Wealth management: what is socially responsible investment?

To choose their investments, more and more French people do not rely only on financial criteria. Wealth management firms therefore offer their clients socially responsible investments. It is therefore a question of investing in companies which care about the environmental impact of their decisions and which take social, ethical and long-term governance issues into account in their strategy.

Taking into account specific criteria

Your wealth management firm can offer you a first category of responsible investment. It concerns financial products which must combine profitability and the consideration of non-financial criteria.

You will thus invest your money in companies which limit their greenhouse gas emissions or which recycle their waste. Apart from these ecological concerns, the companies chosen must also have social objectives. This could be, for example, the employment of people with disabilities.

Finally, they stand out for their exemplary governance, making it a point of honor to fight against corruption or to specify in full transparency the remuneration of directors. Compliance with all these criteria may give rise to a specific certification, called the SRI label.

There are also other labels, which guarantee that such and such an investment can be considered a socially responsible investment. Some attest that the money is invested in environmentally conscious companies, others guarantee that it is placed in companies which, in their governance, insist on values ​​such as transparency or solidarity.

Exclusive investments

The socially responsible investment offered by your wealth management firm can take another form. If you so wish, he can direct you to companies that clearly prioritize environmental issues.

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So you will have to invest your money in companies focusing on renewable energies or recycling recovered materials. You can be sure that these funds will be invested in companies whose primary concern is to reduce the impact of their activity on the environment.

There is a slightly different approach, but it is also a choice of the investor. Indeed, he does not intend to invest in companies whose object seems to him morally questionable.

In this case, the wealth management firm will not offer him to invest his money in companies manufacturing weapons or cigarettes. Groups managing gambling as well as companies involved in the nuclear process or specializing in the production of GMOs are also excluded from the scope of these socially responsible investments.

Shareholder engagement

Finally, socially responsible investment can concern companies that let investors speak. They can therefore influence the company’s policy, in the direction of better taking into account its ecological and social responsibility.

The requests will relate, for example, to a reduction in greenhouse gas emissions or to the prohibition of dealing with a company employing children or of setting up in a country that violates human rights.

These claims can be expressed directly. But they mainly go through the right of investors, who are also shareholders, to vote at general meetings called on a regular basis.

These issues are sometimes put on the agenda by the companies themselves. But such voluntarism is quite rare. These subjects have no real chance of being studied unless the shareholders themselves can include them in the program of the general meeting.

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What is sometimes called shareholder activism is an integral part of socially responsible investing. But he is better known in the Anglo-Saxon world, and in particular in the United States, than in Europe.

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