Socially-responsible investment

Investors of our country are unaware of the immense benefits that Exchange Traded Funds (ETFs) accrue. The idea is that making profit from unethical corporate practices can be avoided and one of the great alternatives in this regard could be the ETF. But the problem remains that many of these ETFs are marketed with investments that have not been socially responsible in the past. An additional issue is to create enough diversification in the investors' portfolio with a limited number of options. One does not normally want to buy stocks that have been screened, because they are known as negative stocks.

On the other hand, positive or affirmative screening means a portfolio that is more in line with one's faith and trust. Investors can select companies engaged in designing and creating new products, fair employment practices and have a diverse board of directors and are supportive of the environment and human rights. Given the time necessary to properly analyse each of the elements, it is realistic to combine a well-invested environmental, social and governance fund with several individual, positive-screened companies.

In order to be a socially-conscious investor, one has to play an active role in determining his/her investment portfolio.

The government and the regulatory authorities should, therefore, come forward to encourage the investors to invest in socially-responsible companies and avoid the previously known negative companies.

Sk. Shamim Iqbal

Research & Development Unit

First Security Islami Bank Ltd

[email protected]