Advertisement

The Heterogeneity of Socially Responsible Investment

  • Joakim SandbergEmail author
  • Carmen Juravle
  • Ted Martin Hedesström
  • Ian Hamilton
Article

Abstract

Many writers have commented on the heterogeneity of the socially responsible investment (SRI) movement. However, few have actually tried to understand and explain it, and even fewer have discussed whether the opposite – standardisation – is possible and desirable. In this article, we take a broader perspective on the issue of the heterogeneity of SRI. We distinguish between four levels on which heterogeneity can be found: the terminological, definitional, strategic and practical. Whilst there is much talk about the definitional ambiguities of SRI, we suggest that there is actually some agreement on the definitional level. There are at least three explanations which we suggest can account for the heterogeneity on the other levels: cultural and ideological differences between different regions, differences in values, norms and ideology between various SRI stakeholders, and the market setting of SRI. Discussing the implications of the three explanations for the SRI market, we suggest that there is reason to be sceptical about the possibilities of standardisation if not standardisation is imposed top-down. Whether this kind of standardisation is desirable or not, we argue, depends on what the motives for it would be. To the extent that standardisation may facilitate the mainstreaming of SRI, it could be a good thing – but we entertain doubts about whether mainstreaming really requires standardisation.

Keywords

ambiguity business ethics definitions ethical investment heterogeneity mainstreaming responsible investment socially responsible investment standardisation sustainable investment 

Notes

Acknowledgments

We gratefully acknowledge the funding support provided by Mistra, the Swedish Foundation for Strategic Environmental Research. This study is part of a larger programme, `Behavioural Impediments to Sustainable Investment', run in collaboration with researchers from the Department of Psychology and the Centre for Finance, School of Business, Economics and Law at University of Gothenburg, Sweden. We would also like to thank Professor Alan Lewis of the University of Bath (UK) who supervised the qualitative research project in the UK.

