What characterizes socially responsible investing (SRI)?

Socially responsible investing (SRI) is fundamentally characterized by the selection of investments that align with ethical and moral criteria. This approach goes beyond traditional investing by incorporating environmental, social, and governance (ESG) factors into the investment decision-making process.

Investors who practice SRI actively seek to invest in companies and projects that reflect their values and contribute to positive social outcomes. This includes considerations such as environmental sustainability, social justice, and corporate governance practices. By prioritizing ethical and moral criteria, SRI enables investors to support businesses that align with their beliefs and have a positive impact on society while also pursuing financial returns.

The commitment to balancing financial performance with ethical considerations sets SRI apart from more conventional investment strategies that may focus solely on financial metrics or other constraints. It also distinguishes SRI from approaches that prioritize maximizing returns without regard for ethical implications, such as investing exclusively in government bonds or other asset classes that may not reflect an investor's personal values.