IDEAS home Printed from https://ideas.repec.org/a/bla/bstrat/v19y2010i3p147-163.html
   My bibliography  Save this article

Management practices in Australasian ethical investment products: a role for regulation?

Author

Listed:
  • Matthew Haigh
  • James Guthrie

Abstract

This paper adds to the literatures on socially responsible investment (SRI), investment management, regulation of financial services and social accounting by providing a comprehensive survey of investment methods used in SRI products and regulated social reporting in financial services. Australian and New Zealand regulations require issuers of self‐declarative SRI products to provide details on methods used in portfolio construction. Regulators' objectives to standardize the reporting of portfolio construction and thus improve its comparability were identified by examination of parliamentary debates and other public reports. Portfolio construction styles of 86 SRI products managed by 63 financial institutions in Australia and New Zealand were chosen for analysis. Statistical analysis was conducted to identify associations between styles, construction methods and assessment techniques over a four‐year period: 2004–2007. These aspects were further examined in 18 case studies. Over the period, diversity and intensity of construction methods had increased both within and between investment managers. The non‐standard nature of management consultation used in SRI products, marketing needs to distinguish rather than standardize investment methods and the types of information thought relevant to clients did not reconcile easily with the types of information required by regulation. The more recent products in the sample tended to reference market indexes in portfolio construction, separate social considerations from financial considerations and delegate qualitative assessments of invested companies. Consumer policy implications arise from questions bearing on the integrity of information attached to investment products and the effective monitoring of delegated investment processes. Copyright © 2008 John Wiley & Sons, Ltd and ERP Environment.

