Socially Responsible Investment (SRI)

Question 1

What are the 3 channels that investors can use to influence Corporate ESG/SRI? (3)

Answer 1

• Capital Markets: Stock/bond prices may be impacted by SRI via buying and selling due to SRI Screening, ESG news, ESG ranking, or ESG divestment movements. (direct & indirect)
• Corporate Governance: Shareholders can influence corporate ESG through communication with board, proxy votes, or shareholder’s resolution.
• Political Process: As citizen or corporate citizen you could influence regulations and government policy

Question 2

Downside of SRI (1)

Answer 2

• narrowing down the universe of available securities lead to poor performance