What does socially responsible investing (SRI) aim to achieve?

Socially responsible investing (SRI) aims to achieve a balance between financial returns and positive social or environmental impact. This approach recognizes that investors can pursue financial gains while also being mindful of their ethical values and the consequences of their investments. SRI encompasses the incorporation of social, ethical, and environmental considerations into investment decisions, allowing investors to support companies and initiatives that are aligned with their values.

This investment strategy often means selecting companies that demonstrate responsible practices, such as sustainability, ethical labor policies, and social impact, while also providing a reasonable expectation of financial returns. This dual focus is what distinguishes SRI from traditional investing that may prioritize profits without regard to social implications.

In contrast, maximizing financial returns only overlooks the potential social and environmental costs of investment choices. Considering only ethical standards disregards the financial aspects that are vital for sustainable investing. Investing solely in government securities limits the range of investment opportunities and does not necessarily align with social responsibility goals. Therefore, the approach of balancing financial return with social/environmental good aptly captures the essence of socially responsible investing.