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Ethical Investment and the Challenge of Corporate Reform - A critical assessment of the procedures and purposes of UK ethical unit trusts

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Abstract

There are 30 ethical investment funds in the UK, managing 1.3bn of assets on behalf of150,000 investors. Just 13 years ago there were none. One goal of ethical investment isto allow people to invest in the stockmarket while not supporting companies withunethical practices. The other is to persuade such companies to reform. I offer a detailedcase-study of the leading ethical fund, Friends Provident Stewardship, which describesthe `screening" procedures used to achieve these two goals....

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... called Christian Concern for South Africa (CCSA) was founded in the UK in 1973. 10 This group campaigned and lobbied banks and investors on the South Africa issue; members of this group were later involved in founding the Ethical Investment Research Service (EIRiS) and subsequently the Ecumenical Committee for Corporate Responsibility (Sparkes, 1995;Mackenzie, 1997). 11 EIRiS was initially set up by grants from the Church of England, the Church of Wales, the Methodists, the Presbyterian Church of Ireland and the Society of Friends and charities such as Oxfam, the Rowntree Charitable Trust and the Rowntree Social Services Trust (Mackenzie, 1997), however EIRiS has been self financing since 1992. ...
... 10 This group campaigned and lobbied banks and investors on the South Africa issue; members of this group were later involved in founding the Ethical Investment Research Service (EIRiS) and subsequently the Ecumenical Committee for Corporate Responsibility (Sparkes, 1995;Mackenzie, 1997). 11 EIRiS was initially set up by grants from the Church of England, the Church of Wales, the Methodists, the Presbyterian Church of Ireland and the Society of Friends and charities such as Oxfam, the Rowntree Charitable Trust and the Rowntree Social Services Trust (Mackenzie, 1997), however EIRiS has been self financing since 1992. The majority of the UK ethical funds use the services of EIRiS (EIRiS, 2000). ...
... One can conclude with Gray et al. (1996) that "in the UK…religious groups were to the fore in the development of the social investment movement…" (p.246). However this observation seems 10 This followed the publication of a report advocating shareholder action on companies operating in South Africa by the British Council of Churches (Mackenzie, 1997). 11 Some activists in CCSA had hoped that EIRiS would actively campaign and engage in shareholder activism. ...
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While the literature contains a number of studies of ethical investment funds, relatively little is known about church investment processes and practices. This paper attempts to address this lacuna by studying the ethical investment programmes of three UK churches: the Methodist Church, the Church of England and the Church of Scotland, The paper initially explores the relationship between the Judeo-Christian church and the development of the ethical investment movement across Europe. This history reveals an engagement both at the institutional and individual level that challenges the assumption of a sacred secular divide now commonplace within the literature (see for example Laughlin
... The received view among a great number of both commentators and proponents of socially responsible investment is that there essentially are two rather different underlying motivations or justifications of SRI as such: one is «consistency» and the other «social change» (cf. Cowton 1998;Domini 2001;Mackenzie 1997). «Consistency» is generally suggested to motivate various kinds of screening efforts, i.e., decisions to actively invest in certain companies and/or to refrain from investing in others based on their social or ethical characteristics. 1 Investors more keen on «social change», however, are then sometimes suggested to be better off engaging in shareholder activism. ...
... It is obviously hard to measure the social effects of shareholder activism in general and the success of these kinds of attempts at influencing managers and directors in particular. Some commentators try to suggest that even though most managers state that they are not influenced by social interest groups, sometimes their behaviour indicates that they are (Mackenzie 1997;Vogel 1978). However, this suggestion could be turned the other way around as well -even though some managers may state that they pay close attention to what social interest groups say, it is not clear whether this actually influences their decisions. ...
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As one of the more progressive facets of the socially responsible investment (SRI) movement, shareholder activism is generally recommended or justified on the grounds that it can create social change. But how effective are different kinds of activist campaigns likely to be in this regard? This article outlines the full range of different ways in which shareholder activism could make a difference by carefully going through, first, all the more specific lines of action typically included under the shareholder activism umbrella and, second, all of the different ways in which it has been suggested that these could influence the activities of commercial companies. It is argued that - although much more empirical research is needed in the area - there are at least theoretical reasons for thinking that it will be difficult to influence companies through the standard actions of filing or voting on shareholder resolutions. However, some alternative strategies open to activists may allow them to increase their efficacy. It is specifically argued that even individual investors could be able to push for corporate change through devising a radically self-sacrificial campaign that manages to get the attention of powerful forces outside the corporate sphere.
