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Socially Responsible Investing, what is it?

Make Money - Now And In the Future

Socially Responsible Investing incorporates social and environmental concerns, human rights and other values into the investment decision. It's also about making money. In the long term Socially Responsible Investing is likely to be good for your portfolio.

Socially responsible investing

  • Are you concerned about the impact of greenhouse gases and global warming?
  • Does the world that our children will inherit concern you?
  • Is your recycling bin full each week?
  • Are you concerned whether their are harmful chemicals in the products you buy?
  • When you invest your money, are your social and environmental concerns reflected in the Companies or funds that you select?

These are some of the most fundamental issues and values that we may have.  And there are plenty more too. They are issues and events that we talk and debate with our families, colleagues, friends and children. Issues that your financial adviser talks about with his or her family, colleagues, friends, and children.

But issues rarely discussed in the professional financial adviser/ client relationship.  In the past, investing and values have usually been mutually exclusive.

At Bay Financial Partners we recommend that when you invest in must try to "Make Money - Now And In the Future". Businesses that are acting in a socially responsibIe manner are far more likely to achieve the second part of the equation. And it is the future part that is the most important.

Traditionally socially responsible investing (SRI) has been the domain of a few concerned individuals, but that is no longer so. 

What is socially responsible investing? It is investing that incorporates social and environmental concerns, human rights and other values into the investment decision.

SRI funds essentially look at 2 aspects  - firstly what a company does  and how to exclude or include this activity – this often referred to as negative and positive screens.  SRI funds also analyse how a company does what is does.  This is often placed around the frameworks of “sustainable development’ and ‘corporate social responsibility’.

Does investing according to our ethics and values mean that we should lower our expectations on returns from our investments? Definitely not! SRI is about investing, and performance is paramount - it must be competitive.  The burning question is, do SRI funds perform better or worse than non SRI funds? In the United States, where most studies have been done and there is a longer time horizon, the results are interesting. Returns on SRI funds are indicating that there is no performance penalty in investing in a socially responsible manner. In fact, recent fund results show that you can “do well by doing good”.  These results are leading to mainstream acceptance of SRI funds overseas.

SRI investing is a relatively new concept in the New Zealand market, but there is increasing awareness, and the amount of money invested in SRI funds is growing rapidly. If you want to invest your money in a manner that fits with your social conscience, talk to your financial adviser, phone us on 07 578 3863.
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