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 language | English |
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Title of host publication | Socially responsible investment in the 21st century |
Subtitle of host publication | does it make a difference for society? |
Editors | Céline Louche, Tessa Hebb |
Place of Publication | Bingley, UK |
Publisher | Emerald Group Publishing |
Pages | 247-272 |
Number of pages | 26 |
ISBN (Electronic) | 9781783504688 |
ISBN (Print) | 9781783504671 |
DOIs | |
Publication status | Published - 2014 |
Externally published | Yes |
Publication series
Name | Critical Studies on Corporate Responsibility, Governance and Sustainability |
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Publisher | Emerald Group Publishing |
Volume | 7 |
ISSN (Print) | 2043-9059 |
Keywords
- Fiduciary law
- Market governance
- Voluntary codes