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What is Socially responsible investment’ ‘SRI’?

Socially responsible investment’ (also referred to as ‘Sustainable and Responsible Investment*’ ‘) is the broad term that we and many others use to describe investments which pay close attention to environmental, social, governance (ESG) as well as ethical, sustainability and/or ‘responsible ownership’ issues.

Any investment that significantly considers environmental, social, ethical or governance issues may be classed as ‘SRI’:  a ‘sustainable’, ‘responsible’, ‘ethical’ or ‘ESG’ fund. SRI includes investment styles that are commonly referred to as ‘ethical investments’ and ‘green investments’ and may cover almost any asset type

Others also refer to this as ‘ESG’ – although the origins of this description relate to the aim of reducing risk for investors, rather than addressing issues of concern.

The core aim of ESG (‘environmental, social and governance’) strategies is to help reduce risk by integrating additional analysis into standard research analytics. In practice these funds vary greatly.  Some are very similar to sustainability funds as their analysis runs deep – other are of a ‘lighter nature’.

Today there are many different fund managers combining these different strategies in many different ways which means individual investors enjoy more choice than ever before.

In the individual investor (retail) market screened ethical funds were widely regarded as the best-known area of SRI however Sustainability funds now outnumber ethical options

What makes SRI funds different from other investment styles is the additional environmental, ethical, and /or governance information an investment manager takes into account, and how they deal with it.


Why SRI is considered an important investment strategy


Basically, ESG investing is a step towards several global challenges, such as inequalities, deforestation, climate change, etc. Also, many investors or consumers believe that the recent climate crisis pandemic spread has brought even more importance to ESG investing.


Businesses with good ESG practices score higher in terms of reputation and carry less risk as they incorporate sustainability as their core value. Moreover, ESG analysis can help investors determine a business’ long-term sustainability and any intangible ESG risks arising from these matters.

The study finds that ESG assets may exceed $53 trillion by 2025. Referring these statistics, we can safely argue that ESG investing and social responsibility will continue expanding and impacting how we live.