Review of Socially Responsible Investing Tools

Introduction

Socially responsible investing (SRI) is a growing trend among investors who want to align their investment decisions with their values. There are a variety of tools available to help investors identify and evaluate socially responsible investment opportunities. In this article, we will review some of the most popular SRI tools on the market today.

1. ESG Ratings

Environmental, Social, and Governance (ESG) ratings are a common tool used by investors to evaluate the sustainability and ethical practices of companies. These ratings assess factors such as a company’s carbon footprint, labor practices, and board diversity. Some popular ESG rating providers include MSCI, Sustainalytics, and Morningstar.

Steps:

1. Research different ESG rating providers to find one that aligns with your values and investment goals.
2. Use the ratings to screen potential investments and identify companies that meet your criteria for social responsibility.
3. Consider incorporating ESG ratings into your overall investment strategy to ensure that your portfolio reflects your values.

2. Impact Investing Platforms

Impact investing platforms connect investors with opportunities to support companies and projects that have a positive social or environmental impact. These platforms often focus on specific themes, such as clean energy, affordable housing, or gender equality. Examples of impact investing platforms include Swell Investing, OpenInvest, and Ethic.

Steps:

1. Explore different impact investing platforms to find one that aligns with your values and interests.
2. Review the investment opportunities available on the platform and evaluate their potential social and environmental impact.
3. Consider diversifying your portfolio by investing in a variety of impact themes to maximize your impact and financial returns.

3. Proxy Voting Services

Proxy voting services allow investors to have a say in the corporate governance practices of the companies they invest in. These services provide guidance on how to vote on shareholder resolutions related to issues such as executive compensation, board diversity, and climate change. Some popular proxy voting services include Institutional Shareholder Services (ISS) and Glass Lewis.

Steps:

1. Subscribe to a proxy voting service to receive recommendations on how to vote on shareholder resolutions.
2. Educate yourself on the issues being voted on and consider how they align with your values and investment goals.
3. Participate in shareholder voting to hold companies accountable for their social and environmental practices.

Conclusion

As the demand for socially responsible investing continues to grow, investors have access to a wide range of tools to help them make informed and ethical investment decisions. By utilizing ESG ratings, impact investing platforms, and proxy voting services, investors can align their portfolios with their values while also seeking financial returns.