Sustainable socially conscious is also referred to as socially responsible investing, social investment, or ethical investment, an investment strategy that seeks to bring social changes through financial returns and the social/environmental good regarded as positive by the investors.
The socially conscious investment represents a small percentage of the total funds invested by corporations facing challenges and many obstacles. The areas of concern recognized by the socially conscious investment sometimes give different meanings as they occur under the ESG criteria, including environment, social justice, and corporate governance.
The meaning of socially conscious under the ESG criteria refers to the practices that aim to avoid damage by allowing the Screening of companies for ESG risks before investors decide to include them in their investment portfolio.
Sustainable Socially conscious investments ensure that companies are not criticized and judged primarily on the financial gains but on how they contribute to society.
Sustainable Socially Conscious Strategies
Not all investors share similar goals and motivations towards investing; however, various sustainable, socially conscious strategies allow business investors to give the meaning of socially conscious investments in multiple ways.
- Negative Screening: this strategy excludes specific companies or business practices from an investment portfolio based on the ESG criteria. The meaning of socially conscious through this strategy is that it focuses on encouraging business investment practices that promote a positive impact on society.
- Positive Screening refers to grouping investments in sectors or companies for a positive ESG performance compared to other industry peers. In this strategy, the meaning of socially conscious encourages business companies with higher ESG performance that contributes to a positive impact and financial returns.
In sustainable, socially conscious investing, the evaluation of investment impact occurs through the ESG factors.
Environmental element refers to the company’s investment contribution towards the environment, such as carbon footprint, waste, water use, and conservation, and the technology it uses and creates in its supply chain.
Social refers to the company’s impact on society and how the company encourages social good and change. Primarily the meaning of socially conscious here focuses on examining the involvement of the company in investment ways in social issues such as human rights, racial and gender diversity of hiring and inclusion programs, the employee’s health and safety, and the engagement with the community.
Governance represents how a company’s management and administration of exchange-traded funds promote positive changes. The meaning of socially conscious through control focuses on reviewing the quality of the company’s management and the diversity of the board, anti-corruption transparency, and disclosure, as well as the political contributions of the company investments in promoting positive changes.
Sustainable, socially conscious investing is essential in encouraging company practices that positively impact and drive changes. Encouraging companies to adopt sustainable investing promotes purpose-driven businesses that make social and environmental impacts.
Although the meaning of socially conscious depends on the various ESG criteria factors, it enables businesses and companies to embrace sustainable principles, allowing long-term social and financial gains.