... It is deeply agreed by Perks et al. (1992), that a community of institutional investors ethically conducting any investment could leave a success mark upon achieving the target. Investors might be tempted with the ethical jargon been fed to them from time to time but, it has been clearly reported that the return of each and every investment made inclusive of the conventional investment mentioned before is still their primary concern (Mackenzie, 1997). Adewunmi (1998) found that the introduction and adoption of a Code of Ethics in the banking industry in Nigeria ensured the highest level of adherence to good banking practice and a strong commitment to high ethical standards in the banker customer relationship. ...
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The global economic affairs have brought both opportunities and challenges for the commercial arenas in which financial market is also not an exception. But some employees in the financial market put their efforts to achieve their target in ethical manner while the other group aims to fulfill their materialistic gains in any manner even if that is unethical. Such behavior often leads to competitive advantages or ethical crises or challenges in a wide range of financial institutions, which, in turn, reflects the success or failure of an economic and social model based on certain ethical assumptions. With this end in view, this paper aims to review the ethical factors of the banking, insurance and investment industries representing the financial market. The present study found various ethical factors which influence the performance of the financial institutions. Such factors include commitment or their lacking to high ethical standards, authentic as well as false financing schemes or rumors for selfish gain, appropriate or overestimation of projected revenue, evil nexus of employees with customers, punctuality or delay in sanctioning loans, compliance or ignoring financial guidelines, informative as well as untrue advertisements, half-truths and nondisclosure of material information regarding what the policy covers, credibility of the agents and brokers, etc. This study concludes with recommendations of effective solution to enhance ethical reputation of the respective financial entities in one hand and counter the bad impact of the unethical factors on the other hand.
... Alternatively, one might try to actively use one's influence as a shareholder to push corporate management in a certain direction (e.g. Mackenzie 1997;Sandberg 2008;Leys, Vandekerckhove, and Van Liedekerke 2009). ...
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Ethical investors are widely thought of two have two main goals. The negative goal of avoiding their investments to be morally tainted. The positive goal to further a certain ethical value they embrace or some normatively laden idea they hold by investing their money in a certain company. In light of these goals, the purpose of this essay is to provide an account of how we can explicitly include investors’ intentions when conceiving of ethical investment. The central idea is that an investor’s intentions may act as both a negative and a positive qualifier for making investing ethical. If we subscribe to this account, there are interesting upshots with respect to how ethical investing compares to ethical giving as effective altruists construe it.
... La figura 9 recoge de forma ilustrativa los elementos más destacables que diferencian el funcionamiento de los fondos de inversión tradicionales de los FISR (fondos de inversión socialmente responsables), entre los que cabe destacar (Mackenzie, 1997;Brill et al., 2000;Lozano y Albareda, 2001;Harrington, 2003;Schueth, 2003): 1) Política de inversión ética y con responsabilidad social. Es el documento que define los criterios éticos, sociales y medioambientales que forman parte de la política de inversión de RSE de cada fondo. ...
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http://www.indi.gva.es/documents/161328120/161338410/Responsabilidad_Social_Empresa.pdf/44ce3539-6b59-4ad8-be60-5b50f382b4dd
... The first RI funds were launched by religious organisations both in the United States and in Europe (Louche and Lydenberg, 2006 (Mackenzie, 1997). In the US, religious groups initiated the Interfaith Center on Corporate Responsibility (ICCR) in 1971 in response to a concern for the situation in South Africa. ...
