Skip to main content
SpringerLink
Log in

Are ‘Ethical’ or ‘Socially Responsible’ Investments Socially Responsible?

  • Published:
Journal of Business Ethics Aims and scope Submit manuscript

Abstract

In this article we discuss whether it pays to invest ethically. Our aim is to examine corporate social responsibility from philosophical, moral and practical points of views. We focus on two main issues related to ethical investments. Firstly we discuss the moral dilemma of how capitalism has changed its shape in today’s world and from ‘blaming the business’ there is a general attempt to use the markets to promote ethics values and corporate social responsibility. Secondly, we analyze the growth of ethical investment funds in the UK today, and their performance, and highlight some of the institutional investors involved in the management of ethical funds. We discuss whether ethical investments really succeed in reducing the conflict between profit-making and social responsibility as they promise or whether they use commercial rhetoric and market mechanism to merely sell us our own perceived values back. We conclude that the paper has a key contribution in setting the scene for future research in an area that is evolving and of fundamental importance to companies, investors and various stakeholder groups.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • R. Adams (1991) Changing Corporate Values: A Guide to Social and Environmental Policy and Practice in Britain’s Top Companies Kogan Page London

    Google Scholar 

  • M. K. Addo (1999) Human Rights Standards and the Responsibility of Transnational Corporations Kluwer The Hague

    Google Scholar 

  • A. Argandona (1991) ‘Sponsorship and Charity: The Ethical Arguments’ B. Harvey H. Luikjk Particlevan G. Corbetta (Eds) Market Morality and Company Size. Issues in Business Ethics Kluwer Academic Publishers Dordrecht, The Netherlands

    Google Scholar 

  • Aristotle; 1981, Politics. J. Trevor (ed.) and translated by T.A. Sinclar. Penguin Classics. Middlesex: Penguin Books

  • K. Arrow (1963) Social Choice and Individual Values, end. Ed Yale University Press New Haven

    Google Scholar 

  • InstitutionalAuthorNameAssociation of British Insurers (2003) Disclosure Guidelines on Socially Responsible Investment ABI London

    Google Scholar 

  • N. P. Barry (1998) Business ethics Macmillan Basingstoke

    Google Scholar 

  • T. Beauchamp N. Bowie (Eds) (1979) Ethical Theory and Business Prentice Hall Englewood Cliffs

    Google Scholar 

  • N. Bowie (1982) Business Ethics Prentice Hall Englewood Cliffs

    Google Scholar 

  • N. Bowie (Eds) (2002) The Blackwell Guide to Business Ethics Blackwell Oxford

    Google Scholar 

  • J. R. Boatright (1999) Ethics in Finance Blackwell Oxford

    Google Scholar 

  • Cadbury Sir, Adnan (2002) Corporate Governance and Chairmanship, Oxford University Press, Oxford

  • Carroll, A.: 1991, ‘The Pyramid of Corporate Social Responsibility: Toward the Moral Management of Organizational Stakeholders’. Business Horizons July/August, 39–48

  • J. Cavanagh (1998) Merchants of Drink: Transnational Control of World Beverages Third World Network Penang, Malaysia

    Google Scholar 

  • I. Christie (1991) Profitable Partnerships: A Report on Business Investment in the Community Policy Studies Institute London

    Google Scholar 

  • G. Chryssides J. Kale (1996) Essentials of Business Ethics McGraw-Hill London

    Google Scholar 

  • F. Clairmonte (1988) Mechanics of Finance Capital: Merger Mania and Insider Trading World Council of Churches Geneva

    Google Scholar 

  • Corporate Social Responsibility: A Business Contribution to Sustainable dev. – Luxembourg: Office for Official Publications of the European Communities, 2002

  • R. DeGeorge (1995) Business Ethics EditionNumber4 Macmillan New York

    Google Scholar 

  • R. DeGeorge (Eds) (1999) International Business Ethics: Challenges and Approaches University of Notre Dame Press London

