For many people, investing has become more than just a way to make money or plan for long-term financial security. More and more, financiers and potential shareholders are looking at companies in a more critical light, beyond simple measurements of growth and annual rates of return. As the general public becomes more aware of what’s happening around the world thanks to a rapid ability to share or track information through Facebook and Google, businesses big and small have come under higher levels of scrutiny than ever before.
We’ve entered an age in which socially responsible investing has gone mainstream. Shareholders are now taking steps to ensure a thorough qualitative analysis is taken on the companies they are potentially interested in and emphasizing behavior as a chief concern. Fund managers have even developed steps to ensure investors have a better idea of what their money is backing by introducing labeling systems and even a screening process to identify companies that are better managed.
Steven J. Schueth, president of First Affirmative Financial Network, told Bankrate that over the past couple of decades, the idea of socially responsible investing has morphed into a much more inclusive term than ever before. He told the publication that while seeing a return is a priority, it’s not the only thing on investors’ minds.
“When I say SRI, the acronym is, for me, sustainable, responsible and impact investing. It’s about investing to do more than just make money,” he said. “We want to make money, but we also want to have a positive impact on the world as we’re making money.”
There are pros and cons to becoming a socially responsible investor, and taking the extra steps to go more in-depth with qualitative analysis comes with the costs of extra time and effort. With so many issues facing the world today, there are those who think that smart financial choices on the part of the investment community can actually help spur some positive change in the world. As the idea of investing with your conscience becomes more popular, it will only get easier, as well. Fund manager Amy Domini explained to The Guardian that capitalism can be a tremendous positive influence in the world when coupled with progressive thought.
“Why wouldn’t someone want to participate in helping to make finance part of the solution to today’s social issues?” she said. “You can take the tool that is being an investor and use it to cast a vote for peace, social justice and other causes that you care about.”
So what steps can average investors take to make sure they’re putting their money where their mouth is when it comes to companies they’re backing? There are several ways, but it really comes down to utilization of existing systems and taking advantage of one’s own personal analysis.
Here are four easy ways to make sure the next investments you make are socially responsible and will rest easy on your conscience.