A Risky Environment for Investment

Purpose This study examines whether institutional investors who have signed the principles for responsible investment (PRI), a commitment to responsible investing, encourage firms to enhance the readability of their corporate social responsibility (CSR) reports, thereby promoting greater transparency and stakeholder engagement. Design/methodology/approach Using a Spanish sample from 2018 to 2022, our main findings indicate that socially responsible investment (SRI) ownership is associated with a lower level of linguistic complexity. This association, estimated using generalized method of moments (GMM) analysis techniques, is robust to a range of alternative readability indexes and additional robustness analyses, including difference-in-differences models and the Heckman procedure. Findings We find that socially responsible investment (SRI) owners ensure less linguistic complexity in CSR reporting. We also show that this positive influence is more pronounced (1) in environmentally sensitive firms and (2) when the PRI signatory investor is from Europe. Overall, these results suggest that SRI owners significantly improve CSR report clarity, especially in environmentally sensitive contexts and underscore the impact of investors’ geographic origins on environmental, social and governance (ESG) engagement. Practical implications Our findings suggest that firms seeking to attract European institutional investors should enhance the readability of their ESG disclosures, as these investors value clear and accessible reporting. Our results also emphasize the role of institutional investors in promoting better ESG communication practices, which can enhance credibility among stakeholders and improve market perceptions. Originality/value This study examines how socially responsible investors influence the clarity and understandability of this information, offering a novel perspective on the significance of SRI in advancing ESG practices. Moreover, we contribute to the literature on the readability of CSR reports in the European context and explore how different industries and investor origins affect CSR report readability.

There appears to be a growing disquiet amongst academics surrounding the ascendancy of ‘responsible’ investment that is egoist or self-interested in character – ‘business case’ responsible investment. This ascendancy has in no small measure been associated with the uptake of United Nations Principles for Responsible Investment (PRI) as a de facto standard for mainstream responsible investment. This article contributes to this disquiet. It does this by examining how egoist ‘responsible’ investors (as endorsed by the PRI) might have behaved had they been around in the 1970s, 1980s and early 1990s during days of the anti-apartheid socially responsible investment (SRI) movement. Armed with near perfect (hindsight grade) enhanced analytics, it is clear that the signals that such egoist ‘responsible’ investors would have sent to company management in terms of the apartheid issue would have been highly muddled and therefore ineffective. The net conclusion is that there is nothing inherently or inevitably ‘responsible’ about egoist investment and that the aversion to behaving ethically amongst institutional investors must be challenged and not swept under a carpet of rhetoric.

The past few decades have seen a marked increase in socially responsible investing (SRI), an investment strategy that incorporates environmental, social and governance (ESG) issues in the decision-making process. While there has been substantial investment and research in predominantly advanced economies, we have seen striking growth in key Asian markets in recent years, suggesting broader proliferation of more responsible corporate and investment practices. Because socially responsible investors take both financial and social considerations into account when allocating investments, this raises questions about the viability of SRI as an investment strategy and motivations behind individuals and institutions engaging in it. To investigate this further, this study analyses the emergence of the SRI market in South Korea given very public corporate governance concerns following the Asian financial crisis of the late 1990s and recent visibility of SRI investments by the country’s largest institutional investor, the National Pension Service (NPS). This study contributes to corporate governance and new institutionalist theory by highlighting that the need to address gaps in corporate governance has served as an important motivation for investment and research institutions to enhance socially responsible investments in Korea. Supported by anecdotal evidence from leading members of the local SRI community, this study suggests that while we have seen the primacy and evolution of existing institutions in the SRI market, SRI growth has been buttressed by the emergence of new institutions, such as research organizations and the Korean Sustainability Investing Forum, and reinforcement by international institutions in the form of the UN-backed Principles for Responsible Investment, global indexes and international CSR guidelines. As such, this study provides a more nuanced understanding of SRI’s emergence in Korea by highlighting institutional layering and dynamics that have led to changes in the local market while eschewing the idea that the emergence of SRI was simply the result of a deliberate effort to ‘westernize’ institutions. Indeed, in Korea’s case, while SRI is a borrowed concept, its primary function has been to address corporate governance issues rather than to generate superior financial returns. In addition to theory-building, findings also highlight practical implications, including opportunities for more rigorous corporate social performance analysis and investment advisory, greater market coordination and awareness-building, and the need to monitor corporate social performance and financial performance going forward.

