Abstract
As Socially Responsible Investment (SRI) enters the mainstream of professional and institutional investment practice, some perplexities arise. Some SRI market participants are well schooled in finance but are hesitative as to how to apply non-financial criteria in the management of portfolios. Governments too are giving SRI more attention and, in some countries, are discussion whether and how to regulate the SRI market. Advocacy groups are targeting SRI projects through media campaigns using political discourse. Many of the pertinent questions that come with these perplexities are of the philosophical or ethical type and concern legitimisation, demarcation of responsibilities, interpretation of norms and policy formulation. The inclusion of non-financial criteria into investment decision-making leads to a ‹puzzle in SRI’ for which this article offers a solution. The puzzle arises when the day-to-day implementation of an SRI-policy coincides with the process of administering justice. Three questions make up that puzzle: (1) what should an␣investor do when allegations arise about a corporation, (2) what should an investor do when a corporation is brought before a court, (3) what should an investor do when a corporation is found guilty by a court. This article argues, by distinguishing between the rationality of the investor and that of the judge, that allegations, court cases or court verdicts should not be reasons to disinvest from a corporation. This article offers examples from investor practice and points out in which way allegations, court cases and court verdicts make sense for investor behaviour.
Article PDF
Similar content being viewed by others
Avoid common mistakes on your manuscript.
References
Alm, K.: 2008, ‹Challenges to Investment Ethics in the Norwegian Petroleum Fund: A Newspaper Debate’, Philosophica 79 (forthcoming)
Barnett M., Salomon R. (2006) Beyond Dichotomy: The Curvilinear Relationship Between Social Responsibility and Financial Performance. Management Journal 27, 1101–1122
Baucus M. S., Baucus D. A. (1997) Paying the Piper: An Empirical Examination of Longer-Term Financial Consequences of Illegal Corporate Behaviour. Academy of Management Journal 41(1), 129–151
Cowton C. J. (1999a) Playing by the Rules: Ethical Criteria at an Ethical Investment Fund. Business Ethics: A European Review 8(1), 60–69
Cowton C. J. (1999b) Accounting and Financial Ethics: From Margin to Mainstream? Business Ethics: A European Review 8(2), 99–107
De Tijd: 2007, ‹Beleggers in duurzame activa zijn geen onrealistische dromers’, De Tijd (January 19), 19
Drucker, P. F.: 1964/1986, Managing for Results (Perennial Library, New York)
Eurosif: 2006, European SRI Study 2006 (Eurosif, Brussels)
ICDO (2006) MVO-Referentiekader. Brussels: Interdepartementale Commissie Duurzame Ontwikkeling
Louche C. (2004) Ethical Investment: Processes and Mechanisms of Institutionalisation in the Netherlands 1990–2002. Rotterdam: Optima
NGPF (2006) Annual Report, Council on Ethics for the Government Pension Fund – Global 2005. Oslo: Norwegian Government Pension Fund
NGPF (2007) Annual Report, Council on Ethics for the Government Pension Fund – Global 2006. Oslo: Norwegian Government Pension Fund
RFA (2007) Boycotter ou non la Birmanie? Financité 8, 3
Sparkes R., Cowton C. J. (2004) The Maturing of Socially Responsible Investment: A Review of the Developing Link with Corporate Social Responsibility. Journal of Business Ethics 52(1), 45–57
Sullivan, R. and C. Mackenzie (eds.): 2006, Responsible Investment (Greenleaf Publishing, Sheffield)
Taylor R. (2000) How New Is Socially Responsible Investment? Business Ethics: A European Review 9(3), 174–179
The Observer: 2007, ‹Barclays Admits Possible Link to Slavery After Reparation Call’, The Observer (April 1)
UNEPFI/Mercer: 2007, Demystifying Responsible Investment Performance. A Review of Key Academic and Broker Research on ESG Factors. A Joint Report by the Asset Management Working Group of the United Nations Environment Programme Finance Initiative and Mercer (United Nations, Geneva)
Vandekerckhove W., Leys J., Van Braeckel D. (2007) That’s not What Happened and It’s not Our Fault Anyway! Business Ethics: A European Review 16(4), 403–418
Vandekerckhove, W., J. Leys and D. Van Braeckel: 2008, ‹A Speech-Act Model for Talking to Management. Building a Framework for Evaluating Communication Within the SRI Engagement Process’, Journal of Business Ethics (forthcoming)
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Leys, J., Vandekerckhove, W. & Van Liedekerke, L. A Puzzle in SRI: The Investor and the Judge. J Bus Ethics 84, 221–235 (2009). https://doi.org/10.1007/s10551-008-9705-4
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10551-008-9705-4