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Socially Responsible Investing

Socially Responsible Investing:

Family HikingSocially Responsible Investing, also known as SRI, is sometimes referred to as “sustainable”, “socially conscious”, “mission,” “green” or “ethical” investing.  We are not talking about granola eating, sandal wearing tree huggers, but everyday investors that care about their country, its people and the environment. SRI is now a large part of the investment world, representing almost one fifth of assets under management in Canada.

Socially Responsible Investment (SRI) follows two broad conceptual paths. One is rooted in a values-based approach to investment, selecting and managing investments according to pre-determined views of the ethical consequences of investment choices. The other is a fiduciary view, based on belief and evidence that the incorporation of environmental, social and governance issues into the investment process will help to mitigate risk and enhance return.

Core SRI Strategies

    1. Screening based on exclusionary or inclusionary criteria. This is investment selection based on the application of predetermined social or environmental values to investment selection. The predetermined screens are rooted in values based choices by investors to exclude or select particular companies or sectors because of their impact on stakeholders or the environment.
  1. Impact investing. Impact investing can be broadly defined as investments aimed at solving social or environmental challenges while generating financial return. Examples of impact investing include community investing, where capital is specifically directed to traditionally underserved communities, or individuals who are unable to access mainstream sources of capital, or financing that is provided to businesses with a social purpose or enterprising (i.e. revenue-generating) non-profits.

Young Woman Standing with Arms Stretched OutSocially Responsible Investing marries traditional financial analysis with environmental, social and governance analysis.

There are 3 areas that SRI will look at when reviewing a potential company:

1. Environmental Risk

2. Social Risk

3. Governance Risk


After deciding to include a company, SRI investment can also become shareholder advocates, engaging directly with company management and boards of directors to encourage improvements in their ESG. They may also file resolutions at annual shareholder meetings according to the changes they are encouraging a company to make.

Niagara Wealth can help you with Socially Responsible Investing for registered and non-registered accounts. Many companies and pension plans are also including SRI as part of their overall investment planning.


Some of the information presented was gathered from The Social Investment Organization report: Canadian Socially Responsible Investment Review 2010, published May 2011

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