Just Like You, Your Portfolio Can Be Socially Responsible Too

Just Like You, Your Portfolio Can Be Socially Responsible Too

This new type of investing is making waves in the world of finance. So, how do you create a socially responsible portfolio?

Globally, there has been an increase in interest around socially responsible investing. If you are not aware of this concept, let us explain. Socially responsible investing (SRI) is an investment strategy that invests money in companies and funds that have positive social impacts. Socially responsible investments can include investing in a solar energy company and exclude investing in those that make a negative impact, like those that sell addictive substances. This is generally referred to as ESG (Environment Social and Governance) investing.

The demand for ESG investing has been on the rise for a while now. According to a 2019 Morgan Stanley Survey, 85% of individual investors are interested in sustainable investing, up from 75% in 2017. Data by EPFR (Emerging Portfolio Fund Research) showed, as mentioned by CNBC-TV18, SRI has witnessed a record inflow of $168.74 billion in 2020 against an inflow of $63.34 billion in 2019. During the pandemic, investors began to focus on more sustainable investment options.

The United Nations Principles for Responsible Investment (UNPRI) reported a 26% jump in ESG assets in 2021, when compared to a 22% rise in 2019. By March 2021, 601 signatories (asset owners) of the UNPRI group managed over $121 trillion. Global inflows in sustainable funds have surged by 88%, in which Europe has accounted for nearly 80%, followed by the U.S, Asia (excluding Japan), Australia/New Zealand, Japan and Canada.

Demand In India

ESG investing in our country has also been on the rise, with more and more investors choosing to invest in sustainable products. Inflows in ESG mutual fund schemes in India have been estimated to have increased by 76% in 2021, surging from ₹2,094 crore to ₹3,686 crores in the time period 2019-20, as mentioned by The Economic Times from PTI. In 2020, India’s Asset Management Companies have launched schemes that have a clear focus on ESG aspects. 

Building A Socially Responsible Portfolio


The first step is to know whether you are going to be doing this on your own or choose an online platform to do it for you. Robo-advisory firms can create a portfolio for you, which will align with your goals and objectives. These firms will create an ESG portfolio based on your goals and risk appetite.

Finding What’s Important 

Understand what’s important to you and write down your focus. If you don’t want to include the stocks of a tobacco company, then you should create a portfolio that doesn’t have any cigarette manufacturers. However, if you are fine with a company that scores low in the environment category, but has a majority-female lead directors, then you can include that in your outline as well.

Choosing The Instruments 

This is the most important step as it involves a lot of research. You can choose stocks or mutual funds to be part of your portfolio. 

Individual Stocks – If there is a company that you expect to show strong growth, you may want to include it. Apart from factors such as revenue and net income, you may want to see if the company releases a sustainability report you can read, know how diverse their board of directors is and learn how their employees grade the work culture.

You can also head to Koshex to choose a portfolio like clean energy that supports your ideologies and also, helps you earn higher returns.

Mutual Funds – Apart from being an easy way to diversify your portfolio, mutual funds also have a lot of sustainable funds these days. You can go through different fund options to find the ones that align with your narrative. Some funds’ holdings might have companies that are led by women or do not rely on fossil fuels or they focus on building sustainable products.

In The End…

Millennials and Generation Z are becoming more focused on following sustainable practices and supporting ethical businesses. The best way to help sustainable, environmental-focused, and socially responsible companies is by investing in them. Your money will help develop the company, and the more they grow, the more returns you will make. 

If you are thinking about investing in a green portfolio, head to Koshex right away!

Also, what are you doing every day to help the planet or community? Tell us in the comments below…