    Google Scholar 

  • InstitutionalAuthorNameEIRIS (2002) The Ethical Investor, Autumn 2002 Ethical Investment Research Service London

    Google Scholar 

  • InstitutionalAuthorNameEIRIS (2004) The Ethical Investor, Autumn 2004 Ethical Investment Research Service London

    Google Scholar 

  • J. Elster K. O. Moene (1990) Alternatives to Capitalism Cambridge University Press Cambridge

    Google Scholar 

  • G. Enderle B. Almon and A. Argandona (Eds) (1990) People in Corporations. Ethical Responsibilities and Corporate Effectiveness. Issues in Business Ethics Kluwer Academic Publishers Dordrecht, The Netherlands

    Google Scholar 

  • O. C. Ferrell (2002) Business Ethics: Ethical Decision Making and Cases EditionNumber5 Houghton Mifflin Boston, Mass

    Google Scholar 

  • R. R. Freeman D. Gilbers (1988) Corporate Strategy and the Search for Ethics Prentice-Hall Englewood Cliffs, NJ

    Google Scholar 

  • P. French (1984) Collective and Corporate Responsibility Columbia University Press New York

    Google Scholar 

  • M. Friedman (1962) Capitalism and Freedom Chicago University Press Chicago

    Google Scholar 

  • Friedman, M.: 1970, ‘The Social Responsibility of Business is to Increase its Profits’. The New York Times, 13 Sep 1970

  • J. G. Fryna (2003) Transnational Corporations and Human Rights Palgrave Macmillan Basingstoke

    Google Scholar 

  • D. Gauthier (1986) Morals by Agreement Clarendon Press Oxford

    Google Scholar 

  • R. H. Gray D. Owen K. Maunders (1987) Corporate Social Reporting: Accounting and Accountability Prentice Hall International London

    Google Scholar 

  • D. Henderson (2001) Misguided Virtue: False Notions of Corporate Social Responsibility Institute of Economic Affairs London

    Google Scholar 

  • Hermes (2002) The Hermes Principles Hermes Pensions Management Limited London

    Google Scholar 

  • Jones, I.: (ed.) 1998, The Role of Business Ethics in Economic Performance (Macmillan, Basingstoke)

  • D. Korten (1999) The Post-Corporate World. Life After Capitalism Kumarian Press West Hardford, CT, USA

    Google Scholar 

  • Kreander, N.: 2002, Ethical Investment, Unpublished PhD thesis, University of Glasgow

  • N. Kreander R. H. Gray D. M. Power C. D. Sinclair (2005) ArticleTitle‘Evaluating the Performance of Ethical and Non-ethical Funds: A Matched Pair Analysis’ Journal of Business Finance and Accounting 32 IssueID7 & 8 1465–1493 Occurrence Handle10.1111/j.0306-686X.2005.00636.x

    Article  Google Scholar 

  • C.A. Mallin (2004) Corporate Governance Oxford University Press Oxford

    Google Scholar 

  • C. A. Mallin B. Saadouni R. J. Briston (1995) ArticleTitle‘The Financial Performance of Ethical Investment Fund’ Journal of Finance and Accounting 22 IssueID4 483–496

    Google Scholar 

  • Mandeville, B.: 1724, The Fable of the Bees. 1970 edition. Philip Harth (ed). (Penguin Books, Middlesex)

  • T. McEwan (2001) Managing Values and Beliefs in Organisations Financial Times Prentice Hall Harlow

    Google Scholar 

  • R. C. Manning (1988) ArticleTitle‘Dismemberment, Divorce and Hostile Takeovers: A Comments on Corporate Moral Personhood’ Journal of Business Ethics 7–8 IssueIDAugust 639–643 Occurrence Handle10.1007/BF00382798

    Article  Google Scholar 

  • T. Mulligan (1988) ArticleTitle‘A Critique of Milton Friedman’s Essay ‘The Social Responsibility of Business Is to Increase its Profits’ Journal of Business Ethics 5 265–269 Occurrence Handle10.1007/BF00383091

