Socially responsible investing is about considering factors that are important to you when deciding where to invest your money. These might be environmental, social, corporate governance and/or ethical factors, in addition to financial return.
Also known as sustainable or ethical investing, it favours investments in organisations that reduce, or do not contribute to, negative environmental and social impacts, and excludes those not aligned with a sustainable approach. Ethical investment is about knowing what your investments are funding, and choosing where to invest, based on this knowledge and your personal values.
Choosing socially responsible investments can have both personal and 'bigger picture' benefits such as:
Ethical or socially responsible banks and investment or superannuation funds consider the social and environmental impact of their investments and loans. These institutions will generally have a clear stance on issues such as climate change, animal welfare, human rights and clean energy. They will be transparent about companies they avoid, which may include those involved in fossil fuels, weapons, tobacco, practices that have negative environmental impacts and human rights abuses.
They will also be clear about companies they support, which may include those involved in clean energy, recycling, energy efficiency, education and sustainable products. Look for financial advisers and investment products with Responsible Investment Association Australasia certification.