Tuesday, December 28, 2010

Socially Responsible Investment

Socially responsible investment involves consideration of non-financial aspects in the investment process. This can follow two broad forms: 1. Negative Screen - those that do negative screens will specify which kinds of companies will not be considered for investment based on the impact that their products or practices have on the environment or society, for example excluding companies that are involved in manufacturing landmines, weapons, nuclear technology, alcohol and tobacco, etc. 2. Positive Screen - those that do positive screens will instead select those companies which are having a positive effect on the environment and society, e.g. investing in companies involved in microfinance, clean energy, and those with exemplary practices in that area. Socially Responsible Investing is a similar concept to the ESG framework, which considers Environmental, Social, and Governance factors.

Synonyms: SRI, UNPRI, ESG

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