Investment Trends: Social Responsibility

As paraplanners for financial advisers, we’re often asked about our investor tips and what’s trending in the industry. While it’s always best to speak to your financial adviser about making investments, there is an emerging trend that seems worth discussion.

It’s no secret that the world has changed drastically in 2020. While there’s still a lot of uncertainty in the air, one thing that has been brought to light in recent months is the importance of corporate social responsibility. It’s now a must-have for investors.

Here, we’re going through what corporate social responsibility means and why investors are jumping on this important trend.

What is corporate social responsibility?

When companies are engaging in corporate social responsibility, it means they are conscious of their impact on society from an economic, social, and environmental perspective.

Essentially, it’s about having a business plan that makes the corporation socially responsible to its stakeholders and the public at large.

How Companies Engage in Social Responsibility

There are various ways a company embraces social responsibility.

Perhaps they’ve built volunteer or charity initiatives within their sales model. Maybe they’ve committed to diversity in their hiring protocols. They might have policies in place to do their part in protecting the environment.

More generally, social responsibility is the idea of “giving back” versus solely focusing on the bottom line.

However, engaging in social responsibility seems to be a solid business plan in the end as employees usually feel heard, customers can feel good about their relationship with the company, and stakeholders trust their investment will be put to good use.

Socially Responsible Investing

So, what is socially responsible investing? Well, when you invest in company’s that maintain corporate social responsibility, in turn, you’re making a socially responsible investment. There are a few ways to do this.

Through buying shares of a company that engages in socially responsible practices, or putting your money in a socially conscious mutual fund, socially responsible investing has become more and more popular in recent years.

When it comes to financial investments, many feel strongly about only investing in companies that mirror the moral and ethical values they themselves hold. And in recent months, as major social issues bubble to the surface, it makes sense that socially responsible investments will only gain steam.

However, beyond financial investments, community investments are another form of socially responsible investing where, instead of measuring financial gains, gains in community impact is most important.

Overall, the goal of most socially responsible investing has both a financial and community impact piece. Similar to how many companies understand that putting socially responsible policies in place is actually good for business, investors also align with the idea that doing the right thing can lead to financial success.

Again, as always, it’s important to go over any potential investments with your financial adviser to make sure you’re choosing the best investment possible. In most cases, you’ll want to aim for both financially and socially responsible gains by receiving a return on your investment while supporting a cause you truly believe in.

It’s a win-win.

Are you a financial planner who needs help with your SOAs for your socially responsible investors? Our expert paraplanners in Australia are ready to help. Call us today!