Traditional investing heavily weighs quantitative looks at how companies are doing. By this system, a company’s published financial accounts are what is considered when investing. While it’s important to keep finances in mind when you consider investing options, companies aren’t just about the bottom line: They’re also about people.
Companies rely on people. Stakeholders are the reasons companies are in business at all, and a company’s mission only can be fulfilled if there are good people enacting it. Socially responsible investing weighs the quality of a company along with the amount of money it makes. It’s a great way for investors to support what they believe in while giving them opportunities to reach their own investment goals. Here is why you should start socially responsible investing with Falcons Rock Impact Investments.
Socially Responsible Investing Defined What do we mean when we say we look at investment vehicles qualitatively? With socially responsible investing (SRI), this means investments are made based on their adherences to environmental, social and corporate governance (ESG) factors. Environmentally-conscious companies might focus on pursuing climate change initiatives or taking measures to become more sustainable. Companies with a goal of social responsibility likely will make sure their conditions are safe for workers and they treat their employees fairly. Clean PR records and keeping executive pays in check can be indicators a company cares about its corporate governance.
No matter what’s important to you, there is a way to find an investment vehicle that helps a socially responsible cause you can get behind. A financial advisor who specializes in SRI has all the information investors like you need to get started finding funds that work for you.
The Return on Investment Could Be Great Since SRI currently is a smaller investing world with fewer options, some more-skeptical investors may overlook it. These investors have concerns about making sure their portfolios are sizable and diverse. However, the field is evolving, which means more options are available, and SRI funds can be a valuable part of your portfolio. While there are no guarantees in the world of investing, the data we currently have shows SRI funds have roughly equal – and possibly even better – financial returns than traditional investments.
Social responsibility measures might not directly affect the firm’s future earnings, but they speak to the quality of a company and its willingness to embrace changes to the status quo in the market as well as the world. It might be a young field, but opportunities are available – and possibly some good bargains.
SRI isn’t just a niche market available to extremely rich investors. Increased awareness has made socially responsible investing an option for nearly anyone whose financial situation is in good shape. Doing some homework about where you are monetarily and what suits your needs will serve you well in the long run.
Social Responsibility Is Good for Companies Investors can’t do well unless a company does well, and SRI criteria are indicators a company has laid out the necessary groundwork to do well. Companies that embrace SRI policies tend to perform better in the market than those that don’t. Actively managing and planning for climate change tends to get a higher return on investment, and reducing emissions also allows companies to avoid fines that negatively impact their profits. Those employers who care about their people will find there’s a link between happy employees and effective workers, and taking steps to ensure their workers are satisfied leads to overall effectiveness, and therefore, profit within the organization. More shareholders’ rights means more input from more places, and therefore more growth; socially responsible companies will be open to comments and votes from their investors for exactly this reason. Companies with good corporate governance policies have chief executives who have stakes in how well the companies do, meaning they are more invested and take necessary steps to ensure their companies grow.
The Best of Both Worlds Qualitative and quantitative analyses of a company are the only ways to be sure about what you’re investing in. Socially responsible investing factors in the traditional approach of looking at financial information, but adds ESG criteria into what gets considered. Socially responsible investing might not pay off immediately in a way more traditional investors like to see, but the benefits to a company as a whole can increase financial yields.
Thinking about investments in this way doesn’t require a particularly specialized approach: The analysis brings in extra information to an approach that’s already tried and true. Being a responsible investor has a long history that proves this isn’t a trend that’s going away anytime soon, as many existing products already are social-impact themed or green. It’s possible to invest in transparent and responsible ways while still seeing returns like those in traditional investing. The real difference is you’re more educated and aware about where your money is going. Especially now, why wouldn’t you want to be?
Socially Responsible Investing With Falcons Rock Impact Investments There always is room for improvement in the world. Socially responsible investment vehicles are potential solutions to a lot of the world’s problems, but they need passionate investors like you to help make their missions possible. By becoming a more conscientious shareholder, you can ensure your contributions go toward the forward progress that helps us all. Falcons Rock Impact Investments is here to help investors like you think ahead and find the funds and other vehicles that work with your beliefs, finances, goals and risk tolerance. Whether you’re new to socially responsible investing or investing in general, the guidance of a financial advisor can help you learn about the investment process, what’s out there, how your contribution can make a difference, and what’s right for you. Learn more about socially responsible investingwith Falcons Rock Impact Investments today.