Skip to main content
SpringerLink
Log in

SRI: An Insight on the Evolution of Its Definition and a Focus on the European ESG Regulation

  • Chapter
  • First Online:
ESG Integration and SRI Strategies in the EU

Part of the book series: Palgrave Studies in Impact Finance ((SIF))

  • 628 Accesses

Abstract

This chapter analyses the evolution of the definition of SRI through a literature review. It will examine how the concept has developed from “Ethical Finance” to “Socially” and “Sustainable Responsible Investment” and highlights the main features of this approach to financial investment, which involves research, analysis, and selection of investments based not only on traditional economic and financial considerations, but also on environmental, social, and corporate governance criteria (ESG criteria). The author also intends to emphasize how this concept has been incorporated into recent European ESG Regulatory Frameworks, specifically the EU Taxonomy (852/2020/EU), which has realized the Action N.1 of the EC Action Plan on Financing Sustainable Growth, issued in March 2018, and the Sustainable Finance Disclosure Regulation (2088/2019/EU). Both regulations aim to increase the disclosure in sustainable activities by Financial Market Participants (MFPs). Additionally, the author considers the proposal presented in literature of a new possible “Classification Scheme” for sustainable investments. The analysis will show the necessity of implementing measures to achieve complete alignment between the various definitions related to the concept of “sustainable investment” in all the considered EU regulations. This alignment would help MFPs to avoid the risk of “greenwashing” as well.

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

Access this chapter

Log in via an institution
Chapter
USD 29.95
Price excludes VAT (USA)
  • Available as PDF
  • Read on any device
  • Instant download
  • Own it forever
eBook
USD 139.00
Price excludes VAT (USA)
  • Available as EPUB and PDF
  • Read on any device
  • Instant download
  • Own it forever
Hardcover Book
USD 179.99
Price excludes VAT (USA)
  • Durable hardcover edition
  • Dispatched in 3 to 5 business days
  • Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Institutional subscriptions

Notes

  1. 1.

    The Brundtland Report, drafted in 1987 by the World Commission on the Environment and Development chaired by the Norwegian G.H. Brundtland, was entitled “Our Common Future” and became famous because it contains the first definition of the “Responsible Development”, that can reconcile economic development with the safeguarding of social and environmental balances (Brundtland, 1987).

  2. 2.

    In June 2018 the EC set up a Technical Expert Group on Sustainable Finance (EU TEG) which produced a Final report on Taxonomy for Sustainable Activities in June 2019. Later, in line with the Taxonomy Regulation (2020/852/EU, art. 20), the EC set up a new permanent expert group, the Platform on Sustainable Finance, or Technical Working Group (TWG), replacing TEG, to assist the EC in developing its sustainable finance policies The TWG started its work on the 16th of October 2020.

  3. 3.

    On the 21th of April 2021, the EU published the EU Taxonomy Climate Delegated Acts, a revised version of the technical criteria first launched in 2020, including the insights received from the EU countries, while on the 30th of March 2022 the Platform on Sustainable Finance presented to the EC its final Report, concerning the other four environmental objectives (from 3 to six), composed by Part A: Methodological Report and by Part B: Technical Annex, where the Part B drafted technical screening criteria for economic activities “taxonomy-aligned” (Platform on Sustainable Finance, 2022).

References

  • Arjaliès, D. L. (2010). A social movement perspective on finance: How socially responsible investment mattered. Journal of Business Ethics, 92, 57–78.

    Article  Google Scholar 

  • Bauer, R., Kodijk, K., & Otten, R. (2005). International evidence on ethical mutual fund performance and investment style. Journal of Banking and Finance, 29, 1751–1767.

    Article  Google Scholar 

  • Becchetti, L., & Paganetto, L. (2003). Finanza etica. Commercio equo e solidale. Donzelli Editore.

    Google Scholar 

  • Bello, Z. Y. (2005). Socially responsible investing and portfolio diversification. The Journal of Financial Research, 28(1), 41–57.

