To govern and be governed

the governance dimensions of SRI's influence

Benjamin J. Richardson

Research output: Chapter in Book/Report/Conference proceedingChapter

Abstract

Purpose: This chapter assesses the impact of socially responsible investing (SRI) in terms of its role in governance. Governance refers to the rules, incentives, institutions and philosophies for coordinating, controlling and supervising behaviour. The SRI sector purports to be a mechanism of market governance, such as through its codes of conduct and targeting of individual companies by engagement or divestment.

Method/approach: This subject-matter of the chapter is evaluated primarily through a conceptual and theoretical argument rather than empirical research.

Findings: Social investors' capacity to 'govern' the market is constrained by gaps and deficiencies in the legal frameworks for the financial economy. Fiduciary law controlling institutional investors is the most important element of this governance framework. The SRI movement is starting to broaden its agenda and strategies to include advocacy for regulatory reform. But the SRI industry has devoted attention to its own voluntary codes of conduct, such as the UNPRI, which do not yet provide a sufficiently comprehensive or robust substitute for official regulation.

Social implications: Paradoxically, whereas SRI once stood for taking action through the financial economy when governments had failed to act, the sector is also somewhat dependent on the state to provide an empowering governance framework. But state regulation itself may be strengthened by partnership with the SRI industry, such as by utilising its codes of conduct to supplement official legal standards.

Originality/value of the chapter: The chapter deepens insights into the relationship between the SRI sector as a largely voluntary movement and its legal governance through the state or the market.

Original languageEnglish
Title of host publicationSocially responsible investment in the 21st century
Subtitle of host publicationdoes it make a difference for society?
EditorsCéline Louche, Tessa Hebb
Place of PublicationBingley, UK
PublisherEmerald Group Publishing
Pages247-272
Number of pages26
ISBN (Electronic)9781783504688
ISBN (Print)9781783504671
DOIs
Publication statusPublished - 2014
Externally publishedYes

Publication series

NameCritical Studies on Corporate Responsibility, Governance and Sustainability
PublisherEmerald Group Publishing
Volume7
ISSN (Print)2043-9059

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Keywords

  • Fiduciary law
  • Market governance
  • Voluntary codes

Cite this

Richardson, B. J. (2014). To govern and be governed: the governance dimensions of SRI's influence. In C. Louche, & T. Hebb (Eds.), Socially responsible investment in the 21st century: does it make a difference for society? (pp. 247-272). (Critical Studies on Corporate Responsibility, Governance and Sustainability; Vol. 7). Bingley, UK: Emerald Group Publishing. https://doi.org/10.1108/S2043-905920140000007010