Socially responsible investing means that the companies that make up your portfolio adhere to the values of social responsibility. There are many dimensions of what constitutes social responsibility for a company. These would have internal aspects and external aspects. Looking internally to the company would include: having human resource policies and practices that ensure all employees are paid a fair wage and receive a full package of benefits including health care, paid leave, maternity and paternity leave, family compassionate leave and a retirement plan. That the workplace respects human rights and is inclusive of diversity. That discrimination, harassment, sexual harassment or other misconduct are not tolerated. Looking externally it would mean that the goods and services that the company provides to its customers and markets do not have adverse social impacts. So tobacco companies would typically not qualify. More broadly it is about how a company interacts in broader industry and society. A company would have to have robust environmental policies to ensure it doesn’t pollute and it deals responsibly with any waste. It would also mean that a company would only acquire goods and services from other socially responsible suppliers. There are various international standards that companies can follow which would put them in the socially responsible class. Signing up for and complying with the UN Global Compact is another route to social responsibility.
