Introduction to Socially Responsible Investing
Socially Responsible Investing (SRI), also known as sustainable or ethical investing, has gained significant traction over the last decade. This approach to investing combines the desire to achieve financial return with the intent to create positive social or environmental change. With the rise of SRI, numerous tools and platforms have been developed to assist investors in making investment choices that align with their ethical, environmental, and social beliefs. This article reviews some of the top tools available for socially responsible investing, highlighting their features and how they can help investors make more informed decisions.
Criteria for Evaluating SRI Tools
Before diving into the specifics of each tool, it’s essential to outline the criteria used for evaluation. These criteria include usability, the breadth of ethical investing options, transparency in the ethical screening process, cost, and the tool’s educational resources. These factors are crucial for investors who wish to not only invest responsibly but also understand the impact of their investments.
Leading Tools for Socially Responsible Investing
1. Aspiration
Aspiration is a financial institution that offers investment portfolios based on environmental and social governance criteria. It stands out for its commitment to donate a portion of its earnings to environmental causes. One key feature is the Aspiration Impact Measurement (AIM), which scores your purchases based on their sustainability impact, helping investors make more socially responsible consumption and investment choices.
2. Betterment
Betterment, a popular robo-advisor, offers socially responsible investing portfolios aimed at reducing exposure to companies involved in harmful activities like fossil fuel production or tobacco. Betterment’s SRI portfolios focus on companies with a high environmental, social, and governance (ESG) score, highlighting their commitment to ethical investing practices.
3. Wealthsimple
Wealthsimple is another robo-advisor that provides an option for SRI by screening investments that meet stringent ESG criteria. It offers a diversified portfolio that spans various sectors, emphasizing clean technology and low carbon emissions. Furthermore, Wealthsimple continuously reviews and updates its SRI portfolios to ensure alignment with ethical investing principles.
4. MSCI ESG Research
For investors interested in a more hands-on approach to SRI, MSCI ESG Research provides a wealth of information and analysis on the environmental, social, and governance aspects of numerous investments. While MSCI ESG Research is more suited for sophisticated investors who prefer to build their portfolios, it remains an invaluable resource for evaluating the ESG performance of potential investments.
Additional Resources and Considerations
Beyond the tools mentioned, it’s worth considering additional resources such as the Forum for Sustainable and Responsible Investment (US SIF) and the Principles for Responsible Investment (PRI). These platforms offer educational materials and can be sources of further information for those who wish to dive deeper into socially responsible investing.
The Importance of Ongoing Education
Investing responsibly requires continuous learning and adaptability. As the field of SRI evolves, staying informed about new developments, evolving methodologies in ESG criteria, and the impact of investments is crucial. Many platforms provide blogs, webinars, and other educational materials to help investors keep abreast of the latest trends in socially responsible investing.
Conclusion
The growth of socially responsible investing tools has made it easier than ever for investors to align their portfolios with their values. From robo-advisors like Betterment and Wealthsimple, offering curated SRI portfolios, to in-depth research tools like MSCI ESG Research, there’s a myriad of options catering to varied investor needs and preferences. Despite the wealth of resources available, investors must engage with SRI practices critically and educate themselves continuously to truly make an impact through their investments.
