The criteria you use to assess the socially responsible nature of a business can vary considerably depending on your priorities.
Here are some of the factors normally assessed:
- Environmental practices: reduction of pollution, recycling and energy saving measures.
- Community relations: community projects, scholarships, and philanthropic investments.
- Employee Relations: Appropriate salaries by industry and employee empowerment.
- Equal opportunities: percentage of minorities and women among employees.
- Customer service: rigorous quality control and consideration of customer feedback.
With these considerations in mind, here are ten suggestions to begin exploring the world of socially responsible investment.
1. Choose the questions that are most important to you
Environmental issues may be at the top of the list, but you can also focus on working conditions and fair trade.
2. Research gray areas
You may be fiercely against the timber industry, but if you find out that a company is replanting the disused agricultural land, you might reconsider your position.
3. Take your time
Compare investment opportunities that, besides being consistent with your personal values, offer you an attractive return.
4. Ask questions
When you consult different funds or investment organizations, ask for information in writing to find out how they invest their money and make their choices. Ask for justifications and documents that support their assertions.
It is not because a company claims to be socially responsible that this is necessarily true.
5. Ensure that the investment portfolio is acceptable
It is possible that a bank fund or annuity plan that claims to be ethical will invest in a business that you find unacceptable.
These funds may, for example, exclude equities in the fields of armaments, games of chance and tobacco, while investing in petrochemical industries.
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6. Discover the main parts of the portfolio
When evaluating investment companies that claim to offer socially responsible investment, take a look at the top 10 or 20 shares in this portfolio.
This information is available on the fund manager’s website. You can also check with the call center.
7. Find out about fees
The management fees associated with Socially Responsible Investment (SRI) are sometimes higher than usual due to the level of audit and selection.
However, these extra costs can be worth it to ensure that your money is invested responsibly.
8. Search for regularly updated rankings
Search online for the rankings of socially responsible companies that you want to include in your portfolio.
9. Learn the vocabulary of the domain
Portfolios can include investments such as equities, property, foreign investments and venture capital, all of which can be confusing to the uninitiated.
Consult a specialist, attend seminars and courses and read about it.
10. Make your voice heard
Shareholders have the right to raise questions about corporate governance and to file resolutions on social and environmental issues.
Investing in companies that you consider socially responsible can be rewarding both ethically and financially.
However, keep in mind that it is always advisable to consult a professional before making investment decisions.