Our resident finance blogger has put together an article on Ethical Investing....
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Cheers,
Donna
There’s a rapidly growing area of investing that some are saying will dramatically change the investment scene over the next ten years and potentially have wide ranging effects on the ability of companies to raise capital.
It’s called ethical investing, or Socially Responsible Investing (SRI).
The rise of SRI is due to increased awareness and interest in the impact of corporate activity on society and the environment.
Many investors are now saying they do not want to support companies that pollute the environment, cause social problems such as gambling and alcohol addiction, or employ child labour in developing countries.
This has led to the creation of a family of products and services which take environmental, social, ethical and governance issues into account.
There are two basic principles used in socially responsible investing – negative screening and positive screening.
With negative screening, the most common approach, investments are filtered out from a fund or investment portfolio if they have a negative impact on society or the environment – for example investment in companies that produce weapons of war, cigarettes or chemicals that contaminate the environment.
Positive screening, that is, looking for investments that promote a positive impact on society, is becoming more common, with a focus on investments in the areas of environmental protection, sustainable development, equal opportunity, healthcare and safety.
Many of the selection criteria for negative and positive screening are subjective and it is important to find out what approach is used.
It’s called ethical investing, or Socially Responsible Investing (SRI).
The rise of SRI is due to increased awareness and interest in the impact of corporate activity on society and the environment.
Many investors are now saying they do not want to support companies that pollute the environment, cause social problems such as gambling and alcohol addiction, or employ child labour in developing countries.
This has led to the creation of a family of products and services which take environmental, social, ethical and governance issues into account.
There are two basic principles used in socially responsible investing – negative screening and positive screening.
With negative screening, the most common approach, investments are filtered out from a fund or investment portfolio if they have a negative impact on society or the environment – for example investment in companies that produce weapons of war, cigarettes or chemicals that contaminate the environment.
Positive screening, that is, looking for investments that promote a positive impact on society, is becoming more common, with a focus on investments in the areas of environmental protection, sustainable development, equal opportunity, healthcare and safety.
Many of the selection criteria for negative and positive screening are subjective and it is important to find out what approach is used.
Cheers,
Donna
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