice heard as an investor, enabling your ability to have a stronger hand in enacting the type of changes you wish to see.

SRI is meant to be customizable, providing the flexibility for you to invest in companies that share your values and help shape the world you want to retire in. For example, environmental care is at a record high and many socially responsible investments are aimed at reducing our carbon footprint and investing in companies that have a positive impact on the environment.

How Can SRI Work for You?

You may be thinking to yourself that investing in a socially responsible way is great and all, but is it also a practical avenue for expanding your ROIs? As one of the fastest growing investment strategies to hit the international financial marketplace, investors are finding that SRI can work successfully in its two-fold model of good investments with good companies.

Janet Brown in a 2016 Forbes article clued us into a wonderful statistic from the Forum for Sustainable and Responsible Investment (USSIF) saying, “assets in SRI funds increased from $641 billion in 2012 to 1.93 trillion in 2014.” As we can see, SRI as a strategy is picking up speed in the global financial framework and many investors are reaping the multifaceted rewards of this new type of investing. 

It is important to note that although you’re pursuing an ethical investing strategy, it’s still just that: a strategy. Like any other investing and saving strategy, it’s intended to help you grow your wealth and move toward your long-term financial goals, like retirement.

Are you ready to reinvent your investment strategy? Talk with your financial planner about ways to optimize your investing strategy to be socially responsible. When you connect with a financial planner, they’ll be able to help you select specific screens that weed out companies or organizations that don’t match your same value set. 

Take it from Simone de Beauvoir, and work to infuse each interaction you have with courtesy, compassion, and justice-- just wait and see the type of world you have helped create.