At iforchange, we regard social investments to be investments that are not only about finance, but also explicitly seek to create positive social or environmental impact as a direct consequence of the investment.
At its simplest, it may be lending money to a charity or social enterprise that needs finance in order to be able to grow, deal with cash-flow issues, or pass on risks that are not core to their mission.
More complex social investments may include social impact bonds, more complex forms of debt, or even new shares in a mission-driven company.
The term “socially responsible investment” normally gets used in the context of investment funds – and typically means a traditional investment fund, that is subject to certain positive or negative screenings: for example, only companies that have adequate standards of environmental and social reporting might be considered to be eligible, and all companies working primarily in the areas of alcohol, armaments, tobacco, or fossil fuels might be excluded.
An area of particular interest to many charities and trusts are the Divest campaign and the Divest:Invest movements, which seek to get investors to divest from fossil fuels and invest into climate solutions. See here for more about Divest solutions.
The key difference is that with a socially responsible investment, there is no expectation that your investment will have a direct impact on the company, and the company will not typically be explicitly looking to create positive impact – except as a by-product of their normal commercial operations.