The article analyses the legitimation processes of two transnational regulatory partnerships—the Equator Principles (EP) and the Principles for Responsible Investments (PRI)—providing guidelines for global financial institutions to take societal responsibility in their financial decisions. By using the theoretical concept of organizational legitimation it is argued that partnerships seek legitimacy from their audiences by constructing their boundaries (identity), coordinating activities (hierarchy), and producing goals (rationality). The empirical analysis shows that the EP and the PRI follow classical strategies of organizational legitimation. They reflect the norm of being societally responsible and create an agency that can be accountable for conformity with standards on environmental, social, and governance issues. The article pinpoints, however, two dilemmas for the EP and the PRI that stem from the global trend of governing by numbers, resulting in an expectations gap between the signatories and external NGOs. Those dilemmas could instead lead to a delegitimation of the partnerships.

Every organisation, and to a certain extent every employee, can choose whether their investments, their bank accounts, their pension fund and so on, are benefitting from supporting climate-damaging activities, such as the profits of the fossil fuel industry, or are supporting the transition to a low-carbon society by investing in appropriate products and processes. Making bad decisions can result in organisations facing the risk of stranded assets. This chapter will cover Socially Responsible Investing (SRI) and the difference between investment for impact and investment with impact. It will also include responsible shareholding and ESG investing. There is also a case study focused on sustainable investing in relation to pensions, along with Quick Wins and Further Resources. Leading initiatives such as the United Nations' Principles for Responsible Investment (PRI), the Global Impact Investing Network (GIIN), the Impact Management Project (IMP) and the European Venture Philanthropy Association (EVPA) will be introduced. More specifically, different investment and screening strategies will be evaluated, the IMP's five dimensions of impact will be introduced, finally, this chapter will guide managers and employees in organisations to make the right choices based on their own values and financial needs.

This dissertation explores the mechanisms of institutional change in practice. The institutional change under study relates to the progressive penetration of Socially Responsible Investment (SRI) criteria into conventional investment funds, a phenomenon which appeared during the 2000s, known as SRI Mainstreaming. The dissertation aims to explain why SRI Mainstreaming has expanded into France and to identify its impacts on the practices of the French asset management sector. It mobilizes a three-year (2006-2009) longitudinal case study of a French asset management company, conducted as an SRI analyst. Research methods rely on the pragmatist concept of inquiry and combine participative observation, semi-structured interviews and documentary evidence. The dissertation comprises three articles that should be considered together. They explore 1) the origins of the SRI Mainstreaming phenomenon, 2) how asset management companies have transformed their practices in response to SRI Mainstreaming and 3) why practices have been transformed in a different way in fixed-income investment, compared to equity investment, respectively.This dissertation received three awards: > Best Thesis Award European FIR-PRI (French Socially Responsible Investment Forum & Principles for Responsible Investment) 2011.> Highly Commendable dissertation in the EFMD Emerald 2011 Outstanding Doctoral Research Awards in the Interdisciplinary Accounting Research (category sponsored by the Accounting, Auditing & Accountability Journal).> Second prize in the 2011 European EDAMBA (European Doctoral Programmes Association in Management and Business Administration) Thesis Competition.

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.

PurposeSocially responsible property investments (SRPI) are seen as the emerging trend in socially responsible investing. The purpose of this paper is to raise the question of whether this trend is also valid for Germany. The results presented in this article are based on an explorative study among German institutional investors in the year 2007.Design/methodology/approachThe authors see the reasons behind the trend of sustainable building in the climate change and the resulting awareness of the investors on this topic. Likewise, the authors also see that more investors, predominantly institutional investors, are focusing on the emerging market for socially responsible investments (SRI). Considering these and the diversified portfolios of the institutional investors which usually include property investments, the authors are investigating the demand of these investors for SRPI in Germany. The investigation is based on an empirical study carried out in 2007 which should be understood as a prolonged insight into the investment preferences of German institutional investors towards SRI, in general, and SRPI, in particular.FindingsThe authors found that the market for SRPI is not growing as a result of an increased interest in SRPI as an emerging asset class, but rather as a consequence of a moderate growth in the property market. Some institutional investors find severe intransparencies in this emerging segment, while others do not perceive this new asset class as an attractive investment opportunity.Practical implicationsThe empirical study sheds light on the willingness of German institutional investors to invest in SRI with special reference to SRPI.Originality/valueThe empirical study shows the willingness of institutional investors which already invested in SRI to invest in SRPI, as well as the reluctance of investors with no experience in SRI to invest in SRPI.

