Socially responsible investing (SRI) is a rapidly growing trend in markets around the world. This sustainable, responsible, impact investing model affords companies the opportunity to ensure that their investments align with their mission and values and also facilitate the global movement towards an environmentally sustainable and socially inclusive economy. SRI models involve ESG (environmental, social and governance) integration, investment screening, shareholder advocacy, sustainably themed investments and impact investing.
Historically, socially responsible investing models were believed to negatively impact performance and consequently were questioned as acceptable standards for acting in “beneficiaries’ best interests” and fulfilling fiduciary obligations. Over the last 25 years, this notion has been challenged and dismantled with the international movement to develop a sustainable global financial system. A legal analysis conducted in 2005 by Freshfields Bruckhaus Deringer (Freshfields) international law firm concluded that ESG factors in investment decisions is “clearly permissible and is arguably required”. Over time, SRI is becoming widely accepted and more effectively executed. The UN has taken initiative in the globalization of sustainable development through collaboration with UNPRI, UNEP FI and the UN Global Compact.
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