Socially Responsible Investing (SRI) plays a crucial role in financial markets by incorporating environmental, social, and governance (ESG) factors into investment decisions. This approach aims to generate positive social and environmental impact alongside financial returns. SRI has gained traction in recent years as investors increasingly seek to align their values with their investment choices.

One example of SRI in action is the exclusion of companies involved in controversial industries such as tobacco, weapons, or fossil fuels from investment portfolios. Instead, SRI funds may prioritize investments in companies with strong sustainability practices, diverse boards, and ethical supply chain management.

Furthermore, SRI can influence corporate behavior by incentivizing companies to improve their ESG performance to attract SRI capital. This, in turn, can lead to positive societal and environmental outcomes.

References:

• Global Sustainable Investment Alliance. (2020). Global Sustainable Investment Review 2020.
• UN PRI. (n.d.). What is responsible investment?
• Investopedia. (2021). Socially Responsible Investing (SRI).