Investing in Socially Responsible Companies: How to Get Started

Investing in Socially Responsible Companies: How to Get Started

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Everyone wants to invest for a profit; that’s the entire purpose. However, those who look to invest in socially responsible companies look to make multiple profits. They look to profit financially, morally, and ethically because they are investing in companies that have a positive impact on the world around them.

Here’s how to get started investing in socially responsible companies.

What is a Socially Responsible Company?

Social responsibility is not objective, and it is also not the traditional profit mandate. Socially responsible companies seek to do good to society, to the climate, and to their stakeholders. You can measure this with a U.S. dollar value by putting a value on everything the company does.

For instance, a company may be considering a move that will produce a $2 profit for its stakeholders. To produce that $2 profit, the company may have to destroy $3 of value in the world around them by, say, polluting or destroying land (negative value). That decision will have a negative value ($-1).

A socially responsible company would not make that move because it considers the impact on the world around it. Not every move will be able to have a positive impact, but companies who choose to act socially responsible will have an overall positive value because they make more positive moves than negative ones.

Sustainability and Social Change

Socially responsible investing includes investing in companies whose aim is sustainability while still making a positive impact. Impact investing in sustainability is where social change starts. It still ends in profits, but these profits are considered to be more than just financial.

Investing in socially responsible companies means investors enjoy the positive impact of sustainability and know that they support companies who abide by the golden rule by doing good in the world around them.

For instance, a tobacco company would not be a socially responsible company because of all the damage its product does to the end consumer and to the world around them by way of the pollution of manufacturing. All environmental and social costs are considered when choosing socially responsible companies.

Choose Your Starting Point

There are many socially responsible companies if you look for them, but the goals will be different between individuals. For instance, one person may choose to invest in socially responsible companies that empower women and minorities, while someone else may prefer companies making a sustainable impact, like a solar energy company.

To get started, you must first evaluate your personal goals and decide what kind of things are really important to you in an investment company. There are lots of options. Once you define your personal goals, then the work begins with research.

Partner with Socially Responsible Companies

Investing in socially responsible companies may mean partnering with one who can help you do the research. Putting a dollar value on everything a company does isn’t easy work, but it can be done. Socially responsible companies aren’t just responding to their investors; they’re responsible to the environment and to everyone around it. Companies that do the extra work to be socially responsible are worth investing in. When you invest in socially responsible companies, you can feel good about investing.