What Is Socially Responsible
Historically, socially responsible investing (SRI) often meant excluding companies or categories (such as tobacco or firearms) from your portfolio in order to align your investments with your personal beliefs.
Over time, SRI has evolved from just an exclusionary approach into an investment strategy that considers both financial return and an investor’s values, such as seeking out companies with a positive social and/or environmental impact on the world.
Why Socially Responsible
Our Socially Responsible Personal Strategy® utilizes a combination of exclusive and inclusive filters. We take a best-in-class approach to the U.S. equity component of portfolios, seeking out companies doing a better job managing environmental, social, and governance (ESG) issues.
Socially Responsible Personal Strategies include the same benefits as our core Personal Strategies®, such as optimal asset class mixes that aim to maximize return and reduce risk, our Smart Weighting™ methodology within U.S. equities, tax management, and disciplined rebalancing.
What are ESG rankings?
E, S, and G represent the three main pillars used to evaluate the “social responsibility” of companies.
There is no global standard for evaluating ESG metrics, but some third-party firms have established ranking methodologies. Personal Capital chooses to partner with Sustainalytics, a global leader in ESG research and ratings. To learn more about the Sustainalytics methodology, read our article “How ESG Ratings Agencies Work.”