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The ABC of socially responsible investment

The ABC of socially responsible investment

Know the six Principles of Responsible Investment to embrace to have a more proactive stance regarding business practices.

Social investment is not a grant or a donation.

As concerns such as global warming and economical sustainability spill from the minds of activists and politicians into the larger world of entrepreneurship, world-reaching institutions such as the Organization for Economic Cooperation and Development (OECD) and the United Nations itself have become sources of guidance and information for investors looking to make an impact beyond solely increasing profits.

What is called the Socially Responsible Investment (SRI) has grown in recent years to become an over US$8 trillion class of assets under management by funds, looking for companies that fulfill better standards in terms of labor practices, sustainability efforts and the like.

Environmental, Social and Governance (ESG) issues are at the top of mind of a number of investment funds and companies looking to bring a wider positive impact to the world.

The United Nations has been one to jump into this trend, with the six Principles of Responsible Investment (PRI), nudging companies and investors into taking a more proactive stance regarding business practices:

Principle 1

We will incorporate ESG issues into investment analysis and decision-making processes.

Principle 2

We will be active owners and incorporate ESG issues into our ownership policies and practices.

Principle 3

We will seek appropriate disclosure on ESG issues by the entities in which we invest.

Principle 4

We will promote acceptance and implementation of the principles within the investment industry.

Principle 5

We will work together to enhance our effectiveness in implementing the principles.

Principle 6

We will each report on our activities and progress towards implementing the principles.