Thesis
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It is a general assumption that Religious Organisations (ROs) are driven by religious beliefs and values, whilst multinational corporations (MNCs) are considered to be concerned about their profits, their share price and their reputation. When ROs invest in capital markets, they participate in modern economy and thereby enter a sensitive spectrum of ethical dilemmas. Since ethics is the core business of ROs, they cannot maintain a situation in which their investment portfolio would be in contradiction with those ethics. MNCs on the other hand are operating in the same modern economy, whereby - in their aim for profits and growth - they too have to deal with the ethical dilemmas that occur due to the nature and expansion of their business and the different cultural contexts in which they operate. Business managers and religious investors struggle to define the roles and responsibilities of MNCs when the products and/or activities they provide or invest in have considerable impact on society. The common assumption would be that - in an era of Corporate Responsibility (CR) – the two types of organisations can be positioned at the different ends of the scale from money to ethics. This study provides insight into the struggles of MNCs and ROs and builds on theory that can be used by business and investment managers that have an influence on society through the means of their activities. The study does not compare MNCs with ROs but demonstrates how MNCs - being confronted with social issues - and ROs, being concerned with similar social issues and investing in MNCs, deal with these issues in an era of increased CR. This dissertation is a compilation of several sub-studies that - as a whole - provide insight into the black-box of decision-making of managers and investors in the context of business ethics. The popular assumptions are validated and a more sophisticated understanding of the two different actors manoeuvring in the fields of finance and ethics is provided throughout this doctoral thesis. To download and read the full dissertation: http://repub.eur.nl/pub/93104
... However, the heated debate over whether or not to place a socially responsible investment on top of a conventional investment is still considered a greyshaded area since the final decision would be greatly dependent on investors in general. Investors might be tempted with the ethical jargon been fed to them from time to time but, it has been clearly reported that the return of each and every investment made inclusive of the conventional investment mentioned before is still their primary concern (Mackenzie, 1997). Describing details of the main characteristics of ethical investment in our current modern period, any element of environmental issues, arms, alcohol, gambling and also tobacco are considered a massive rejected-criterion in following the previous suit (Smith, 1996). ...
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Nonetheless, the implications of this study would be able to assist general insurance fund managers to determine the right directions and intentions of placing the funds and to manage it in an ethical manner. This study could also be used as a benchmark for specific investment activities because an ethical source was a main criterion to manage the clients’ funds and income in a good way. Furthermore, the findings offered valuable insights to policy makers in general insurance and to the consumers on the significance of the results.
... The earliest origins of social investing can be traced back to the religious teachings and philosophies of early Christian churches. John Wesley, one of the founding fathers of Methodism, taught that proper use of money was the second most important subject of new testament teaching (Mackenzie, 1997). In 1744, he gave a sermon titled The Use of Money, which outlined the basic tenets of social investing; that fellow Christians should earn all they can, but not at the expense of conscience, or the expense of their neighbors wealth and health. ...
Article
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While many rating systems incentivize firms to improve their performance, I investigate how positive recognition from external stakeholders can lead to reductions in performance, rather than improvements. Drawing upon behavioral and performance feedback theory, I argue that positive ratings can lead firms to decrease their subsequent performance by reducing uncertainty regarding standards of acceptable or appropriate conduct. Assuming that firms will seek to avoid uncertainty, I propose that such ratings can lead high-performing firms to redefine their aspirations and thus reduce their subsequent performance. I test this main hypothesis, as well as several moderating effects, by examining how firms responded to a rating that evaluated their prior philanthropic efforts. My findings suggest that firms recognized for their generosity were, under certain conditions, more likely to subsequently reduce their philanthropic contributions. From a practical perspective, these results highlight the unintended consequences of social ratings and provide further insight for policy makers and stakeholders interested in motivating improvements in corporate social performance.
... Religious organisations have also been very active setting up organisations that have played an instrumental role in the development of RI such as rating agencies. For example, Ethical Investment Research Service (EIRIS) was created in 1983 jointly with the Quakers, the Church of England, the Church of Wales, the Methodists, the Presbyterian Church of Ireland and the Society of Friends and some charities (Mackenzie 1997). In the US, religious groups initiated the Interfaith Center on Corporate Responsibility (ICCR) in 1971 in response to a concern for the situation in South Africa. ...
