Socially responsible investing has become a hot topic in recent years. As a result, many companies are now offering socially responsible investment funds to meet the needs of investors. But what exactly are socially responsible bonds?
Are they the same as ethical bonds? Essentially, yes. Socially responsible and ethical bonds are similar in the following ways.
1. Core Values
Socially responsible bonds and ethical bonds are bond investments with a conscience. Socially responsible bonds are from only companies whose operations align with the social guidelines set by the fund manager. For instance, bonds within this class could be dedicated to companies that protect the environment, advance equality, promote peace, and foster sustainable development. Generally, their products and services aim to improve quality of life.
On the other hand, ethical bonds comprise companies whose revenues do not result from unethical activities like gambling, arms, tobacco, or animal testing. So, both bonds’ core values are similar. Moreover, they represent companies whose morals and ethics align with a fund manager’s guidelines as well as the moral code of the investor.
2. Social Impact
Socially responsible and ethical bonds highly regard social impact. Both strive to work with companies whose operations do not negatively impact the environment, employees, or community. Ideally, companies should be socially conscious. Regardless of a company’s promising financial gains, it may not be held by a fund manager if its activities fall short of the social guidelines.
3. ESG
Since socially responsible and ethical bonds are bonds with a conscience, they both look into the ESG considerations of a company before the company enters the fund. You cannot downplay environmental, social, and governance factors in ethical investing. Their adherence shows that a company’s activities lean towards community improvement and sustainability. In addition, most companies who adhere to environmental, social, and governance practices can improve their returns.
So, these bonds consider companies that protect the environment by reducing emissions and investing in clean energy sources. Socially responsible and ethical bonds will also avoid companies with negative environmental impacts, like coal mining.
In addition, they consider companies interested in inclusion, racial justice, and equality. Such practices improve the well-being of a community and a company’s employees.
4. Investor-Centric
Unlike investments, where a business doesn’t care much about its investors, socially responsible and ethical bonds are centered on the investor. This means that the fund manager only holds funds from companies whose values and ethics align with the investors. So, at their core, it’s all about you. Fund managers find investments that resonate and align with your world’s ethical view by identifying those values and why they matter to you. There is a wide variety of such companies, like those with female leaders or that support the rights of the LGBT community.
Conclusion
Socially conscious investing has been rapidly growing, causing the formation of new investment vehicles and funds. So, if you are looking for investments to add to your portfolio, socially responsible and ethical bonds are an ideal investment opportunity for every ethical investor. By the time they get into a fund, these companies have been socially and financially reviewed to meet your investment needs.
