Socially Responsible Investing Essay Sample
The following essay sample work shall highlight the explanation of the Socially Responsible Investing (SRI), steps to build a socially responsible investment portfolio, and benefits of socially responsible investing.
Socially Responsible Investing (SRI) is known as social investing where investment is done on the basis of the nature of the business by performing or discharging its social responsibility towards the society. It is an investment in companies that are socially responsible and follows ethical practices.
Community investment is one type of social investing in which the return is measured on the community impact. It follows the Environmental, Social, and Governance (ESG) factors of investing where the company has to follow sustainable management practices in favor of the community.
Socially Responsible Investing is meant for the purpose of eliminating investments in the companies that produce and sell harmful substances like drugs, alcohol, etc.
It encourages investments in companies that use clean and sustainable technology, energy, resources following the social norms and engages in environmental sustainability.
Investors make investment in the company not only on the basis of expenses and performance but also by ensuring that the values are in alignment with business practices and revenue sources.
Steps to Build a Socially Responsible Investment Portfolio
- An ethical portfolio must be made by choosing an appropriate avenue where an individual can build a portfolio by picking and making his own investment which also needs to be monitored over time.
One can create his own portfolio of SRI and can seek help by figuring out that how much a company is committed to ethical practices.
There is a Robe advisor who can be used for ascertaining the risk tolerance and goals of the investment portfolio. They even help in finding ethical investment practices to make the right choice for investment.
- A brokerage account needs to be first opened where the investments can be sold and bought and socially responsible investments can be made by choosing the right funds for the portfolio.
- It is very important to highlight those areas which are relevant and poses questions related to the investments. It asks that what type of investment to be done in an SRI or ESG and what type of company to choose for the purpose of investment.
- After having a brokerage account an individual can start building a portfolio that may aid and support him and be appropriate. The investment must be done in a sustainable portfolio which includes the stocks and funds.
Stocks are only 5 to 10% included in the portfolio and the Mutual Funds are very easy to diversify the portfolio to make sustainable funds. Mutual funds have selected the assets where the broker has screening tool which can help making choice through different fund options to choose the right one.
Benefits of the Socially Responsible Investing
Some of the main benefits of employing a socially responsible investment strategy are:-
- Making a socially responsible investing (SRI) helps in valuing the money where it allows an individual to make an investment only where he is willing to and is not forced for it.
By adhering to the values of ethical investing one can divert their focus on the other financial aspects of life such as buying a home, saving for education, payroll savings, etc.
An ethical investing assures an individual that he does not need to check constantly his investments as he chooses socially responsible funds for investing.
- It promotes the companies who are having ethical practices and does not deal with any prohibited products. Socially responsible investing does not allow our money to get invested in the wrong places and withholds the money from the businesses that are not socially responsible.
If people invest only in companies that follow ethical and social practices then it will encourage only companies which act responsibly and forcing other companies to step back. If an individual stands with a socially responsible investment then it will motivate others as well.
- Socially responsible investing punish the company that has unethical practices and rewards the companies following ethical practices.
Investment capital is a way through which companies can make more responsible choices. A long term investment in socially responsible companies can be rewarding more and can bring significant social changes.
- Making a socially responsible investment can help a person to make money for improving the condition of other humans. It helps the companies to become profitable and rewarding as one can align their values with such companies and can make future investments possible.
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The above essay sample mentions the socially responsible investing process.
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