What Is Socially Responsible Investment?
Socially responsible investing, also known simply as “social investment,” is a way to strategically seek a return on funds while supporting positive social change, sustainability, and other socially conscious efforts. Some investors choose to invest solely in companies with products designed to have a significant social impact, while others may invest in a wide range of products but insist that those products come from companies with internal practices consistent with principles of social responsibility.
Socially responsible investing can be a hot-button topic, as many investments are linked to sensitive subjects or potentially partisan issues, such as climate change. These investments are also ever-evolving and tend to reflect whatever is currently in the news. While environmental concerns are at the forefront today, that could shift depending on what new issues capture the public’s awareness in the future, with investment trends following suit.
Basic Dos And Don’ts
Socially responsible investing can be deeply personal as choices typically reflect an individual’s belief systems and the pet projects they focus on. That said, there are some basic tenets followed more often than not:
How To Invest
Socially responsible investing can be tricky as it’s not always easy to tell the truly committed companies apart from those hoping to capitalize on growing social awareness. To avoid putting money in the wrong place, it’s wise to seek the guidance of an investment professional. A trusted advisor can understand a company’s practice while directing investors to special mutual funds, exchange-traded funds (ETFs), and other pooled investment vehicles that include multiple companies under a single umbrella.
Another option is to explore community investing, a practice that collects money for organizations dedicated to community service. These organizations often cannot secure traditional funding and can use money from private investors to give business loans to the underprivileged, build affordable housing, and otherwise foster an environment conducive to economic and social growth.
Supporting socially responsible enterprises is a noble move that comes with its own set of non-tangible rewards, but as good as it may feel to funnel money into worthy causes, socially responsible investments are still investments. Some companies may check the box of social responsibility but offer little to no monetary return; others are poised to deliver a financial windfall but at a steep social cost. It’s up to each investor where to draw the line.
HighPoint Advisors takes client relationships seriously. Every new investment is a chance to build a long-term relationship that benefits all involved. We’ll help you work toward a strong and steady financial future via a portfolio that reflects your values, interests, and preferred level of risk. Backed by extensive experience and impressive credentials, the HighPoint Advisors team is prepared to help you make the most of your investments, so you can achieve your goals and feel proud of your financial decisions, both large and small.