Pennsylvania State University, USADespite overwhelming consensus among scientists about thereality of anthropogenic climate change (Bray, 2010; Oreskes,2004), there remains significant reluctance on the part ofcitizens and politicians to take the action needed to addressit. This resistance has been repeatedly identified in socialresearch (Leiserowitz & Maibach, 2010; Leviston, Leitch,Greenhill, Leonard, & Walker, 2011; Lorenzoni & Pidgeon,2006; McCright & Dunlap, 2011; Reser, Bradley, Glendon,Ellul, & Callaghan, 2012) and is mirrored by the lack of prog-ress made by salient political summits (Rogelj et al., 2010).Perhaps as a response to this, scholarly journals and articlesthat are focused on climate change are growing. Naturalscientists tell us that we know what needs to be done to avertdangerous climate change (IPCC, 2014), and economists tellus that delaying action in the short term will lead to muchgreater costs in the long term (Stern, 2007). Understandingpublic responses to climate change and developing solutionsto catalyse action is a critical challenge for the social sciences,and we propose that the development and elaboration of asocial psychology of climate change would be a cornerstoneof such an approach.We do not make the claim that social psychology has all theanswers but rather that the theories, models and researchmethods of social psychology can provide a powerful arsenalto complement the approaches of other disciplines. Re-searchers have already begun to apply social psychologicaltheory and methods to the issue of climate change, and wehighlight in the following sections examples of the insightsthat have flowed from this. We cannot assume, though, thatour theories and findings will automatically generalise to theclimate change context. As Moser (2010) has noted, thereare unique dimensions to climate change that make it distinctfrom other environmental, risk and health issues: The causesof climate change are invisible to humans, the impacts are dis-tal and it is complex and riddled with uncertainties. Modernurban humans are to some extent insulated from their physicalenvironment, and the lags between the climate and social sys-tems make it difficult for people to understand their role ininfluencing climate.These factors suggest the importance of developing a socialpsychology of climate change, empirically testing, integratingand refining existing theories and models to develop newframeworks. The notion that psychology can play a role inunderstanding and addressing climate change is not a newone. The American Psychological Association’s Task Forceon the interface between psychology and global climatechange comprehensively detailed the ways in which psycho-logical research can help to understand people’s perceptionsof the risks of climate change, the contribution of human be-haviour to climate change, the psychosocial impacts of climatechange, the ways in which people can adapt and cope withclimate change and the psychological barriers that could limitclimate change action (Swim et al., 2009, 2011).It is also not a new idea that social psychology can play animportant role in understanding and addressing environmentalproblems and solutions (Clayton & Brook, 2005). Social psy-chology, specifically, has a long tradition oftheory andresearchthat is relevant to addressing key climate change questions.Attitudes, social cognition, persuasion and attitude change, so-cial influence, and intragroup and intergroup behaviour, forinstance, are fundamental foci for social psychology and havedirect relevance for understanding the human and social dimen-sionsofclimatechange.Thetimeisripetounderstandtherangeof research that has been developing in social psychology onattitudes, beliefs and actions, to build upon these insights, andintegrate them with knowledge from other sciences to developmodels and theories indigenous to the climate change context.In the following section, we provide a brief overview of re-cent social psychological research that addresses three broadthemes relevant to understanding and responding to climatechange. These themes are as follows: (i) social psychologicalinfluences on climate change attitudes and beliefs; (ii) facilita-tors and barriers to climate change action; and (iii) changingclimate change attitudes and behaviour. Although there issome overlap in these themes, as an organising principle theyintuitively map on to key questions that arise in relation to cli-mate change. Our aim is to highlight recent examples of socialpsychological research that provide interesting and importantinsights in relation to these themes. Swim, Markowitz, andBloodhart (2012) have noted that much of the social psycho-logical research on climate change has emerged since 2006;we focus in on the most recent of this research that has beenpublished since 2010. We also outline how the studies in thespecial issue relate to these themes. We recognise that theseare not the only areas where social psychological researchand theory can make important contributions but they never-theless relate to key questions that need to be addressed. Weconclude the introduction by proposing considerations thatsocial psychologists could take into account in their futureresearch on climate change.European Journal of Social Psychology, Eur. J. Soc. Psychol. 44, 413–420 (2014)

The paper is concerned with a new phenomenon in modern business practice - socially responsible investing. The subject of the research is the reasons that triggered the promotion of socially responsible investing and now encourage businesses to incorporate responsible investment principles into their business strategies. The purpose of the work was to determine the level of promotion and the extent of the responsible investing practice in the domestic business environment. The paper analyzes the foreign and domestic experience along with statistical data characterizing individual aspects of the responsible investing process, which made it possible to identify the main trends and the nature of the above process development abroad and in Russia. It is concluded that the responsible investing is a fully developed trend. The main reason restraining its spread in Russia is the lack of a sustainable business motivation system.

