Tessa Hebb, Céline Louche and Heather Hachigian
The objective of this chapter is twofold. It first introduces the theme of the book. There are many ways of looking at socially responsible investment (SRI). It can be viewed as a…
Abstract
Purpose
The objective of this chapter is twofold. It first introduces the theme of the book. There are many ways of looking at socially responsible investment (SRI). It can be viewed as a financial product where the financial performance is the outmost important aspect and cannot be compromised. Or it can be regarded as a force for change to promote and stimulate a more sustainable development. In this chapter we provide a literature review on SRI especially on the notion of the impact and how it has been addressed so far in the literature. The second objective of the chapter is to provide an overview of the volume by introducing each chapter.
Methodology
This chapter reviews the literature on SRI as well as the chapters included in this volume.
Findings
If SRI is about making a change toward sustainability, we ought to study its societal and environmental impacts. Although scholar articles on SRI have gained importance in the two last decades, very little is known on its impact. Research has developed from a narrow concern with negative screening and divestment in isolated cases to a rigorous analysis of its financial performance across a range of ethical and ESG issues. While we have identified some studies that are beginning to explore the potential impact of SRI for society, this remains a crucial area to explore.
Originality/value of the chapter
The chapter contributes to the debates on the societal impact of SRI, a debate that needs to be continued even if or just because it raises some fundamental questions that are complex and difficult but also necessary to advance SRI.
Details
Keywords
Socially responsible investment (SRI) engagement currently performs a variety of supportive regulatory functions such as reframing norms, establishing dialogue and providing…
Abstract
Purpose
Socially responsible investment (SRI) engagement currently performs a variety of supportive regulatory functions such as reframing norms, establishing dialogue and providing resources to improve performance, however corporate responses are voluntary. This chapter will examine the potential gains in effectiveness for SRI engagement in a responsive regulatory regime.
Approach
Global warming is a pressing environmental, social and governance (ESG) issue. By using the example of climate change the effectiveness of SRI engagement actors and the regulatory context can be considered. This chapter builds the conceptual framework for responsive regulation of climate change.
Findings
SRI engagement may face resistance from corporations due to its voluntary nature and conflict with other goals. Legitimacy and accountability limit the effectiveness of SRI engagement functioning as a voluntary regulatory mechanism. This chapter argues that the effectiveness of SRI engagement on climate change could be enhanced if it served as part of a responsive regulation regime.
Practical implications
Engagement is used by SRIs for ESG issues. A comprehensive regulatory regime could enhance corporate adaptation to climate change through increasing compliance with SRI engagement. The implication for SRI practitioners is that lobbying for a supportive regulatory regime has a large potential benefit.
Social implications
Responsive regulatory policy involves both support and sanctions to improve compliance, enhancing policy efficiency and effectiveness. There are potentially large net social benefits from utilising SRI engagement in a regulatory regime.
Originality of chapter
In seeking to re-articulate voluntary and legal approaches this research addresses a gap in the literature on climate change regulation.
Details
Keywords
This chapter interrogates the idea that Socially Responsible Investment (SRI) is ‘making the world a better place’. It explores the issue of the societal impacts of SRI by…
Abstract
Purpose
This chapter interrogates the idea that Socially Responsible Investment (SRI) is ‘making the world a better place’. It explores the issue of the societal impacts of SRI by addressing five main questions: (1) Is SRI a viable solution to society’s problems? (2) What are the impediments and limits to SRI’s ability to make a difference in society? (3) Where is ‘ethics’ in SRI? (4) How do we measure societal impacts of SRI? and (5) What is the future of SRI?
Methodology
This chapter is a reflective piece debating the societal impacts of SRI. For the purpose of this chapter, a focus group was organised and interviews were conducted involving both academics and practitioners.
Findings
The chapter highlights and discusses several items that can either enhance or on the contrary hinder the societal impacts of SRI. Some of them are related to understanding of SRI, some concern the practice of SRI, while others are more of an epistemological nature. Based on the discussion, we propose three points of leverage that can enhance the capacity and ability of SRI to create change.
Research implications
The chapter is a call for more research on the societal impacts of SRI. Research in SRI has dominantly focused on the technicalities of the activity and the financial implications, but has hardly touched upon the question of the societal impact.
Practical implications
There are three primary managerial implications highlighted in this chapter: rethink the notion of fiduciary duties, strengthen the interaction between asset owners and asset managers, and encourage changes in public policy.