    Article  Google Scholar 

  • Bender, J., Bridges, T. A., He, C., Lester, A., & Sun, X. (2018). A Blueprint for integrating ESG into equity portfolios. The Journal of Investment Management, 16(1), 20. Available at SSRN: https://ssrn.com/abstract=3080381

  • Biggeri, U., Ferri, G., & Ielasi, F. (2021). Finanza etica. Il Mulino.

    Google Scholar 

  • Boffo, R., & Patalano, R. (2020). ESG investing: Practices progress and challenges. OECD Publishing.

    Google Scholar 

  • Brundtland, G. H. (1987). Our common future: Report of the world commission on environment and development. Geneva, UN-Dokument A/42/427.

    Google Scholar 

  • Busch, T., van Hoorn, V., Stapelfeldt, M., & Pruessner, E. (2022, July). Classification scheme for sustainable investment: Accelerating the just and sustainable transition of the real economy (WHITE PAPER). Eurosif and Universitat Hamburg.

    Google Scholar 

  • Camilleri, M. A. (2021). The market for socially responsible investing: A review of the developments. Social Responsibility Journal, 17(3), 412–428. https://doi.org/10.1108/SRJ-06-2019-0194

  • Capelli, P. (2016). Una nuova metrica di rischio ESG (Environmental, social and governance) – per i fondi etici. Bancaria, 10.

    Google Scholar 

  • Capital Group. (2022, June 15). ESG global study 2022. https://www.capitalgroup.com

  • Cavallito, M., Isonio, E., & Meggiolaro, M. (2020). La finanza etica e sostenibile in Europa. Terzo rapporto. Fondazione Finanza Etica.

    Google Scholar 

  • Crifo, P., & Forget, V. D. (2013). Think global, invest responsible: Why the private equity industry goes green. Journal of Business Ethics, 116(1), 21–48.

    Article  Google Scholar 

  • Douglas, E., Van Holt, T., & Whelan, T. (2017). Responsible investing: Guide to ESG data providers and relevant trends. The Journal of Environmental Investing, 8(1), 92–114.

    Google Scholar 

  • Easton, S., & Pinder, S. (2018, July). Theory and empirical evidence on socially responsible investing and investment performance: Implications for fund trustees and their members, Australian centre for financial studies commissioned paper series.

    Google Scholar 

  • European Commission. (2018, March 8). Action plan: Financing sustainable growth.

    Google Scholar 

  • European Commission. (2019, December 11). The European green deal. https://ec.europa-eu/

  • European Securities and Market Authority (ESMA). (2022, February 10). Sustainable finance roadmap 2022–2024. (ESMA30–379–1051)

    Google Scholar 

  • EU High-Level Expert Group (HLEG) on Sustainable Finance. (2018, January 31). Financing a sustainable European economy: Final report.

    Google Scholar 

  • Eurosif. (2014, November). European SRI study. https://www.eurosif.org

  • Eurosif. (2016, November). European SRI study. https://www.eurosif.org

  • Eurosif. (2018, November). European SRI study. https://www.eurosif.org

  • Eurosif. (2021). Eurosif Report 202: Fostering investor impact placing it at the heart of sustainable finance. https://www.eurosif.org

  • Eurosif. (2022, June). EU sustainable finance & SFDR: Making the framework fit for purpose. Eurosif policy recommendations for article 8 & 9 product labels. https://www.eurosif.org

  • EUROSTAT. (2017, November). Sustainable development in the European Union: Monitoring report on progress towards the SDGs in an EU context. http://ec.europa.eu/Eurostat

  • Ferri, G., & Acosta, B., A. (2019, July). Sustainable finance for sustainable development (Working Paper no. 30). CERBE (Center for Relationship Banking and Economics)—LUMSA University.

    Google Scholar 

  • Ferri, G., & Intonti, M. (2018). SRI Funds. I fondi eticamente orientati e la finanza sostenibile. Aracne.

