The social responsibility performance of ethical and solidarity funds: an approach to the case of Spain

Abstract

In the past few years, concepts like ‘social responsibility investment’, ‘social and environmental investment’, ‘ethical investment’, ‘socially responsible funds’, ‘ethical funds’ and others have become increasingly important. All of them refer to similar but not equivalent concepts and demonstrate the existence of a new financial situation whose policy for action is based on economic, social and environmental criteria. The origin of what is today socially responsible investment (SRI) comes from the political environment experienced in the US and in Europe in the 1960s, when social and environmental movements, above all in support of peace, served to deepen the awareness of society of social responsibility and sustainable development issues. As a consequence of this, at the end of the 1970s the concept of social investment attracted a large number of American investors, who began to question the idea of financing the Vietnam War through investments. So, in 1971, there emerged the first true US ethical fund. In Europe, the first ethical fund was launched in Sweden in 1965 and in the UK the first ethical fund was launched in 1984. According to SiRi Group (2003), the leading countries in SRI in Europe are the UK, Sweden, France and Belgium. These events have involved noticeable changes in the size and composition of stock markets and even in the habits and financial culture of individual investors. However, these habits are not homogeneous in all international asset markets, and if we carry out an analysis of the ethical criteria by countries, some differences can be seen. In Spain, funds that can be identified as ethical investment funds have been marketed since 1997. The development of such investment funds has been less than in other developed countries, not only in number of funds or assets under management but also in the fund policy aspects and the establishment of social criteria. Another aspect that shows the weakness of SRI in Spain is the lack of engagement with companies made by these funds. As we show in this research, when we analyse Spanish SRI more deeply, we find that Spain is at an earlier stage of development than other European countries. The Spanish regulatory legislation focuses only on corporate governance issues (Olivencia and Aldama Reports); the selection methodology focuses mainly on the application of negative criteria (negative screening), and the Respectively, University Lecturer, University Professor and Assistant Lecturer, Department of Finance and Accounting, Universitat Jaume I, Castellon, Spain.