What is SRI?

Are you concerned about how your investment choices impact the world? If so, you may be interested in having SRI woven into your investment strategy.

Socially Responsible Investing (SRI) is an investment discipline that emphasizes the social and environmental issues that are important to you, while maintaining a long-term growth and/or capital preservation strategy. Primary methods, among others, are to cultivate, exclude, and petition companies based on an evaluation of their policies, practices, and impacts.

Common areas of concern are, among others:

• Environmental sustainability
• Human rights
• Gender equality
• Diversity
• Corporate responsibility
• Community impact
• Animal welfare

SRI has many names, including ESG (environmental social governance), sustainable and responsible investing, values-driven or values-based investing, green investing, and impact investing (a form of SRI), and they all describe a growing movement that has brought tremendous change to the world, and will continue to do so.

Why choose SRI?

Some clients of Woven Prosperity^® prefer SRI and some do not. The decision is a personal one.

Those who have chosen it have expressed the following reasons and benefits:

• SRI a way to "vote with your money" and exercise your influence as an investor and shareholder
• The return on investment of SRI is perceived as greater in scope than traditional investing, as demonstrated by the concept of a "triple bottom line" (financial, environmental, and social)
• There is evidence* that SRI has a favorable risk/return tradeoff, and it's worth considering that SRI excludes companies with risk factors such as reliance on limited resources, exposure to lawsuits due to unsafe working conditions or discrimination, association with unstable governments, and vulnerability to government regulation
• The exponential growth of SRI over the last few decades has resulted in many competitive investment options across sectors and asset classes, which help contribute toward a robust, well-diversified portfolio

SRI as a growing movement

According to the 2018 and 2020 "Reports on U.S. Sustainable and Impact Investing Trends" by the US SIF Foundation:

• From 1995 to 2018, U.S. sustainable and responsible investment assets have increased more than 18-fold, a compound annual growth rate of 13.6 percent.
• The total U.S.-domiciled assets under management using sustainable investing strategies at the start of 2020 was $17.1 trillion.
• This represents 1 out of every 3 dollars of the total U.S. assets under professional management.

As examples of significant SRI-related developments:

• The United Nations, together with representatives of the world's largest institutional investors, have supported the Principles for Responsible Investment (PRI) Initiative since its inception in 2006, based on SRI (i.e., "ESG") principles. As stated by the United Nations Secretary-General Kofi Annan, "the Principles provide a framework for achieving better long-term investment returns and more sustainable markets. I invite institutional investors and their financial partners everywhere to adopt these Principles."
• The White House met with over 20 private sector investors on June 25, 2014, "answering the President's call to action by announcing their new commitments to make more than $1.5 billion in investments that intentionally generate sound financial return as well as measurable social or environmental impact," as posted by the White House Office of Science and Technology Policy.

* "Sustainable Investing: Establishing Long-Term Value and Performance", DB Climate Change Advisors, 2012
* "Shedding Light on Responsible Investment: Approaches, returns and impacts", Mercer, 2009
* "It's plain for all to see, ESG research works", Financial Times, 2012

If you are interested in SRI

Woven Prosperity^® specializes in building custom SRI portfolios for clients who request it. If you would like to learn more, Woven Prosperity^® offers a free initial consultation to discuss SRI and whether it is a fit for you.