Environmental & Socially Responsible Investing

ESG Factors

Socially Responsible Investment (SRI) strategies typically incorporate environmental, social, and corporate governance (ESG) factors to analyze and construct investment portfolios. Environmental, Social, and Governance data for publicly traded companies is often provided along with other data by investment research and analysis services. Money managers who use Socially Responsible Investment strategies integrate Environmental, Social, and Governance factors with traditional financial analysis.

Some examples of ESG issues include environmental practices, employee relations, human rights, and product safety and utility. For example, an SRI approach might include companies with positive ESG ratings, while screening out companies that raise red flags by creating a high level of carbon emissions, engaging in questionable employment practices, investing in countries with poor human rights records, or profiting from certain products or services (e.g., tobacco, alcohol, gambling).

For many investors, environmental, social, and governance (ESG) investing presents a terrific opportunity. The ability to invest in those companies that are mindful of sustainability practices, social issues, and other mission-related objectives allows investors to have some say in what’s important to them. 

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Socially responsible investing involves the exclusion of certain securities for nonfinancial reasons. This may result in the investor forgoing some market opportunities that may have been available to those not subject to such criteria. There is no guarantee that any investment goal will be met.