NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, December 13, 2016

There’s been a growing movement for investors to care not only about their own financial gain but also about the good of their community. So-called “impact investors” are willing to put their money where their mouths are by investing in companies that also share their commitment to environmental, social, and governance causes, or other causes the investor cares about. The movement often is called SRI, which stands for socially responsible investing.

Performance of socially responsible investing funds:

There are many ways to practice socially responsible investing. You can avoid companies that engage in certain “sin” industries such as cigarettes or you can look for companies that support certain industries such as renewable energy.

One way investors can participate in socially responsible investing without looking through the operations, employee-management policies, investments, supply chain, and other aspects of a company to decide if it’s meeting a set of criteria is to invest in an index fund specifically targeted at finding such companies.