The University of Southampton
University of Southampton Institutional Repository

Financial markets: a tool for social responsibility?

Financial markets: a tool for social responsibility?
Financial markets: a tool for social responsibility?
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
socially responsible investment, ethical investment, shareholder activism, mutual funds, managed funds, legitimacy
0167-4544
59-71
Haigh, Matthew
b23a476f-0ca5-4a58-8098-f05dcbe47835
Hazelton, James
457e2034-9a1c-4db4-a535-154d55542157
Haigh, Matthew
b23a476f-0ca5-4a58-8098-f05dcbe47835
Hazelton, James
457e2034-9a1c-4db4-a535-154d55542157

Haigh, Matthew and Hazelton, James (2004) Financial markets: a tool for social responsibility? Journal of Business Ethics, 52 (1), 59-71. (doi:10.1023/B:BUSI.0000033107.22587.0b).

Record type: Article

Abstract

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

This record has no associated files available for download.

More information

Published date: 2004
Keywords: socially responsible investment, ethical investment, shareholder activism, mutual funds, managed funds, legitimacy

Identifiers

Local EPrints ID: 45602
URI: http://eprints.soton.ac.uk/id/eprint/45602
ISSN: 0167-4544
PURE UUID: ff28ebe2-0a53-477e-8019-6296621055d9

Catalogue record

Date deposited: 13 Apr 2007
Last modified: 15 Mar 2024 09:11

Export record

Altmetrics

Contributors

Author: Matthew Haigh
Author: James Hazelton

Download statistics

Downloads from ePrints over the past year. Other digital versions may also be available to download e.g. from the publisher's website.

View more statistics

Atom RSS 1.0 RSS 2.0

Contact ePrints Soton: eprints@soton.ac.uk

ePrints Soton supports OAI 2.0 with a base URL of http://eprints.soton.ac.uk/cgi/oai2

This repository has been built using EPrints software, developed at the University of Southampton, but available to everyone to use.

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we will assume that you are happy to receive cookies on the University of Southampton website.

×