What is socially responsible investing (SRI)?
- Socially responsible investing is an aspirational strategy combining funding positive social change with financial returns.
- The key features of socially responsible investing include alignment of personal values, positive impact on society and the environment, portfolio diversification, and risk mitigation.
- Investment in social good can foster the longevity of financial returns.
Sustainability is the new watchword in business and finance. From fashion to food, environmental, social, and governance (ESG) concerns are mainstream considerations when it comes to where we put our money.
The definition of socially responsible investing (SRI) has evolved since its inception in the 1950s as a way to align personal values with investment portfolios. Now, SRI is an aspirational strategy that seeks to fund positive social change while earning financial returns.
What is socially responsible investing?
Socially responsible investing is a strategy that involves investing money into companies and funds that focus on positive social change.
This may include the environment, human rights, healthcare, and other social issues. Many believe they can make a difference in the world by using their money to support causes they care about.
How does socially responsible investing work?
The key to successful socially responsible investing is finding the right mix of companies that fit your ethical values and standards while also providing a good return on investment. Many people use a screening process to find companies that align with their social and environmental values. This may include looking at a company’s policies, products, and practices.
An essential method of screening companies involves the environmental, social, and governance frameworks. By reading corporate policies and encouraging companies to act responsibly, investors hold companies to a higher social standard.
The best way to ensure companies act responsibly is to vote with your wallet and support those that reflect your values.
Socially responsible investing has grown in popularity in recent years as more people are more inclined to make a difference with their money. 76% of consumers reported that they would discontinue business with corporations that treat employees, the environment, or the community they operate in poorly.
Meet the Charity bots
BOTS is an automated trading platform that aims to make trading accessible for anyone in the world. At BOTS, we noticed a gap in the market where individuals and investors needed support in trading. Our team uses rigorously tested algorithms to create bots that trade for users making trading a hassle-free process.
Charity Bots, particularly, were developed to help our users support social and environmental causes they believe in.
New charity bots - Bee bot, Tree bot, and the Sea bot were launched on the 8th of November 2022.
These are developed to match 25% of investor earnings and donate them to the respective charities they are tied to.
The motivation behind developing these bots was twofold: first, many people are interested in social responsibility but do not want to sacrifice potential earnings; and second, countless charities need financial support, but it can be difficult to know where to start when making donations.
With Charity Bots, individuals can easily support any number of causes without researching individual charities themselves.
How do charity bots work?
Each bot is developed with a specific charity in mind, and the team behind the bot ensures that the chosen charity will receive at least 25% of all investor earnings. And as an investor and supporter, you can earn annual fixed rewards of 8.5%.
This allows investors to enact change and receive fixed earnings while also receiving support from bots. So what are you waiting for? Head to the BOTS app and continue to invest in other causes you are passionate about.
What are the benefits of socially responsible investing?
There are many benefits to socially responsible investing, from bringing about positive social change to promoting solar and wind power or pushing for environmental protection and stability.
Socially responsible investors are motivated by a desire to do good with their money. They want to invest in companies that share their values and work to make the world a better place.
Some benefits of socially responsible investing include making a positive impact on society, aligning your investments with your values, diversifying your portfolio, and generating positive returns.
1. Positive Impact on Society
When you invest in socially responsible companies, you are supporting businesses that are working to make the world a better place. From renewable energy to fair trade, these companies are having a positive impact on social and environmental issues.
You might be wondering about other ways in which socially responsible investing impacts society positively. This type of investment promotes corporate social responsibility, encourages companies to be more environmentally friendly, supports businesses that positively affect the community, and creates job opportunities.
2. Alignment With Personal Values
Do you want to have an impact on the things that matter most to you? Socially responsible investing allows you to put your money where your mouth is.
When you invest in companies that are working to make the world a better place, you can align your personal values with your investment portfolio. This can give you a greater sense of satisfaction and purpose in your investing.
In 2020, 85% of investors considered ESG factors in their investments. This shows that more and more people are interested in making sure their money is going to companies that share their values.
3. Diversified Portfolio
Don't put all your eggs in one basket. This old saying means that you should invest only some of your efforts or resources into one area because if things take a turn for the worst, you will lose everything in one swift blow.
Diversifying your portfolio is an easy way to mitigate risk. By putting eggs in different baskets, so to speak, investors can expand their portfolios and protect themselves from sudden and extreme losses.
Recommended: What is diversification?
Socially responsible investing is one more way for you to diversify your portfolio, as these investments are often less correlated with the stock market. This means that they can provide a degree of stability in times of economic uncertainty.
4. Positive Returns
Contrary to popular belief, socially responsible investing does not sacrifice financial returns. In fact, many studies have shown that these investments can generate competitive returns while also doing good for society.
With investors and businesses becoming more socially conscious, it is no surprise that there is an increasing demand for sustainable and responsible investments.
Is socially responsible investing effective?
People are very careful and particular about how, when, and where they invest their hard-earned money. An investment strategy must be effective in order to be applicable or relevant in the financial sector.
Socially responsible investing is effective because it promotes social good while achieving a financial return. Despite the persisting myth that ethical investments are not profitable, research has shown that sustainable, responsible, and impact investing outperforms traditional investments in the long run. A 2019 Morgan Stanley survey reported that 85% of individual investors are interested in sustainable investing.
Socially responsible investing has come a long way since the 1950s. Nowadays, investors don't need to worry about funding so-called "sin" stocks.
Web 3.0 and AI technology have provided investors with easier ways to search out ethical investments without all the hassle. It is now easier than ever to find an investment that best suits your values.
If you're unsure of how to get started, we can help. Check out how the BOTS app works here. With BOTS, you can easily monitor your portfolio while letting our bots do all the heavy lifting for you.
This blog is for educational purposes only. The information we offer does not constitute investment advice. Please always do your own research before investing.
Any views expressed in this blog and by BOTS do not constitute a recommendation that any particular cryptocurrency (or cryptocurrency token/asset/index), portfolio of cryptocurrencies, transaction, or investment strategy is suitable for any specific person.