Introduction

 

Socially responsible investing (SRI) factors sustainability criteria into the investment decision. These are non-financial factors, often relating to a company’s environmental, social and governance (ESG) standards, they may affect the value of the company. However, each country has its own SRI approach that is specific to its cultural heritage. Therefore, SRI practices are very diverse.

 

Different forms of SRI

 

Socially responsible or sustainable investment funds

 

Such funds take non-financial social and environmental criteria into account when valuing a listed company. These factors are then cross-referenced to financial criteria in order to select the companies with the best performances in terms of sustainable development.

 

Ethical Funds

 

Such funds are more common in English-speaking countries. They exclude certain businesses, such as weapons, gambling or tobacco on moral or religious grounds.

 

Engagement

 

Socially responsible investors demand more socially responsible policies of companies by engaging in direct dialogue and through exercise of their voting rights at general meetings.

 

Theme Funds

These funds invest in companies that contribute to sustainable development in the broadest sense through renewable energy production, along with conventional manufacturers at the cutting edge of energy efficiency issues and industries such as water and waste management or healthcare. Only some of these funds have comprehensive requirements for all SRI criteria. Novethic made an inventory of theme funds in 2007.