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Office building ABN AMRO

Concept

Socially Responsible Investment (SRI) consists of enhancing the usual financial criteria applied during the stock picking process with extra-financial filters. These filters enable an assessment of companies’ behaviour in three major areas identified by Environmental, Social and Governance (ESG) criteria.
 


ESG criteria

ESG criteria are the main pillars of socially responsible investment. Depending on the SRI approach adopted by the investment firm, these criteria may be given different weightings. They are defined as follows:

Small tree

Environmental criteria:

The direct or indirect impact of a company’s business on the environment, such as:

  • Greenhouse gas reduction programme
  • A procurement policy slanted towards green energy
  • Reduction in consumption of water, electricity, fuel, plastic, paper, etc. …
Man with a paper

Social criteria:

The direct or indirect impact of a company’s business on stakeholders with regard to universal values (human rights, international labour standards, anticorruption, etc.), for example:

  • A major anti-discrimination policy
  • An advanced programme in favour of diversity
  • A low staff turnover rate within the company
  • An ethical approach to subcontractors
Pig from glass

Governance criteria:

These concern how a company is managed, administered and controlled, particularly its relations with its shareholders, management and board of directors, for example:

  • Highly developed anti-corruption and prevention of money laundering policies
  • Corporate officers’ remuneration policy
  • Signatory of the UN Principles for Responsible Investment (PRI)
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