    Google Scholar 

  • Forum for Sustainable Finance. (2014). L’investimento sostenibile e responsabile: una definizione al passo con i tempi. https://www.finanzasostenibile.it

  • Forum for Sustainable Finance (2019). L’Unione Europea e la finanza sostenibile. Impatti e prospettive per il mercato italiano, presented at SRI Week 2019. https://www.finanzasostenibile.it

  • Forum for Sustainable Finance (2020), PMI italiane e sostenibilità, presented at SRI Week 2020. https://www.finanzasostenibile.it

  • Fung, H. G., Law, S. A., & Yau, J. (2010). Socially responsible investment in a global environment. Edward Edgar Publishing.

    Google Scholar 

  • GIIN (Global Impact Investing Network). (2017). Annual impact investor survey (17th ed.). https://thegiin.org/

  • GSIA (Global Sustainable Investment Alliance). (2018). Global sustainable investment review. http://www.gsi-alliance.org/

  • Hanks, J. (2015). Responsible investment banking and asset management: Risk management frameworks, soft law standards and positive impacts. In K. Wendt (Ed), Responsible investment banking: Risk management framework, sustainable financial innovation and soft law standards (pp. 545–561). Springer.

    Google Scholar 

  • Ielasi, F., & Rossolini, M. (2019). Responsible or thematic? The true nature of sustainability-themed mutual funds. Sustainability, 11(12), 1–17. https://doi.org/10.3390/su11123304

  • In, F., Kim, M., Park, R. J., Kim, S., & Kim, T. S. (2014). Competition of socially responsible and conventional mutual funds and its impact on fund performance. Journal of Banking & Finance, 44, 160–176.

    Article  Google Scholar 

  • Lyon, T. P., & Marxwell, J. W. (2011). Greenwash: Corporate environmental disclosure under threat of audit. Journal of Economics & Management Strategy, 20(1), 3–41.

    Article  Google Scholar 

  • MainStreet Partners. (2022, February). ESG barometer Report. https://mspartners.org

  • Morningstar. (2021). The EU sustainable finance disclosure regulation. London. https://morningstar.com

  • Nitsche, C., & Schröder, M. (2015). Are SRI funds conventional funds in disguise or do they live up to their name? (Discussion Paper No. 15–027). ZEW Centre for European Economic Research. https://papers.ssrn.com

  • Official Journal of the European Union. (2020). Final taxonomy regulation (2020/852/EU). https://ec.europa-eu/

  • Platform on Sustainable Finance (Technical Working Group). (2022, March). Part A: Methodological report. https://finance.ec.europa.eu/

  • PRI (2022), Reporting framework glossary. https://www.unpri.org/

  • Puaschunder, J. M. (2016). On the emergence, current state, and future perspectives of Socially Responsible Investment (SRI). Consilience: The Journal of Sustainable Development, 16(1), 38–63, Columbia Univ.

    Google Scholar 

  • Puaschunder, J. M. (2017). Ethical, environmental, social and governance-oriented investments. Archives of Business Research, 5(8), 151–159.

    Google Scholar 

  • Quirici, M. C. (2013). Dalla crisi finanziaria alle opportunità della finanza etica. In (a cura di) M. Berti, A. Bianchi, G. Conti, D. Manetti, M. Merger, & V. Pinchera, Studi in ricordo di Tommaso Fanfani (vol. II, pp. 687–709). Pacini Editore e Fondazione Piaggio.

    Google Scholar 

  • Quirici, M. C. (2020). The increasing importance of Green Bonds as instruments of impact investing: Towards a new European standardisation. In M. La Torre, H. Chiappini (Eds.), Contemporary issues in sustainable finance. Creating an efficient market through innovative policies and instruments (pp. 177–203). Series Palgrave studies in impact finance, Palgrave Macmillan.

    Google Scholar 

  • Quirici, M. C. (2021). Investimenti SRI e Corporate Reputation nell’approccio dei diversi soggetti coinvolti: A literature review. In P. Ferretti (a cura di), La Corporate Reputation. Alcuni driver di sviluppo (pp. 161–206). Giappichelli.

