What is the difference between ESG and SRI?

ESG (Environmental, Social, Governance) refers to the specific criteria used to evaluate a company's sustainability and ethical performance. SRI (Socially Responsible Investing) is the broader investment strategy that incorporates these ESG factors, along with an investor's personal values, into investment decisions. ESG is the tool, and SRI is the approach.

Do ethical investments perform as well as traditional investments?

Recent research and market data indicate that ethical investments, particularly those integrating strong ESG factors, can perform comparably to, and sometimes even outperform, traditional investments. Companies with robust ESG practices often demonstrate better long-term financial resilience and lower risk.

How can I avoid greenwashing when choosing ethical investments?

To avoid greenwashing, look for transparent reporting, third-party ESG ratings from reputable agencies (like MSCI or Sustainalytics), and specific, measurable impact metrics. Be wary of vague claims and always scrutinize a company's core business practices, not just its marketing.

Can I build an ethical portfolio with a small amount of money?

Yes, absolutely. You don't need a large sum to start ethical investing. Many socially responsible mutual funds and ETFs have low minimum investment requirements, making them accessible to beginners. Fractional share investing also allows you to buy portions of individual ethical stocks.

What are common ethical screens used by investors?

Common ethical screens include negative screens for industries like fossil fuels, tobacco, alcohol, gambling, and weapons. Positive screens often look for leaders in renewable energy, fair labor practices, diversity and inclusion, and strong corporate governance.

How often should I review my ethical investment portfolio?

It's advisable to review your ethical investment portfolio at least once a year, or whenever there are significant changes in your personal values, financial goals, or the ethical performance of your holdings. This ensures ongoing alignment and allows for necessary adjustments.

Is ethical investing only for environmental causes?

No, ethical investing encompasses a broad range of issues beyond just environmental concerns. It includes social factors (like labor practices, human rights, diversity) and governance factors (like board structure, executive pay, business ethics). Investors choose which areas align most with their personal values.

Ethical Investment Screening: Build a Socially Responsible…