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Socially responsible investing (SRI) is ensuring that our investments are aligned with our values. None of us want to make our financial returns at the expense of seriously harming ourselves, other humans, or the environment.
The four components of socially responsible investing include:
Screening: Negative Screening is trying to avoid doing unnecessary harm, such as by avoiding investments in companies that are serious polluters, employ sweatshops, or have racist or sexist policies. Positive Screening is preferring investments in companies that provide a societal good as well as a safe and attractive return, such as companies with good environmental records.
Shareholder Activism: proposing and representing resolutions at annual stockholder meetings to encourage companies to adopt policies consistent with your values.
Proxy Voting: using your shareholder voting power to vote on important issues of corporate governance, and proposed shareholder resolutions, through the annual proxy voting process
Community Investing: setting aside some portion of funds, often 1%, to be invested in local businesses that generate jobs and opportunities in addition to an attractive return. Many Community Development Financial Institutions exist for managing such investments for you.