# Review of Socially Responsible Investing Tools
In the world of investing, a significant shift has been observed towards socially responsible investing (SRI), where investors look for financial return while also considering the social and environmental impact of their investments. As SRI gains popularity, various tools have emerged to help investors align their investment portfolios with their ethical values. This article reviews some of the leading socially responsible investing tools, providing insights into how they work and their unique features.
What is Socially Responsible Investing?
At its core, socially responsible investing is an investment strategy that considers both financial return and social/environmental good. It seeks to support corporations that promote environmental stewardship, consumer protection, human rights, and diversity. This approach can filter out investments in industries like fossil fuels, tobacco, and weapons, favoring companies with positive environmental, social, and governance (ESG) criteria.
Top Socially Responsible Investing Tools
To navigate the SRI landscape, investors can use various tools and resources. These tools help identify companies and funds that meet specific ethical criteria, making it easier to build a portfolio that reflects one’s values. Below, we review some of the leading SRI tools available to investors.
1. MSCI ESG Ratings
MSCI ESG Research provides in-depth research, ratings, and analysis of the environmental, social, and governance-related business practices of thousands of companies worldwide. Investors can use MSCI ESG Ratings to understand a company’s long-term resilience to ESG risks and how they compare to competitors. This tool is particularly useful for institutional investors looking to integrate ESG considerations into their investment process.
2. Sustainalytics
Sustainalytics is a global leader in ESG and corporate governance research and ratings. It offers insights into companies’ sustainability performance, including their ESG risks and how well they are managing those risks compared to their industry peers. Sustainalytics serves both individual and institutional investors, providing detailed reports that can inform investment decisions.
3. Morningstar Sustainability Rating
The Morningstar Sustainability Rating is a tool for investors interested in the sustainability performance of mutual and exchange-traded funds. The rating evaluates the underlying holdings of each fund, focusing on how well the companies manage ESG risks relative to peers. Funds are assigned a rating from one to five globes, making it easy for investors to compare at a glance.
4. YourStake
YourStake is a tool tailored more for financial advisors than individual investors, although its insights can benefit anyone interested in SRI. It allows advisors to create reports that show clients not only the financial performance of their investments but also the social and environmental impact. This includes metrics like carbon offset and gallons of water saved, giving a tangible sense of how investments make a difference.
5. As You Sow
As You Sow offers a suite of free online tools that allow investors to scan their investment portfolios for various social and environmental issues, including fossil fuels, gender equality, deforestation, and more. This tool is particularly user-friendly for individual investors wanting to assess and adjust their portfolios based on specific causes they are passionate about.
Conclusion
Socially responsible investing tools offer powerful insights for investors aiming to merge their ethical values with their investment strategies. Whether you’re an individual investor or a financial advisor, these tools can help you navigate the complexities of SRI, allowing for informed decisions that reflect not only financial considerations but also the impact on society and the environment. By leveraging such tools, investors can contribute to a more sustainable and equitable world while aiming for financial returns.
