Socially responsible investing, or SRI, is becoming popular as people become more concerned with the environment and creating positive change with their money. As a result, investors are looking more closely at SRI to understand how global trends may impact their portfolios in the long-term. With that in mind, here are 3 SRI trends to watch for in 2017 that could affect your investments:
1) Climate change
It’s no secret that climate change is real and that its effects are being increasingly felt ecologically, economically, and socially.
SRI options that mitigate the risks and take advantage of the opportunities created by a changing climate while also delivering competitive financial returns are in greater demand. That may mean investing in companies that focus on clean technology, renewable energy, sustainable agriculture, or that are otherwise actively managing and planning for climate change (such as those choosing to divest from fossil fuels).
Being regarded as an environmentally-friendly, socially responsible, or green company helps organizations and leaders stand out in a crowded marketplace. However, not every “green” company is created equal. Being a leader takes time and resources, a long-term commitment to continually improving and could potentially be risky for an organization if it doesn’t work out as planned.
Some companies take the easy route and gloss over their environmental performance or the environmental benefits of a product or service. However, investors and consumers are getting smarter when it comes to “greenwashing” (claiming to be environmentally sustainable when this is not the case) and are digging into details about performance, products, and practices. With more information at their fingertips than ever, savvy investors will more easily divert their dollars to the real thing.
3) Fair compensation
In the U.S., the growing gap in income between the very wealthy and the average wage earner is likely to accelerate. Unfortunately, income inequality has the potential to destabilize economic systems and erode social capital, which puts significant pressure on companies who are committed to being leaders in social responsibility. Expect to see public campaigns for fair wages increase along with just compensation and living wage policies to address inequality and to ensure worker’s basic needs are met. SRI funds will be advancing these policies for domestic companies in the U.S. and here at home in Canada to ensure workers are getting a fairer share of the benefits of their labour.
For more on socially responsible investing, click here.
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