    Article  Google Scholar 

  • OECD 1998, Corporate Governance: Improving Competitiveness and Access to Capital in Global Markets, A Report to the OECD by the Business Sector Advisory Group on Corporate Governance, OECD

  • O’Neill, O.: 2001, `Agents of Justice' in Pogge, T (ed.) Global Justice. Blackwell, Oxford

  • E. Parnell (1990) People-Centred Business: PCB’s: What They Are, How They Become Successful Plunkett Foundation for Co-operative Studies Oxford

    Google Scholar 

  • A. Riahi-Belkaoui (1999) Corporate Social Awareness and Financial Outcomes Quorum Books Westport, Conn

    Google Scholar 

  • J. Richter (2001) Holding Corporations Accountable: Corporate Conduct, International Codes and Citizen Action Zed London

    Google Scholar 

  • Schmidheiny, S.: 1996, Financing Change: The Financial Community, Ecoefficiency, and Sustainable (Cambridge, Mass, London)

  • B. Shaw (1988) ArticleTitle‘A Reply to Thomas Mulligan’s ‘Critique of Milton Friendman’s Essay ‘The Social Responsibility of Business to Increase its Profits’ Journal of Business Ethics 7 537–543 Occurrence Handle10.1007/BF00382601

    Article  Google Scholar 

  • H. A. Simon (1979) ArticleTitle‘Rational Decision Making in Business Organizations’ American Economic Review 69 493–513

    Google Scholar 

  • A. Smith (1776) The Wealth of Nations EditionNumber6 Metheuen London

    Google Scholar 

  • R. Solomon (1987) It’s Good Business Harper and Row 1987 New York

    Google Scholar 

  • R. Solomon (1993) ‘Business Ethics’ Peter Singer (Eds) A Companion to Ethics Blackwell Oxford

    Google Scholar 

  • T. Sorrell (2000) Moral Theory and Anomaly Blackwell Oxoford

    Google Scholar 

  • C. Stone (1997) ‘Why the Law Can’t Do It?’ T. Donaldson T. Dunfee (Eds) Ethics in Business and Economics NumberInSeries1 Ashgate/Dartmounth Aldershot

    Google Scholar 

  • InstitutionalAuthorNameSwiss Action Group for International Development/Third World Action Groups (1998) Two Years After the “Nestle Kills Babies” Trial, Business as Usual Thir Bern, Switzerland Switzerland

    Google Scholar 

  • P. Vardy (1989) Business Morality Marshall Pickering London

    Google Scholar 

  • M. Velasquez (1982) Business Ethics Prentice Hall Englewood-Cliffs

    Google Scholar 

  • M. Willmott (2001) Citizen Brands: Putting Society at the Heart of Your Business Wiley Chichester

    Google Scholar 

  • Y. Zakaria (1999) Entrepreneurial Ethics and Trust: Cultural Foundations and Networks in the Making of Modern Africa Ashgate Aldershot

    Google Scholar 

  • E. Zipperstein (1983) Business Ethics in Jewish Law Ktav Publishing House

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Centre for the Study of Global Ethics, University of Birmingham, Priorsfield, 46 Edgbaston Park Road, Birmingham, B15 2RT, U.K.

    Sirkku Hellsten

  2. Centre for Corporate Governance Research, Birmingham Business School, University of Birmingham, Birmingham, B15 2TT, UK

    Chris Mallin

Authors
  1. Sirkku Hellsten
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Chris Mallin
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Sirkku Hellsten.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Hellsten, S., Mallin, C. Are ‘Ethical’ or ‘Socially Responsible’ Investments Socially Responsible?. J Bus Ethics 66, 393–406 (2006). https://doi.org/10.1007/s10551-006-0001-x

Download citation

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10551-006-0001-x

Keywords

Search

Navigation