References

  1. Anderson, D.: 1996, What has “Ethical Investment” to Do with Ethics? (The Social Affairs Unit, London).Google Scholar
  2. Baue, W.: 2005, ‹Australian Report on Globalization of the Mainstreaming of Socially Responsible Investing’. Socialfunds.com news. Retrieved July 17, 2007 from http://www.socialfunds.com/news/print.cgi?sfArticleId=1880
  3. Beloe, S., J. Scherer and I. Knoepfel: 2004, Values for Money: Reviewing the Quality of SRI Research (Sustainability, London). Retrieved March 15, 2007 from http://www.sustainability-index.com/djsi_pdf/publications/Studies/SustainAbility
  4. Brill, H., J.A. Brill and C. Feigenbaum: 1999, Investing with your values: making money and making a difference (Bloomberg Press, Princeton, NJ).Google Scholar
  5. Brill, J. A. and A. Reder, A.: 1993, Investing from the Heart - the Guide to Socially Responsible Investments and Money Management (Crown Publishers, New York).Google Scholar
  6. van den Brink, T.: 2002, Screening and rating sustainability (Triple P Performance Center, Rotterdam).Google Scholar
  7. Bruyn, S. T.: 1987, The field of social investment (Cambridge University Press, Cambridge).Google Scholar
  8. Camejo, P. (Ed.): 2002. The SRI advantage: why socially responsible investing has outperformed financially (New Society Publishers, Gabriola, BC).Google Scholar
  9. Cooper, M. and B·B. Schlegelmilch: 1993, “Key Issues in Ethical Investment”, Business Ethics: A European Review 2 (4), 213–227.CrossRefGoogle Scholar
  10. Cowton, C. J.: 1993, “Peace Dividends: The Exclusion of Military Contractors from Investment Portfolios”, Journal of Peace Research 30 (1), 21–28. doi: 10.1177/0022343393030001003 CrossRefGoogle Scholar
  11. Cowton, C. J.: 1994, The Development of Ethical Investment Products. in A. R. Prindl and B. Prodhan (eds.), Ethical Conflicts in Finance. Blackwell, Oxford, pp. 213–232.Google Scholar
  12. Cowton, C. J.: 1998, Socially responsible investment. in Chadwick, R. (Eds), Encyclopedia of Applied Ethics. Academic Press, New York, NY, pp. 181–190Google Scholar
  13. Domini, A.: 2001, Socially responsible investing: making a difference and making money (Dearborn Trade, Chicago, IL).Google Scholar
  14. Domini, A. L. and P.D. Kinder: 1986, Ethical Investing (Addison-Wesley, Reading, MA).Google Scholar
  15. Dunfee, T. W.: 2003, “Social Investing: Mainstream or Backwater?”, Journal of Business Ethics 43 (3), 247–252. doi: 10.1023/A:1022914831479 CrossRefGoogle Scholar
  16. Elkington, J.: 1994, “Towards the sustainable corporation: Win-win-win business strategies for sustainable development”, California Management Review, 36, 90–100.Google Scholar
  17. Elkington, J. and S. Beloe: 2000, A Responsible Investment? An Overview of the Socially Responsible Investment for the Institute of Chartered Accountants in England and Wales, British Airways, Dow Chemical, Ford Motor Company and the NatWest Group (London: Centre for Business Performance and Sustainability Ltd). Retrieved December 10, 2007 from http://www.sustainability.com/insight/sri-article.asp?id=138
  18. Entine, J.: 2003, “The myth of social investing”, Organization & Environment, 16 (3), 352–368. doi: 10.1177/1086026603256283 CrossRefGoogle Scholar
  19. Eurosif: 2003, Socially Responsible Investment Among European Institutional Investors. 2003 Report (Eurosif, Paris). Retrieved December 10, 2007 from http://www.eurosif.info/publications/sri_studies
  20. Eurosif: 2006. European SRI Study 2006 (Eurosif, Paris). Retrieved September 7, 2006 from http://www.eurosif.info/publications/sri_studies
  21. Fehrenbacher, S.: 2001, Put Your Money Where Your Morals are: A Guide to Values-Based Investing (Broadman & Holdman Publishers, Nashville, TN).Google Scholar
  22. George, A., N. Edgerton, N. and T. Berry: 2005, Mainstreaming Socially Responsible Investment (SRI): A role for government? (Institute for Sustainable Futures, Sydney).Google Scholar
  23. Guay, T., J. Doh and G. Sinclair: 2004, “Non-governmental organizations, Shareholder Activism, and Socially Responsible Investments: ethical, strategic, and governance implications”, Journal of Business Ethics, 52(1), 125–139. doi: 10.1023/B:BUSI.0000033112.11461.69 CrossRefGoogle Scholar
  24. Guyatt, D.: 2005, Investment Beliefs Relating to Corporate Governance and Corporate Responsibility (Marathon Club, London). Retrieved November 2, 2007 from www.marathonclub.co.uk/Docs/SurveySummary.pdf
  25. Harrington, J. C.: 1992, Investing with your conscience: How to achieve high returns using socially responsible investing (John Wiley & Sons, New York).Google Scholar
  26. Judd, E.: 1990, Investing with a Social Conscience (Pharos Books, New York)Google Scholar
  27. Juravle, C. and A. Lewis: Forthcoming, `The Role of Championship in the Mainstreaming of Sustainable Investment (SI): What Can We Learn from SI Pioneers in the UK?', Organization & Environment Google Scholar
  28. Kiernan, M. 2006, Sustainable Investment Research. in R. Sullivan and C. Mackenzie (eds.), Responsible Investment. Greenleaf Publishing Sheffield, UK, pp. 122–132Google Scholar
  29. Kinder, P. D.: 2004, Values and Money. A Research Practitioner’s Perspective on Values for Money, KLD Research & Analytics. Retrieved September 17, 2007 from http://www.kld.com/resources/papers/SRIevolving050901.pdf
  30. Kinder, P. D. and A. L. Domini: 1997, “Social screening: Paradigms old and new”, Journal of Investing 6 (4), 12–19.CrossRefGoogle Scholar
  31. Kinder, P. D., S.D. Lydenberg and A.L. Domini: 1993, Investing for Good: Making Money While Being Socially Responsible (HarperCollins, New York).Google Scholar
  32. Lang, P.: 1996, Ethical Investment: A Saver’s Guide (Jon Carpenter Publishing, Charlbury, Oxfordshire).Google Scholar
  33. Louche, C. and S. Lydenberg: 2006. ‹Socially Responsible Investment: Differences Between Europe and United States’, Vlerick Leuven Gent Working Paper Series 22. Retrieved March 2, 2007 from http://www.vlerick.be/research/workingpapers/vlgms-wp-2006-22.pdf
