Matters that change the world positively are worth investing in. Investing in projects such as collecting trash and volunteering in a healthcare facility is socially responsible investing. SRI has been attracting more investors from all corners of the globe.
The current report shows that the number of investors willing to invest in SRI has skyrocketed. The 2009 report shows that more than 80% of individual investors are passionate about sustainable investing. Keep reading to learn more about socially responsible investing and socially responsible bonds.
What is Socially Responsible Investing?
“Socially responsible investing” aims to create financial profits and bring social transition for an investor. Some of these investments are firms that contribute to changing people’s lives positively. Another example is a solar energy firm that helps investors and society to cut down energy bills and not pollute the environment.
SRI is also called sustainable or ethical investing. This investment applies practices with a framework of governance aspects that are sustainable and responsible. Other SRI strategies involve both social and governance elements for guidance.
What are Socially Responsible Bonds?
Bonds are fixed-income tools in the form of a debt that investors make to a borrower. Sovereign governments, municipalities, and states commonly use these tools to fund projects and other operations. Socially responsible bonds are bonds whose returns are for supporting sustainable projects that benefit the community.
These bonds are used to accomplish environmental and social-based tasks that will positively change people’s lives. Examples of common socially responsible bonds include green bonds; most investors who want to change people’s lives typically invest in socially accountable bonds.
Green Bonds
Green bonds are similar to standard bonds, but the money contributed by the investors is used to fund renewable energy sources, green construction projects, or any environmental program meant to change the environment positively. They operate like blue bonds used in funding water and environmental-related programs.
Green bonds attract most investors with a passion for transforming the environment positively. To invest in green bonds, you need to define your purpose precisely. This way, any investor will understand very well the projects to support. These bonds also have tax incentives that have recently drawn the attention of many global investors.
Socially Responsible Bonds Features
Issuance of socially responsible bonds is done without abiding by the laws and regulations but by non-binding global guidelines. These guidelines apply to all the socially responsible bonds across different states.
Also, the standards for evaluating bond eligibility apply to socially responsible bonds. Some of the main features are
- Requirements on the application to track proceed
- Particular standards on the bonds eligibility of climatic-based projects
- Independent verification process
- Constant procedures
- Independent climatic bonds certification
Conclusion
Socially responsible bonds play a huge role in addressing social and economic problems to transform the environment positively. These bonds do not only save on energy costs, but they also safeguard our environment and enhance social values. Additionally, investing in these bonds fosters sustainable economic growth, raising the country’s gross domestic product.