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  • Writer's pictureC Garrett Moore, CFP®

What is Socially Responsible Investing (SRI)?

Updated: Jun 2, 2023

If you have no idea, you're not alone.

I like to define it as the intentional act of aligning your investments with your own beliefs and values.


Imagine a cardiologist that goes to work every day pleading with his patients to stop smoking because it's harming them. He then goes home and invests his earnings in a typical S&P 500 fund, which includes Philip Morris International, the makers of Marlboro. As a result, he receives a portion of the profit Marlboro earned from his patient. Isn't that a bit ironic?


Avoiding such companies has largely defined socially responsible investing in the past. You may have heard the abbreviation "ESG", which stands for Environmental, Social, and Governance. These three factors provide investors with a framework to determine how socially responsible a company is.

While I believe that considering ESG factors in your investments has a great deal of merit, I'm even more excited about the next generation of such investing: what has become known as impact investing. Instead of avoiding companies that do harm, impacting investing involves the intentional inclusion of companies that are doing good. Neat.

One of my favorite ways to incorporate impact investing, which we are utilizing in our Social Impact portfolio models as of the date of this post, is the iShares MSCI Global Impact ETF (MPCT) fund.

Every year, the countries of the United Nations convene to develop their Sustainable Development Goals.

Impact investing, partly through the Global Impact fund, gives you the opportunity to invest in companies that have made it their mission to make these goals a reality.

To each their own.

I believe there is a distinction worth making here. To use the example above, I believe pretty much everyone should have the right to smoke. However, I have no particular need or desire to profit from it. You might ask yourself if you feel the same way.

What about returns?

Most investors ask some variation of the question - "Will my returns suffer if I engage in socially responsible or impact investing?" Academic research tells us the answer is no¹. In fact, there may very well be an improvement in performance as a result of screening for such socially responsible factors.

The below chart details the performance of the longest running socially responsible index, the MSCI KLD 400 Social Index against both the Russell 3000 and the S&P 500, which are traditional indexes comprised of many of the publicly traded American companies.

Socially Responsible Investing

The rise of such socially responsible and impact funds has enabled us to develop low-cost, tax-efficient, and globally diversified portfolios that are perfectly suitable for nearly any financial goal and risk comfort level. Thusly enabling investors to align their money with their values, without sacrificing returns.

If you are interested in incorporating social responsibility or impact investing in your portfolio, e-mail or call at 941.544.2269.


Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. I encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from C Garrett Moore, and all rights are reserved.


¹Gordon L Clark, Andreas Feiner & Michael VIehs “From the Stockholder to the Stakeholder: How sustainably can Drive Financial Outperformance,” Arabesque Partners, March 2015.


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