Aligning investments with your core values is no longer just a trend, nor does it mean you have to sacrifice performance. So where to begin?
If you’re new to the idea of environmentally conscience or socially sustainable investments we’re here to help de-code some of the basic vocabulary being used today.
The finance industry loves it’s acronyms, and green initiatives have certainly followed suit, take a look:
ESG – Environmental, Social, and Governance
ESG criteria are a set of standards for a company’s operations that socially conscious investors use to screen potential investments. Environmental criteria consider how a company performs as a steward of nature. Social criteria examine how it manages relationships with employees, suppliers, customers, and the communities where it operates. Governance deals with a company’s leadership, executive pay, audits, internal controls, and shareholder rights.
SRI – Socially Responsible Investing
SRI involves investing in companies that promote ethical and socially conscious themes including environmental sustainability, social justice, and corporate ethics, and fight against gender and sexual discrimination.
Green Investing
Investment activities that focus on companies or projects that are committed to the conservation of natural resources, the production and discovery of alternative energy sources, the implementation of clean air and water projects, and/or other environmentally conscious business practices. Green investments may fit under the umbrella of SRI but are fundamentally much more specific.
Impact Investing
Investing that aims to generate specific beneficial social or environmental effects in addition to financial gain. Impact investing is a subset of SRI, but while the definition of SRI encompasses avoidance of harm, impact investing actively seeks to make a positive impact by investing, for example, in non-profits that benefit the community or in clean technology enterprises.
CSR – Corporate Social Responsibility
A self-regulating business model that helps a company be socially accountable — to itself, its stakeholders, and the public. CSR is a broad concept that can take many forms depending on the company and industry.
Corporate Citizenship
Refers to a company’s responsibilities toward society. The goal is to produce higher standards of living and quality of life for the communities that surround them and still maintain profitability for stakeholders.
Conscious capitalism
A business management strategy that emphasizes aligning the business with stakeholders for shared success. A company that fits within that realm not only seeks profits to benefit shareholders, but also serves other stakeholders like employees, the environment, suppliers, customers, and communities.
To find out more about ESG investing, or to see how your current portfolio aligns with your values, give us a call, we’re here to help.
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