Socially Responsible Investing
Doing Well By Doing Good.
What is Socially Responsible Investing?
Socially Responsible Investing means different things to different people. To some, it may mean avoiding industries that they find objectionable such as tobacco, weapons, or pornography. To others, it may mean seeking out companies that protect the earth’s environment. Others may think it means companies that allow women and minorities to reach their full potential. The point is social responsibility is personal. Over the past few years, a standard has emerged that attempts to define a broad definition of social responsibility in an attempt to create a framework that allows investors to build and benchmark institutional quality portfolios around this idea. It’s called ESG.
What is ESG?
ESG stands for Environment, Social, Governance. These three pillars encompass the vast majority of the subcategories considered in Socially Responsible Investing. Each and every company is screened and rated on their corporate policies regarding all ESG subcategories and they are given a composite score. Investment managers are then able to include a company’s social responsibility (in the form of their ESG rating) into their stock evaluation process.