  34. Lowry, R. P.: 1993, Good Money - A Guide to Profitable Social Investing in the ‹90s (W. W. Norton, New York).Google Scholar
  35. Mackenzie, C.: 1997, Ethical Investment and the Challenge of Corporate Reform. Unpublished Doctoral Dissertation, University of Bath, Bath, UKGoogle Scholar
  36. Melton, J. and M. Keenan: 1994, The Socially Responsive Portfolio: Balancing Politics and Profits (Probus Publishing, Chicago).Google Scholar
  37. Mercer Investment Consulting: 2005, A climate for change: a trustee’s guide to understanding and addressing climate risk (The Carbon Trust: London).Google Scholar
  38. Michelson, G., N. Wailes, S. van der Laan and G. Frost: 2004, “Ethical Investment Processes and Outcomes”, Journal of Business Ethics, 52(1), 1–10. doi: 10.1023/B:BUSI.0000033103.12560.be CrossRefGoogle Scholar
  39. Miller, A. J.: 1991, Socially responsible investing: how to invest with your conscience (New York Institute of Finance, New York).Google Scholar
  40. Monahan, M.: 2002, “The Ethics of Socially Responsible Investing”, Business and Professional Ethics Journal 21 (3–4), 27–46.Google Scholar
  41. Monks, R. A. 2002, Introduction. in P. Camejo (ed.), The SRI Advantage. New Society Publishers, Gabriola Island, BC, pp. xiii-xix.Google Scholar
  42. Munnell, A. H. and A. Sundén: 2005, “Social Investing: Pension plans should just say ‹No’”. in J. Entine (ed.), Pension Fund Politics. AEI Press, Washington, D.C.Google Scholar
  43. O’Rourke, A.: 2003, “The message and methods of ethical investment”, Journal of Cleaner Production, 11, 683–693. doi: 10.1016/S0959-6526(02)00105-1 CrossRefGoogle Scholar
  44. Owen, D. L.: 1990, “Towards a Theory of Social Investment: A Review Essay”, Accounting, Organizations and Society 15 (3), 249–65. doi: 10.1016/0361-3682(90)90007-H CrossRefGoogle Scholar
  45. Porter, M. and M. Kramer: 2006, ‹Strategy & Society – The Link Between Competitive Advantage and Corporate Social Responsibility’, Harvard Business Review December, 78–92Google Scholar
  46. Powers, C. W.: 1971, Social Responsibility & Investments. Abingdon Press, Nashville.Google Scholar
  47. Powers, C. W. and J.P. Gunnemann: 1969, “Institutions, Investments and Integrity”, The Christian Century January 29, 144–48.Google Scholar
  48. Rowley, T. and S. Berman: 2000, “A brand new brand of corporate social performance”, Business & Society 39, 397–418. doi: 10.1177/000765030003900404 CrossRefGoogle Scholar
  49. Ryan, L. and M. Schneider: 2003, “Institutional investor power and heterogeneity: implications for agency and stakeholder theories”, Business & Society 42, 398–429. doi: 10.1177/0007650303260450 CrossRefGoogle Scholar
  50. Sandberg, J.: 2008, The Ethics of Investing. Making Money or Making a Difference? (Acta Universitatis Gothoburgensis, Gothenburg, Sweden).Google Scholar
  51. Schepers, D. H. and S·P. Sethi: 2003, “Do Socially Responsible Funds Actually Deliver What They Promise? Bridging the Gap Between the Promise and Performance of Socially Responsible Funds”, Business and Society Review 108 (1), 11–32. doi: 10.1111/1467-8594.00006 CrossRefGoogle Scholar
  52. Schlegelmilch, B. B.: 1997, The Relative Importance of Ethical and Environmental Screening: Implications for the Marketing of Ethical Investment Funds. International Journal of Bank Marketing 15, 48–53. doi: 10.1108/02652329710160457 CrossRefGoogle Scholar
  53. Schwartz, M. S.: 2002, “The Ethics of Ethical Investing”, Journal of Business Ethics 43 (3), 195–213. doi: 10.1023/A:1022933912939 CrossRefGoogle Scholar
  54. Sethi, S. P.: 2005, “Investing in socially responsible companies is a must for public pension funds – because there is no better alternative”, Journal of Business Ethics 56 (2), 99–129. doi: 10.1007/s10551-004-5455-0 CrossRefGoogle Scholar
  55. Simon, J. G., C·W. Powers and J.P. Gunnemann: 1972, The Ethical Investor: Universities and Corporate Responsibility (Yale University Press: London).Google Scholar
  56. Social Investment Forum: 2003, “2003 Report on Socially Responsible Investing Trends in the United States” (Social Investment Forum, Washington, DC).Google Scholar
  57. Social Investment Forum: 2006, “2005 Report on Socially Responsible Investing Trends the United States. 10-year review” (Social Investment Forum, Washington, DC).Google Scholar
  58. Sparkes, R.: 1995, The ethical investor (Harper Collins, London).Google Scholar
  59. Sparkes, R.: 2001, “Ethical investment: Whose ethics, which investment?”, Business Ethics: A European Review 10 (3), 194–205.CrossRefGoogle Scholar
  60. Sparkes, R.: 2002, Socially responsible investment: A global revolution (Wiley, Chichester, UK).Google Scholar
  61. Sparkes, R. and C.J. Cowton: 2004, “The maturing of socially responsible investment: A review of the developing link with corporate social responsibility”, Journal of Business Ethics 52(1), 45–57. doi: 10.1023/B:BUSI.0000033106.43260.99 CrossRefGoogle Scholar
  62. Sullivan, R. and C. Mackenzie: 2006, Responsible investment (Greenleaf Publishing, Sheffield, UK).Google Scholar
  63. Suranyi, M.: 1999, Blind to Sustainability? Stock Markets and the Environment (Forum for the Future, London).Google Scholar
  64. Ward, S.: 1991, Socially Responsible Investment (Directory of Social Change, London)Google Scholar

Copyright information

© Springer Science+Business Media B.V. 2008

Authors and Affiliations

  • Joakim Sandberg
    • 1
    Email author
  • Carmen Juravle
    • 2
  • Ted Martin Hedesström
    • 3
  • Ian Hamilton
    • 4
  1. 1.Department of PhilosophyUniversity of GothenburgGothenburgSweden
  2. 2.Department of PsychologyUniversity of BathBathU.K.
  3. 3.Department of PsychologyUniversity of GothenburgGothenburgSweden
  4. 4.Umeå School of BusinessUmeå UniversityUmeåSweden

Personalised recommendations