What Is Socially Responsible Investing?
Socially responsible investing is investing motivated by the desire to make a social impact by aligning one’s investment strategy with social causes like homelessness. When an investor is deciding how best to spend their money to make money, there are more considerations on the table than just a good financial return.
Investors are becoming increasingly more particular about how they are spending their funds. Many investors want to impact the world in areas of high need that align with their own values and priorities.
Some of the areas that are drawing ethical investors include:
- Sustainable agriculture
- Renewable energy
- Conservation
- Affordable and accessible basic services – e.g. housing, healthcare, and education
Companies that support social causes or provide services that directly support these causes are great for drawing investors who want to make a social impact.
Why Social Causes Investments Are Increasing
Ethical investment is not a new concept. It has been around for years, yet is showing increasing interest, especially among millennials.
In a recent study by American Century Investments, 63% of UK respondents stated that impact investing is an important factor to consider when investing. Millennials, known for their socially conscious tendencies, are the most likely to be drawn to social cause investments.
Some of the factors impacting the increase in social cause investments include:
- More social awareness of issues – people are more socially aware of opportunities to help
- Increasing desire to make an impact in the world – more awareness brings more desire to help
- Financially sensible – ethical impact investing has proven a financially viable option
- It’s good business – businesses that work to benefit a cause generally do good business
- Tax benefits – businesses that do socially conscious work can benefit from tax relief
Social causes are a rising trend, and there is no shortage of need for those looking to invest. As more and more companies are developing socially conscious practices, investors are able to more readily find companies and causes to support.
Examples of Social Causes Investments
The impact of investors can be seen globally. Investors with vision, entrepreneurs and even first-time investors are seeking out opportunities to make a difference while improving their financial position.
Some areas for social cause investments include:
- Agriculture
- Education
- Energy efficiency
- Environmental
- Healthcare
Globally, these and many other social causes are drawing investors to the companies that work to provide services and assistance to those in need. It has created a ripple effect where companies work to be socially conscious and draw investors to partner with them in making an impact.
How Ethical Investing Is Helping the Housing Crisis
One area, in particular, that is drawing the attention of investors is the housing crisis in the UK. Economic changes in the past decade have caused housing prices to skyrocket while living wages have remained the same, or in some cases decreased. This makes affordable housing difficult to find. Even low-deposit loans have been difficult to manage for homeowners who struggle to make monthly payments on their homes.
Different companies and organisations such as Concept Capital Group have worked to provide affordable housing options while partnering with investors for building low-cost, build-to-let homes. Investing in rental properties is a great way to secure passive income from social causes.
Large developers are overrun with the amount of housing needed, and building costs are higher for larger development companies. In addition, the carbon footprint left by large construction efforts can be damaging as well.
Smaller housebuilders local to certain regions can better offer homes that will meet the needs of each community, however, the demand is very high, and the amount of money offered by the government is not enough to successfully fund what needs to be built. This is where socially conscious investors come into play.
Builders and companies that contract them to sell build-to-let housing frequently call upon investors to support the construction of homes that are needed in an area. Investors that want to get involved in social causes can see direct results of their investment, and get a good financial return as well. This is just one way that socially conscious investors are making a major difference in the UK.
Book a call with one of our investment consultants to learn more about how to invest in social causes.
