Socially Responsible Investment (SRI)
The most common forms to align financial investments with ethical, moral, and social considerations are screenings, shareholder advocacy, community investing, and social venture capital funding. Screenings integrate the evaluation of corporate financial and social performances into portfolio selections. Positive screenings target corporations with sound social and environmental responsibility. Negative screenings exclude entities featuring morally and ethically irresponsible corporate conduct. Shareholder advocacy is the active engagement of shareholders in the corporate management by voting, activism, and dialogue. The majority of shareholders exercise their voting rights by proxy resolutions, in which a third party has the right to advocate for the shareholders before the corporate board. Negative shareholder activism comprises political lobbying, consumer boycotts, stakeholder confrontation, and negative publicity. Community investing describe ear-marks of investment funds for community development, but also features access to financial products and services to un(der)served communities. Social venture capital supports pro-social start-ups and social entrepreneurs for the greater goal of increasing the social impact of financial markets. This chapter explores socially responsible investment.