Difference Between Socially Responsible Investing (SRI) and Environmental, Social and Governance (ESG) Investing

Samual Adams, writing for Advisor Perspectives (12/17/18), explains the difference between SRI and ESG:

“SRI was originally developed to allow investors to avoid companies they disliked for ethical or values-based reasons. This original form of SRI is now called “exclusions” or “negative-screen” investing. Other SRI strategies have been developed, including positive screen or thematic investing, where only companies aligned to the investors’ values are bought. More recently, impact investing has become popular; here investors provide capital to innovative companies working to solve social problems like endemic unemployment or recidivism.” SRI is also known as: “sustainable, responsible and impact investing.”

 Check out the online article for a helpful infographic that distinguishes between ESG, SRI and impact strategies. “Both conventional and ESG strategies aim to maximize financial return for the risk taken. They put financial return first, before any other issues are addressed. The values-driven’ categories… include strategies that consider financial return after the investors’ values have been satisfied.” https://www.advisorperspectives.com/articles/2018/12/17/the-difference-between-sri-and-esg-investing

ESG strategies focus on the inclusion of environmental, social and governance risks and opportunities into traditional financial analysis . ESG is about economic value. SRI is an attempt to incorporate ethics and social concerns into portfolios. SRI is about individual values.”

Read the article for more detailed explanation.
Source: Financial Planning for Women