Ways of doing SRI
There is a range of ways in which charities can invest responsibly. The list below sets out the main approaches that could be adopted by the charity you support:
Positive screening
Positive screening can be used to further the aims of a charity and encourage responsible business practices. It involves investing in companies with a commitment to responsible business practices, that produce positive products and services or that address environmental or social challenges.
Negative screening
Negative screening can be used to protect a charity’s reputation, avoid conflict with its objectives or contradictions with its work. It is about avoiding investments that do not meet its social, environmental or ethical criteria.
Engagement and voting
Engagement can be used to encourage more responsible business practices. It usually takes the form of dialogue with companies or voting at Annual General Meetings (AGMs) and is typically carried out by fund managers on behalf of investors.
The roots of Responsible Investment lie partly in negative screening, and this is still the most popular and well-known form of SRI. It can be a good first step for charities wishing to safeguard against damage to their reputation.
It is also possible to use positive screening, engagement and the voting of shares to encourage and influence positive change. It is possible for charities to collaborate with other investors to pursue social, environmental or ethical objectives.
These strategies can be used individually or in combination - depending upon a charity's objectives and the sophistication of its Responsible Investment policy.
Integration is another Responsible Investment strategy. It refers to the inclusion of potentially material social, environmental, ethical or corporate governance risks and opportunities into normal investment processes.
Mission-related investment and programme -related Investment are not the same as socially responsible investment. For further details of these terms see the hot topics section.
You may wish to ask the charity you support which SRI strategy or strategies it pursues and with what objectives.
