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Socially Responsible Investing
Socially Responsible Investing… sounds great doesn’t it!

But what does it really mean and is it the right thing to be doing?

Most investors are aiming to invest to meet their individual long term financial goals. Usually, these investments are diversified and well-managed and in many cases should, with care, achieve this.

However, for many investors, it is not just important for them to invest for their own return, but also to be investing in the right place, to either be doing good or avoiding what they consider bad or unethical. This approach is called ethical screening and is generally classified as either positive or negative.

Investors often will consider part of their savings towards an ethical approach, however are wary that it must not mean they miss out on meeting their own financial needs. Investors have the option of considering both growth areas, like equities and more defensive investments, like fixed income.

A negative screened approach

When considering a more ethical approach, it is often easier for an investor to consider what they do not want to be invested in, as opposed to picking something they do. Areas like tobacco, alcohol, gambling and pornography are often areas people have strong feelings about and so may wish to avoid if possible.

Of course, this may mean in some core areas like equity income, looking to omit companies involved with something like tobacco can be restrictive. However, this is not just about achieving high returns, but about finding a balance between achieving goals and doing something ethically and socially responsible.

Other companies that may be involved in an area of concern, for example weapon manufacturing, may make useful contributions to society in others, like research and development and technology. Often one will have a greater impact on the other to the benefit of society. This can often cloud the ethical objective for the investor.


There are funds around that provide their own ethical standard and regularly publish this to keep investors informed on what they are and are not investing in. Also, some funds utilise the additional screening offered with Islamic Finance, which offers a certain standard to the approach, which is carefully agreed at the outset and monitored going forwards.

A positive screened approach

Although this sounds easier, it is in fact sometimes more complex, as this is about picking the areas that ethically are desired to be invested in and will still offer a return to meet financial goals. This could be something as simple as renewable energy or water. It could be more complex looking at a combination of industries affecting the social structure in the world we live in, like environmental funds.

For some investors, this is an easier way to understand what you are invested in and provides an opportunity to move among different types of investment as the market changes and differing needs arise.

Alternative approaches

As many investors are less worried about what they are or are not invested in, but more about the social impact, some investment funds take an even more charitable approach by donating, for example, part of their profit or revenue towards certain charities. This often links in regionally with where the fund is invested or the particular industry sector it is focusing on.

If investing part or even all of your funds in a socially responsible manner is important to you; contact us to find out more about how you could achieve this.

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