What does Socially Responsible Investing (SRI) consider when evaluating investments?

Socially Responsible Investing (SRI) takes into account sustainability criteria alongside financial performance when evaluating investments. This approach means that SRI looks beyond just the potential financial returns and incorporates environmental, social, and governance (ESG) factors into investment decisions. Investors who engage in SRI aim to choose companies and projects that align with their ethical values, such as those promoting sustainability, social justice, and responsible governance.

For instance, an SRI investor might prefer to invest in a company that actively reduces its carbon footprint, treats its employees fairly, and maintains transparency in its operations, even if another investment could potentially yield higher financial returns but does not meet these ethical or sustainability criteria. This holistic evaluation helps foster responsible corporate behavior and can lead to long-term sustainable success for both investors and society.

The other options do not accurately capture the essence of SRI. Focusing solely on potential return on investment ignores the ethical implications of where and how money is invested. Considering market volatility and trends pertains to timing and speculation but lacks the depth of incorporating social or environmental impacts. While compliance with government regulations is important, it does not encompass the broader social objectives that SRI promotes.