Suggested Citation

  • Matthew Haigh & James Guthrie, 2010. "Management practices in Australasian ethical investment products: a role for regulation?," Business Strategy and the Environment, Wiley Blackwell, vol. 19(3), pages 147-163, March.
    • Handle: RePEc:bla:bstrat:v:19:y:2010:i:3:p:147-163
    DOI: 10.1002/bse.613
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/bse.613
    Download Restriction: no
    File URL: https://libkey.io/10.1002/bse.613?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Jonathan Edwards & Simon Wolfe, 2005. "Compliance: A review," Journal of Financial Regulation and Compliance, Emerald Group Publishing, vol. 13(1), pages 48-59, February.
    2. Banz, Rolf W., 1981. "The relationship between return and market value of common stocks," Journal of Financial Economics, Elsevier, vol. 9(1), pages 3-18, March.
    3. Colin Ryall & Simon Riley, 1996. "Appraisal Of The Selection Criteria Used In Green Investment Funds," Business Strategy and the Environment, Wiley Blackwell, vol. 5(4), pages 231-241, December.
    4. Bauer, Rob & Koedijk, Kees & Otten, Roger, 2005. "International evidence on ethical mutual fund performance and investment style," Journal of Banking & Finance, Elsevier, vol. 29(7), pages 1751-1767, July.
    5. Alan Lewis & Paul Webley & Adrian Winnett & Craig Mackenzie, 1998. "Morals and Markets: Some Theoretical and Policy Implications of Ethical Investing," Palgrave Macmillan Books, in: Peter Taylor-Gooby (ed.), Choice and Public Policy, chapter 9, pages 164-182, Palgrave Macmillan.
    6. Perks, R.W. & Rawlinson, D.H. & Ingram, L., 1992. "An exploration of ethical investment in the UK," The British Accounting Review, Elsevier, vol. 24(1), pages 43-65.
    7. Mackenzie, Craig & Lewis, Alan, 1999. "Morals and Markets: The Case of Ethical Investing," Business Ethics Quarterly, Cambridge University Press, vol. 9(3), pages 439-452, July.
    8. John Tippet & Philomena Leung, 2001. "Defining Ethical Investment and its Demography in Australia," Australian Accounting Review, CPA Australia, vol. 11(25), pages 44-55, November.
    9. Andrew A. King & Michael J. Lenox, 2001. "Does It Really Pay to Be Green? An Empirical Study of Firm Environmental and Financial Performance: An Empirical Study of Firm Environmental and Financial Performance," Journal of Industrial Ecology, Yale University, vol. 5(1), pages 105-116, January.
    10. Nicolas Schoenenberger, 1994. "A case study of ethical/green/environmental funds, corporate governance and stakeholder management," Business Strategy and the Environment, Wiley Blackwell, vol. 3(3), pages 22-26.
    11. Frankfurter, George M., 1997. "Pushing the epsilon to the abyss post-modern finance," International Review of Financial Analysis, Elsevier, vol. 6(2), pages 133-177.
    12. Matthew Haigh, 2006. "Camouflage play: Making moral claims in managed investments," Accounting Forum, Taylor & Francis Journals, vol. 30(3), pages 267-283, September.
    13. Lewis, Alan & Cullis, John, 1990. "Ethical investments: Preferences and morality," Journal of Behavioral Economics, Elsevier, vol. 19(4), pages 395-411.
    14. John G. Cullis & Alan Lewis & Adrian Winnett, 1992. "Paying To Be Good? U.K. Ethical Investments," Kyklos, Wiley Blackwell, vol. 45(1), pages 3-23, February.
    15. Lewis, Alan, 2001. "A focus group study of the motivation to invest: 'ethical/green' and 'ordinary' investors compared," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 30(4), pages 331-341.
    16. Matthew Haigh, 2006. "Managed investments, managed disclosures: financial services reform in practice," Accounting, Auditing & Accountability Journal, Emerald Group Publishing, vol. 19(2), pages 186-204, February.
    17. Anand, Paul & Cowton, Christopher J., 1993. "The ethical investor: Exploring dimensions of investment behaviour," Journal of Economic Psychology, Elsevier, vol. 14(2), pages 377-385, June.
    18. Winnett, Adrian & Lewis, Alan, 2000. "''You'd have to be green to invest in this'': Popular economic models, financial journalism, and ethical investment," Journal of Economic Psychology, Elsevier, vol. 21(3), pages 319-339, June.
    19. Cullis, John G & Lewis, Alan & Winnett, Adrian, 1992. "Paying to Be Good? U.K. Ethical Investments," Kyklos, Wiley Blackwell, vol. 45(1), pages 3-24.
    20. Webley, Paul & Lewis, Alan & Mackenzie, Craig, 2001. "Commitment among ethical investors: An experimental approach," Journal of Economic Psychology, Elsevier, vol. 22(1), pages 27-42, February.
    21. Belkaoui, Ahmed, 1980. "The impact of socio-economic accounting statements on the investment decision: An empirical study," Accounting, Organizations and Society, Elsevier, vol. 5(3), pages 263-283, July.
    22. Rockness, Joanne & Williams, Paul F., 1988. "A descriptive study of social responsibility mutual funds," Accounting, Organizations and Society, Elsevier, vol. 13(4), pages 397-411, June.
    23. Ulf Schrader, 2006. "Ignorant advice – customer advisory service for ethical investment funds," Business Strategy and the Environment, Wiley Blackwell, vol. 15(3), pages 200-214, May.
    24. David L. Owen & Tracey Swift & Karen Hunt, 2001. "Questioning the Role of Stakeholder Engagement in Social and Ethical Accounting, Auditing and Reporting," Accounting Forum, Taylor & Francis Journals, vol. 25(3), pages 264-282, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. El-Mehdi Barca, 2015. "Familiarity of Algerian Investors with Socially Responsible Investment (SRI)," International Journal of Management Science and Business Administration, Inovatus Services Ltd., vol. 1(4), pages 73-85, March.
