Socially Responsible Investing

Socially responsible investing, also referred to as ESG (for environment, social, and governance), is an investment sector that is considered socially responsible due to the nature of the business the company conducts. Socially responsible investing isn't a specific investment product- rather, it is an investing philosophy that can be applied to individual stocks, mutual funds, and ETF's. 

Historically, socially responsible investing served as the brunt of jokes within the financial services industry. "Socially responsible investing?" they'd say. "You mean fiscally irresponsible investing!" they'd say laughing, referring to the idea that socially responsible investment strategies under-performed and were poor investment choices.

Much has changed since then. For one, we have found that some ESG filters actually serve to improve investment performance. (keep in mind past performance doesn't guarantee future results) One example is the time when certain socially responsible investment firms divested from Equifax due to perceived failure to protect client data- mere months before the notorious data breach occurred. Turns out doing the right thing (protecting client data) can have financial advantages. 

All investing involves risk including loss of principal. No strategy assures success or protects against loss.