Mental health and climate change: tackling invisible injustice

Environmental, Social, and Governance (ESG) investing has rapidly evolved now into a critical component of global investment strategies, despite its roots in Socially Responsible Investing (SRI) dating back over two centuries. ESG gained prominence in the 1980s and was formally recognized in 2006 by the United Nations Principles for Responsible Investment (PRI), aligning it with global frameworks such as the Sustainable Development Goals (SDGs) and the Paris Climate Agreement. This paper reviews the evolution of the ESG investment ecosystem, examining key contributors, including regulators, fund managers, corporations, and rating agencies, and their roles in promoting ESG adoption. Recent regulatory initiatives, such as the U.S. SEC's ESG disclosure rules, the European Commission's Sustainable Finance Disclosure Regulation (SFDR), and India’s Business Responsibility and Sustainability Reporting (BRSR) framework, represent significant efforts to streamline ESG reporting and reduce greenwashing. However, the lack of harmonized global standards and inconsistencies in ESG reporting and scoring methods remain critical challenges. This study analyses the performance of leading ESG funds in the U.S. and India over a four-year period, benchmarking their returns against major market indices. Additionally, it explores the correlations between ESG fund performance and market benchmarks, as well as the similarities in stock holdings between ESG and non-ESG funds. The findings reveal that while ESG funds perform comparably to or below traditional indices, significant gaps persist in defining ESG criteria and measuring performance effectively. The paper concludes with a call for global harmonization of ESG reporting standards and scoring methodologies to ensure consistency, transparency, and investor confidence. As ESG investing is poised for substantial growth, establishing clear definitions and robust frameworks will be essential to unlocking its potential as a transformative force in sustainable finance

Environmental, Social, and Governance (ESG) investing has rapidly evolved now into a critical component of global investment strategies, despite its roots in Socially Responsible Investing (SRI) dating back over two centuries. ESG gained prominence in the 1980s and was formally recognized in 2006 by the United Nations Principles for Responsible Investment (PRI), aligning it with global frameworks such as the Sustainable Development Goals (SDGs) and the Paris Climate Agreement. This paper reviews the evolution of the ESG investment ecosystem, examining key contributors, including regulators, fund managers, corporations, and rating agencies, and their roles in promoting ESG adoption. Recent regulatory initiatives, such as the U.S. SEC's ESG disclosure rules, the European Commission's Sustainable Finance Disclosure Regulation (SFDR), and India’s Business Responsibility and Sustainability Reporting (BRSR) framework, represent significant efforts to streamline ESG reporting and reduce greenwashing. However, the lack of harmonized global standards and inconsistencies in ESG reporting and scoring methods remain critical challenges. This study analyses the performance of leading ESG funds in the U.S. and India over a four-year period, benchmarking their returns against major market indices. Additionally, it explores the correlations between ESG fund performance and market benchmarks, as well as the similarities in stock holdings between ESG and non-ESG funds. The findings reveal that while ESG funds perform comparably to or below traditional indices, significant gaps persist in defining ESG criteria and measuring performance effectively. The paper concludes with a call for global harmonization of ESG reporting standards and scoring methodologies to ensure consistency, transparency, and investor confidence. As ESG investing is poised for substantial growth, establishing clear definitions and robust frameworks will be essential to unlocking its potential as a transformative force in sustainable finance

This study examines the impact of organizational ethical climate on perceived socially responsible investment (SRI) behavior with intention to engage in SRI as a mediating variable. This study uses questionnaire to collect opinion from respondents. Questionnaires were distributed to 320 fund managers of unit trust fund companies but only 84 of them positively responded by returning the filled questionnaires. This led to a response rate of 26.25%. On a scrutiny of the returned questionnaires, it has been found that 73 are fit for further processing or the usable rate of 22.81%. Employing Structural Equation Modeling (SEM) technique, the results showed goodness of fit for the model, indicating the appropriateness of the use of instrument and measurement. The analysis found that caring ethical climate has a significant and positive direct effect on perceived SRI behavior. Besides, a caring ethical climate has a significant and positive indirect effect on perceived SRI behavior with the intention to engage in SRI. The study found a significant direct effect of intention on perceived SRI behavior. However, the study has not found any evidence to support the association of instrumental ethical climate with intention and perceived SRI behavior. Key words: Organizational ethical climate, intention, socially responsible investment behaviour, unit trust fund managers.

Despite a strong demand for Socially Responsible Investing (SRI) and scientific evidence that responsible investing can outperform conventional investments, financial intermediaries are hesitant about SRI. Through an institutional logics lens, this research inductively investigates what hinders the adoption of SRI within intermediaries. Based on interviews with representatives from Swiss banks and insurance firms, the comparative study shows that while short-term orientation tends to complicate SRI, long-termism generally furthers SRI. The findings contribute to the SRI and the institutional logics literature: First, time helps to understand differences in SRI adoption and gives new insights into the feasibility of SRI. Second, the research explains how time shapes the conflict between different institutional logics within organizations.