In recent years, there has been a growing interest in social investing, also known as socially responsible investing or SRI. This type of investing involves considering not only financial returns but also the social and environmental impact of the companies in which you choose to invest. This trend has been driven by a desire to align one's investments with their values and make a positive impact on the world.
One of the key questions that investors often have about social investing is whether it can deliver comparable returns to traditional investing. Can you make money while also making a difference? The answer, it turns out, is a resounding yes.
Numerous studies have shown that companies with strong environmental, social, and governance (ESG) practices tend to outperform their peers over the long term. By considering factors such as a company's impact on the environment, treatment of employees, and ethical business practices, investors can identify companies that are better positioned to weather market downturns and capitalize on emerging opportunities.
In fact, a recent study by Morningstar found that sustainable funds outperformed their traditional counterparts in 2020, with 72% of sustainable equity funds ranking in the top half of their categories. This demonstrates that investing with a conscience does not have to come at the expense of financial returns.
Furthermore, diversifying your portfolio with socially responsible investments can help reduce risk and increase resilience. By spreading your investments across companies with different ESG profiles, you can mitigate the impact of any one company's underperformance and potentially increase your overall returns.
So, if you're looking to diversify your portfolio and make a positive impact on the world, social investing may be the way to go. By aligning your investments with your values, you can not only support companies that are making a difference but also potentially boost your financial returns in the process. It's a win win for both your wallet and the world.