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Socially Responsible Investing

Jonah King, 17yo, Canada

A new trend in investing values and morals is emerging as younger people take their money to the markets in search of lucrative trades. This new concept of investing incorporates social and environmental criteria into one’s investment decisions. Of course, how an individual manages their portfolio to align with their ideals varies widely but there are some general standards that most investors evaluate. We will cover these later, but to better grasp the principles of Socially Responsible Investing (SRI), we must delve into where it originated.

John Wesley, the founder of the Methodist movement in England and the USA around the mid-18th century, urged his followers not to make a profit at the expense of their neighbors by refusing to do business in tobacco, gambling, or weapons. This, coupled with the Islamic method of investment, Halal or Shari’a, set the tone for not exploiting one’s community for profits or immoral business practices as a means for gains. These values carried through to the 20th century, where we saw investors looking to promote social activism for civil rights, racial equality, and climate change. By the 1980s, there were a few dedicated mutual funds that used positive screening to filter out the stocks that they could confidently invest in. Certain funds, such as the Parnassus Fund or a Calvert Fund are still around and are established leaders in the responsible investing industry. Fast forward to the present day, and you’ll find a leap of positive attitudes towards sustainability challenges being tackled head-on by socially responsible investors. Such modern approaches include impact investing (the investment into a firm with specific and measurable goals to enhance corporate reputation), and the mainstreaming of sustainable investing, both of which continue to evolve.

So now you know roughly what you’re getting yourself into. But where does one start? The process can be broken down into a four-step process. Firstly, take some time to reflect and evaluate what is important to you. What values are you trying to promote with your investment? Where do you want your capital to have an impact? Next step, develop criteria that you can gauge a firm’s responsibility. Most criteria consist of environmental, social, and corporate aspects. These are overarching categories and can be further broken down to more specific sub-genres to detail your criteria. The next step consists of applying your criteria to analyze firms you could potentially invest in. Ensure you don’t take the research of firms lightly because a thorough dig into the companies past, present, and plans for the future may drastically alter your perception of a company. The last step is to secure the capital you plan to invest and open a trading account to begin. Your values may shift as your investment matures so be willing to change up your portfolio as time progresses. These are some recommendations for a few equities and mutual funds, along with websites that may help with researching your first investments. Please note that there is no affiliation between the firms or funds we recommend and WhyFI Matter$. All of the recommendations are in no particular order. Obviously there are hundreds more options than the 10 we mention below, these are simply meant to give you, the investor, guidance in the right direction.

  • iShares MSCI KLD 400 Social

  • BetaShares Global Sustainability ETF

  • Invesco Solar ETF

  • Nuveen ESG Large-Cap Growth ETF

  • Microsoft Corp

  • Nio

  • Citigroup

  • Amgen

  • Nielsen


Finally, here are some research resources for analyzing and comparing your own research to what other professionals recommend.

  • MSCI Indices

  • Newsweek’s list of responsible firms

  • Investopedia


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