Socially responsible investing (SRI) is a philosophical approach to investing. While investing typically focuses on only maximizing financial return, SRI also takes into account social considerations when calculating a return. You can think of it as a single bottom line vs. a double or even triple bottom line. SRI looks at financial return, as well as the investor’s impact on society, and the environment.

But SRI isn’t just unique in the way it measures returns – it’s also a distinct approach to the investments themselves. Let’s say you’re in the stock market. With a regular investing mindset, you’d choose companies based on how well they perform – how much money they make. With an SRI mindset, you would look at the company’s financial performance, but also its mission. SRI tends to avoid investing in alcohol, tobacco, gambling, weapons, and military companies for instance. Instead, a socially responsible investor might invest in an alternative energy company or a microfinance institution that is profitable but also directly beneficial for society.

Due to the rising popularity of mixing business and conscience, there are now funds and financial advisors devoted specifically to socially responsible investing.

Tags: return on investment, socially responsible investing, SRI