    2. Martin Gold, 2010. "Fiduciary Finance," Books, Edward Elgar Publishing, number 13813.
    3. Riikka Sievänen & Hannu Rita & Bert Scholtens, 2017. "European Pension Funds and Sustainable Development: Trade‐Offs between Finance and Responsibility," Business Strategy and the Environment, Wiley Blackwell, vol. 26(7), pages 912-926, November.
    4. José F. Molina‐Azorín & María D. López‐Gamero, 2016. "Mixed Methods Studies in Environmental Management Research: Prevalence, Purposes and Designs," Business Strategy and the Environment, Wiley Blackwell, vol. 25(2), pages 134-148, February.
    5. Felipe Arias Fogliano de Souza Cunha & Erick Meira de Oliveira & Renato J. Orsato & Marcelo Cabus Klotzle & Fernando Luiz Cyrino Oliveira & Rodrigo Goyannes Gusmão Caiado, 2020. "Can sustainable investments outperform traditional benchmarks? Evidence from global stock markets," Business Strategy and the Environment, Wiley Blackwell, vol. 29(2), pages 682-697, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dominique Diouf & Tessa Hebb & El Hadji Touré, 2016. "Exploring Factors that Influence Social Retail Investors’ Decisions: Evidence from Desjardins Fund," Journal of Business Ethics, Springer, vol. 134(1), pages 45-67, March.
    2. Webley, Paul & Lewis, Alan & Mackenzie, Craig, 2001. "Commitment among ethical investors: An experimental approach," Journal of Economic Psychology, Elsevier, vol. 22(1), pages 27-42, February.
    3. Anett Wins & Bernhard Zwergel, 2016. "Comparing those who do, might and will not invest in sustainable funds: a survey among German retail fund investors," Business Research, Springer;German Academic Association for Business Research, vol. 9(1), pages 51-99, April.
    4. Luluk Widyawati, 2020. "A systematic literature review of socially responsible investment and environmental social governance metrics," Business Strategy and the Environment, Wiley Blackwell, vol. 29(2), pages 619-637, February.
    5. Katherina Glac, 2009. "Understanding Socially Responsible Investing: The Effect of Decision Frames and Trade-off Options," Journal of Business Ethics, Springer, vol. 87(1), pages 41-55, April.
    6. Beal, Diana & Goyen, Michelle, 1998. "'Putting Your Money Where Your Mouth Is' A Profile of Ethical Investors," Financial Services Review, Elsevier, vol. 7(2), pages 129-143.
    7. Volker Lingnau & Florian Fuchs & Florian Beham, 2022. "The link between corporate sustainability and willingness to invest: new evidence from the field of ethical investments," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 33(3), pages 335-369, September.
    8. Gregor Dorfleitner & Mai Nguyen, 2016. "Which proportion of SR investments is enough? A survey-based approach," Business Research, Springer;German Academic Association for Business Research, vol. 9(1), pages 1-25, April.
    9. Christian Hertrich, 2013. "Asset Allocation Considerations for Pension Insurance Funds," Springer Books, Springer, edition 127, number 978-3-658-02167-2, December.
    10. Frédérique Dejean, 2002. "L'Investissement Socialement Responsable : Une Revue De La Litterature," Post-Print halshs-00584461, HAL.
    11. Sandberg, Joakim & Nilsson, Jonas, 2011. "Conflicting Intuitions about Ethical Investment: A Survey among Individual Investors," Sustainable Investment and Corporate Governance Working Papers 2010/16, Sustainable Investment Research Platform.
    12. Déjean, Frédérique, 2004. "Contribution à l'étude de l'investissement socialement responsable : Les stratégies de légitimation des sociétés de gestion," Economics Thesis from University Paris Dauphine, Paris Dauphine University, number 123456789/10473 edited by Colasse, Bernard.
    13. Lars Hornuf & Eliza Stenzhorn & Tim Vintis, 2022. "Are sustainability-oriented investors different? Evidence from equity crowdfunding," The Journal of Technology Transfer, Springer, vol. 47(6), pages 1662-1689, December.
    14. William Pasewark & Mark Riley, 2010. "It’s a Matter of Principle: The Role of Personal Values in Investment Decisions," Journal of Business Ethics, Springer, vol. 93(2), pages 237-253, May.
    15. repec:dau:papers:123456789/3275 is not listed on IDEAS
    16. Antonio Chamorro‐Mera & María Manuela Palacios‐González, 2019. "Socially responsible investment: An analysis of the structure of preferences of savers," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 26(6), pages 1423-1434, November.
    17. Céline Louche & Daniel Arenas & Katinka Cranenburgh, 2012. "From Preaching to Investing: Attitudes of Religious Organisations Towards Responsible Investment," Journal of Business Ethics, Springer, vol. 110(3), pages 301-320, October.
    18. Florian Methling & Rüdiger Nitzsch, 2019. "Thematic portfolio optimization: challenging the core satellite approach," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 33(2), pages 133-154, June.
    19. Ewa Banasik & Meropy Barut & Louise Kloot, 2010. "Socially Responsible Investment: Labour Standards and Environmental, Social and Ethical Disclosures within the SRI Industry," Australian Accounting Review, CPA Australia, vol. 20(4), pages 387-399, December.
    20. Miwa Nakai & Tomonori Honda & Nariaki Nishino & Kenji Takeuchi, 2013. "An Experimental Study on Motivations for Socially Responsible Investment," Discussion Papers 1314, Graduate School of Economics, Kobe University.
    21. Francesco Gangi & Jérôme Méric & Rémi Jardat & Lucia Michela Daniele, 2019. "Business for society," Post-Print hal-02382307, HAL.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:bstrat:v:19:y:2010:i:3:p:147-163. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1099-0836 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.