Article
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Religious organisations are major investors with sometimes substantial investment volumes. An important question for them is how to make investments in, and to earn returns from, companies and activities that are consistent with their religious beliefs or that even support these beliefs. Religious organisations have pioneered responsible investment. Yet little is known about their investment attitudes. This article addresses this gap by studying faith consistent investing. Based on a survey complemented by interviews, we investigate religious organisations’ attitudes towards responsible investment including opinions, practices and the impediments for implementing faith consistent investing. Although our results cannot be generalised because of the non-random character of our sample, six main characteristics of faith consistent investing are drawn: investing is not perceived as being in contradiction with religious values, religious values are important drivers, there is a strong community around faith consistent investing, religious investors are pioneering impact investing, implementing faith consistent investing is not without difficulties, and practices vary across regions. The survey also reveals that faith consistent investing has many commonalities with secular responsible investors.
... The academic writings in the SRI field have built a strong case for institutional investor involvement in the promotion of corporate responsibility from the business ethics perspective (Mackenzie, 1997;Cowton and Crisp, 1998;Sparkes, 2001;Sparkes and Cowton, 2004) drawing from the agency problem literature (Berle and Means, 1932;Jensen and Meckling, 1976;Coase, 1988) through to stakeholder theory (Freeman, 1984). There is also extensive associated literature on the performance implications of SRI and shareholder activism with varying results [5]. ...
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Purpose - This paper seeks to unravel some of the challenges associated with responsible investment from the institutional investor's perspective, focusing on how dominant conventions influence investor behavior and their ability to invest responsibly. Design/methodology/approach - The research draws from three longitudinal case studies that were carried out on UK institutions that have adopted a responsible investment policy. Findings - Evidence of behavioral obstacles to responsible investing were found, including short-termism, gravitation towards defensible decisions and reluctance to integrate corporate responsibility factors into the core investment process. Based on the case study evidence these appear to be driven by the influence of prevailing dominant conventions, reinforced by institutional herding tendencies. Research limitations/implications - The paper introduces some preliminary thoughts as to how conventions might be resisted and changed over time through the institutional herding mechanism. Further research is required (and is currently under way) to more closely examine the potential impact of investor collaboration for challenging dominant conventions. Practical implications - Collaboration amongst institutional investors is key for mobilizing institutional herding tendencies so that responsible investment might get built into conventions. Originality/value - The research combines responsible investment literature with behavioral finance studies on investor behavior, herding tendencies and the influence of conventions. It also illuminates the complexities in investor behavior from which other institutional investors might learn in implementing a responsible investment policy. Keywords Social responsibility, Short-term planning, Conventions Paper type Research paper
... AQ: Please cite Mackenzie (1997) in the text or delete from the list. ...
... The academic writings in the SRI field have built a strong case for institutional investor involvement in the promotion of corporate responsibility from the business ethics perspective (Mackenzie, 1997;Cowton and Crisp, 1998;Sparkes, 2001;Sparkes and Cowton, 2004) drawing from the agency problem literature (Berle and Means, 1932;Jensen and Meckling, 1976;Coase, 1988) through to stakeholder theory (Freeman, 1984). There is also extensive associated literature on the performance implications of SRI and shareholder activism with varying results [5]. ...
Article
Full-text available
This paper seeks to unravel some of the challenges associated with responsible investment from the institutional investor's perspective, focusing on how dominant conventions influence investor behavior and their ability to invest responsibly. The research draws from three longitudinal case studies that were carried out on UK institutions that have adopted a responsible investment policy. Evidence of behavioral obstacles to responsible investing were found, including short-termism, gravitation towards defensible decisions and reluctance to integrate corporate responsibility factors into the core investment process. Based on the case study evidence these appear to be driven by the influence of prevailing conventions, reinforced by institutional herding tendencies. The paper introduces some preliminary thoughts as to how conventions might be resisted and changed over time through the institutional herding mechanism. The research combines responsible investment literature with behavioral finance studies on investor behavior, herding tendencies and the influence of conventions. It also illuminates the complexities in investor behavior from which other institutional investors might learn in implementing a responsible investment policy.
... If this occurred, the share prices of that company would suffer, affecting its cost of equity capital. The argument and evidence for such an indirect effect, however, is weak, chiefly because social criteria are not included in the 'fundamentals' of a company by investment analysts (Mackenzie, 1997). Further, the direction of any signalling effects, should they exist at all, are not guaranteed. ...
