The Forum for Sustainable and Responsible Investment (US SIF) defines sustainable, responsible, and impact investing (SRI) as “an investment discipline that considers environmental, social, and corporate governance (ESG) criteria to generate long-term competitive financial returns and positive societal impact.” Interest in responsible investing has grown in recent years, and investors are often motivated by a range of factors when incorporating these strategies into their long-term portfolios.

For many investors, financial outcomes are only part of the equation. Responsible investing considers how companies conduct business and the impact they have on society and the environment. Investors may support companies that demonstrate sound business practices, thoughtful stewardship, and a commitment to addressing environmental and social challenges, or invest in initiatives designed to create positive societal or environmental impact. Many institutions may also incorporate responsible investing principles as part of their risk management process and fiduciary responsibilities.

Responsible investing encompasses a range of strategies. These include incorporating environmental, community, societal, and corporate governance factors into investment analysis and portfolio construction. It can also involve community investing, which seeks to finance projects and institutions that support underserved communities in the United States and abroad. For investors in publicly traded companies, it may include filing shareholder resolutions and engaging in other forms of shareholder advocacy.

These approaches are often used together to promote responsible business practices and to direct capital toward positive social and environmental outcomes across the broader economy.