    Google Scholar 

  • Renneboog, L., Ter Horst, J., & Zhang, C. (2008). The price of ethics and stakeholder governance: The performance of socially responsible mutual funds. Journal of Corporate Finance, 14, 302–322.

    Article  Google Scholar 

  • Revelli, C., & Viviani, J. L. (2015). Financial Performance performance of socially responsible investing (SRI): What have we learned? A meta-analysis. Business Ethics A European Review, 24(2), 158–185.

    Article  Google Scholar 

  • Shiller, R. (2000). Irrational Exuberance. Princeton.

    Google Scholar 

  • Schöltens, B., & Sievänen, R. (2013), Drivers of socially responsible investing: A case study of four Nordic countries. Journal of Business Ethics, 115 (3), 605–616. Available at https://www.jstor.org/stable/42002005

  • Sen, A. K. (1991). Denaro e valore. Etica ed economia della Finanza. Edizioni dell’Elefante.

    Google Scholar 

  • Signori, S., Rusconi, G., & Dorigatti, M. (2005). Etica e Finanza. Franco Angeli.

    Google Scholar 

  • Sullivan, R., & Mackenzie, C. (a cura di). (2006), Responsible investment. Taylor & Francis.

    Google Scholar 

  • Townsend, B. (2020). From SRI to ESG: The origins of socially responsible and sustainable investing. The Journal of Impact and ESG Investing, 1(1), 10–25.

    Article  Google Scholar 

  • United Nations. (2015, September). Transforming our world: The 2030 agenda for sustainable development. https://www.un.org/

  • UNEP (United Nations Environment Programme). (2021). Emission Gap Report 2021. https://wedocs.unep.org/

  • US SIF. (2018). Report on US sustainable, responsible and impact investing trends. https://www.ussif.org

  • VIGEO-EIRIS. (2016, October). Green, social and ethical funds in Europe.

    Google Scholar 

  • Von Der Leyen, U. (2019). My agenda for Europe: Political guidelines for the next European Commission 2019–2024. European Commission.

    Google Scholar 

  • Weber, O., & Feltmate, B. (2016, July 16), Sustainable banking and finance managing the social and environmental impact of financial institutions. University of Toronto Press.

    Google Scholar 

  • Yan, S., Ferraro, F., & Almandoz, J. (2019). The rise of socially responsible investment funds: Tthe paradoxical role of the financial logic. Administrative Science Quarterly, 64(2), 466–501.

    Article  Google Scholar 

  • World Economic Forum. (2022). The Global Risks Report 2022.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Economics and Management, University of Pisa, Pisa, Italy

    Maria Cristina Quirici

Authors
  1. Maria Cristina Quirici
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Maria Cristina Quirici .

Editor information

Editors and Affiliations

  1. Department of Economics and Management, University of Pisa, Pisa, Italy

    Luca Spataro

  2. Department of Economics and Management, University of Pisa, Pisa, Italy

    Maria Cristina Quirici

  3. Department of Law, University of Pisa, Pisa, Italy

    Gabriella Iermano

Rights and permissions

Reprints and permissions

Copyright information

© 2023 The Author(s), under exclusive license to Springer Nature Switzerland AG

About this chapter

Check for updates. Verify currency and authenticity via CrossMark

Cite this chapter

Quirici, M.C. (2023). SRI: An Insight on the Evolution of Its Definition and a Focus on the European ESG Regulation. In: Spataro, L., Quirici, M.C., Iermano, G. (eds) ESG Integration and SRI Strategies in the EU. Palgrave Studies in Impact Finance. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-36457-0_4

Download citation

  • DOI: https://doi.org/10.1007/978-3-031-36457-0_4

  • Published:

  • Publisher Name: Palgrave Macmillan, Cham

  • Print ISBN: 978-3-031-36456-3

  • Online ISBN: 978-3-031-36457-0

  • eBook Packages: Economics and FinanceEconomics and Finance (R0)

Publish with us

Policies and ethics

Search

Navigation