Article
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Objectives of socially responsible investment (SRI) are discussed with reference to the two main mechanisms of the SRI 'movement': shareholder advocacy and managed investments. We argue that in their current forms, both mechanisms lack the power to create significant corporate change. Shareholder advocacy has been largely unsuccessful to date. Even if resolutions were successful, shareholder advocacy may still be ineffective if underlying economic opportunities remain. Marketing material and investment prospectuses issued by socially responsible mutual funds (SRI funds) commonly contain the claim that, by affecting corporations' access to capital funding, SRI funds can change corporate practices. This paper makes a contribution by presenting the market share of SRI funds in the regions where they are most developed, being Europe, the U.S. and Australia, to show that this claim is unlikely to eventuate. SRI funds also commonly claim that they will outperform conventional active mutual funds. That the economic performances of both are similar might be explained by their similar portfolio compositions. The paper makes an innovation in the SRI literature by adopting a legitimacy framework to explain the continued presence of SRI funds. To achieve desired social and environmental outcomes, SRI funds are urged to address issues at a more systemic level. A suggested mechanism is the collective lobbying of corporations and, especially, governments. Yes Yes
Chapter
This chapter presents a range of heuristic lessons from the histories of print, telegraphy, and broadcast, focusing on how these technologies have been and remain implicated in exercises of power bearing on specific populations, and how they have been apprehended as harbingers of change. Discussing some “past” communication technologies, it moves backward and forward between centuries and between “older” and “newer” media: for example, between older and newer ways of “doing the books” and the kinds of individuals these practices have helped form. In so doing the chapter explicates how communication technologies are part of governing populations, the formative dimensions of this approach, and the inseparable link between communication technology and the political technology of individuals.
Chapter
Die Frage ob Unternehmen eine gesellschaftliche Verantwortung wahrzunehmen haben, und wenn ja, auf welche Art und Weise, wird seit geraumer Zeit unter dem Schlagwort „Corporate Social Responsibility“ (CSR) kontrovers diskutiert. Die Forderung nach mehr unternehmerischer Verantwortung ist auf der einen Seite den steigenden Ansprüchen von Kunden, Regierungen und außerparlamentarischen Interessengruppen an die gesellschaftliche Rolle von Unternehmen geschuldet. Aber auch auf Unternehmensseite ist die Institutionalisierung von gesellschaftsgerichteten Policies und Maßnahmen bereits weit vorangeschritten.
Article
Socially responsible investment (SRI): selection of investment portfolios with regard to ethical and social criteria in addition to conventional financial considerations, is often considered to bring reduced financial performance, although empirical evidence is inconclusive. Five possible sources of divergence in the performance of socially responsible and conventional investments have been proposed in the literature, and are further examined here. Two proposed mechanisms (the ‘anticipation effect’ and the ‘positive selection effect’) describe firms in which investment is potentially made. Since such opportunities are available to all investors, these are unlikely sources of systematic divergence. Concern (the ‘diversification effect’) that SRI constraints prevent adequate portfolio diversification is shown to be ill founded. The greater proportion of smaller companies in SRI portfolios links to an ongoing debate regarding the ‘small companies effect’, in which smaller companies have at times appeared to have superior (and more recently, inferior) performance, while other studies suggest that this is merely an artefact of the methodology used. It is argued that none of the above provides a basis for expectations of inferior SRI performance. Furthermore, SRI portfolio managers gather additional company information and also increasingly engage in dialogue with companies. It is argued that this ‘information effect’ is a possible source of superior SRI performance.
Article
How do ethical investment funds choose their ethical criteria? How intelligent is this process from an ethical point of view? This paper reports on his field work carried out as part of the Bath University ‘Morals and Money’ Project. After completing this research, Dr. Craig Mackenzie left academia to become ethics development officer at Friends Provident. He can be contacted at 15 Old Bailey, London, EC4M 7AP; c.mackenzie@stewardship.co.uk
Article
3 While most of the attention to date has focused on SRI funds that invest in publicly listed companies, there has also been a wider proliferation of ethical finance products. The offering of ethical current accounts, mortgages, savings, and social investment vehicles for ethical businesses and community development finance institutions (CDFIs) represents a significant extension of the ethical financial landscape. Ethical finance in the UK is now a broad space that encompasses a number of diverse initiatives. Optimists see the growing presence of ethical financial options as a sign that sustainable economic principles are filtering into the mainstream; reflecting consumer demand for enhanced transparency in financial institutions and attention to the social and environmental implications of investment decisions. This paper seeks to examine whether ethical finance challenges the mainstream financial system or represents the latest trend in diversified consumer choice, to remain marginal once the focus has passed on. Perhaps the appeal of ethical finance lies in its alternative status, making it unlikely that its market share will grow beyond that of a niche sector. To explore this question, we need a composite understanding of the UK ethical finance sector with clear indications of its impetus and direction. This paper begins by examining the emergence of ethical finance in the UK. We move on to suggest a much needed taxonomy for the sector, offering a more comprehensive understanding of the structure of ethical finance in the UK. From this basis, we examine the issues that ethical finance seeks to address and, critically, analyse whether ethical finance is delivering on its promises. Significantly, we make
Article
This document provides a subjective categorisation of the responsible investment literature in eight main bodies of literature and twenty-three sub-literature bodies. It is based on a literature scan of twelve relevant bibliographies. Web links to the four most exhaustive among these bibliographies can be found on my web site. As responsible investment appears to represent an increasingly fast growing research area, I will be constantly updating this literature categorisation. Anybody interested in an updated literature list of a main literature body or sub-literature body is welcome to email me as time passes by.
Article
This paper discusses the idea that investors have moral reasons to avoid investing in certain business areas based on their own moral views towards these areas. Some have referred to this as 'conscience investing', and it is a central part of the conception of ethical investing within the socially responsible investment (SRI) movement. The paper presents what is taken to be the main arguments for this kind of investing as they are given by those who have defended it, and discusses the plausibility of these arguments from the point of view of moral philosophy. The paper argues that focusing on the moral views of individual investors is not very fruitful - there are strong reasons to think that investors do not have moral reasons to invest 'with their consciences', or, to the extent that such reasons are allowed, that they are very weak compared with other sorts of moral reasons pertaining to ethical investing.
Article
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.
Article
A critical issue for the future growth and impact of socially responsible investment (SRI) is whether institutional investors are legally permitted to engage in it – in particular whether it is compatible with the fiduciary duties of trustees. An ambitious report from the United Nations Environment Programme’s Finance Initiative (UNEP FI), commonly referred to as the ‘Freshfields report’, has recently given rise to considerable optimism on this issue among proponents of SRI. The present paper puts the arguments of the Freshfields report into some further both empirical and critical perspective, however, and suggests that its findings do not call for very much optimism. The general argument is that while the understanding of fiduciary duty outlined by the Freshfields report seems to allow institutional investors to at least sometimes take some social or environmental considerations into account, the support it gives for SRI is notably contingent and, furthermore, it seems to rule out exactly the kind of SRI which proponents of social responsibility and environmental sustainability should hold in highest regard – proactive cases and socially effective investment strategies. If SRI is to become an important force for corporate social responsibility through its adoption by institutional investors, then, it is suggested that legal reform is needed.
Article
Die vorliegende Arbeit beschäftigt sich mit dem historischen, theoretischen, empirischen und praktischen Verhältnis von Geschäft und Gewissen. Im akademischen Sinn untersucht sie die Anwendung von wirtschaftsethischen Theorien im Bereich der Unternehmensethik. Dabei verbindet sie einen philosophietheoretischen Zugang mit einem analytisch-empirischen Ansatz, bei dem der Transfer von der Theorie zur Praxis abgebildet wird. Dies geschieht durch eine Untersuchung und Evaluation von Fallstudien zur Institutionalisierung von ethischen Prinzipien und Aktivitäten in Unternehmen.
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This study explores the contemporary practice of Ethical and Socially Responsible Investment and concludes that it is based on an ad hoc construct of empirically derived principles, driven mainly by the commercial self-interest of large financial institutions and fund managers. It explores the relationship between investment and morality, to posit a background theory of investment ethics. The study then proposes a move away from the narrow focus of ethical investment to a broader concern for investment ethics. The study introduces the discipline of investment ethics and examines the criteria that form the basis of morality in investment decisions. The resultant theory is intended to be of practical significance in the business and investment domains and to assist potential investors to evaluate investment opportunities in the context of a consistent set of substantive normative ethical principles.
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