IDEAS home Printed from https://ideas.repec.org/p/hhb/sicgwp/2010_003.html
   My bibliography  Save this paper

Socially Responsible Investment and Fiduciary Duty: Putting the Freshfields Report into Perspective

Author

Listed:

Abstract

A critical issue for the future growth and impact of socially responsible investment (SRI) is whether institutional investors are legally permitted to engage in it – in particular whether it is compatible with the fiduciary duties of trustees. An ambitious report from the United Nations Environment Programme’s Finance Initiative (UNEP FI), commonly referred to as the ‘Freshfields report’, has recently given rise to considerable optimism on this issue among proponents of SRI. The present paper puts the arguments of the Freshfields report into some further both empirical and critical perspective, however, and suggests that its findings do not call for very much optimism. The general argument is that while the understanding of fiduciary duty outlined by the Freshfields report seems to allow institutional investors to at least sometimes take some social or environmental considerations into account, the support it gives for SRI is notably contingent and, furthermore, it seems to rule out exactly the kind of SRI which proponents of social responsibility and environmental sustainability should hold in highest regard – proactive cases and socially effective investment strategies. If SRI is to become an important force for corporate social responsibility through its adoption by institutional investors, then, it is suggested that legal reform is needed.

Suggested Citation

  • Sandberg, Joakim, 2010. "Socially Responsible Investment and Fiduciary Duty: Putting the Freshfields Report into Perspective," Sustainable Investment and Corporate Governance Working Papers 2010/3, Sustainable Investment Research Platform.
    • Handle: RePEc:hhb:sicgwp:2010_003
    as

    Download full text from publisher

    File URL: http://sites.google.com/site/climatedeclaration/Home/sirpwp10-03-Sandberg.pdf?attredirects=0
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. 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.
    2. 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.
    3. Larry D. Wall, 1995. "Some lessons from basic finance for effective socially responsible investing," Economic Review, Federal Reserve Bank of Atlanta, vol. 80(Jan), pages 1-12.
    4. 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.
    5. Hudson, Richard, 2005. "Ethical Investing: Ethical Investors and Managers," Business Ethics Quarterly, Cambridge University Press, vol. 15(4), pages 641-657, October.
    6. Debra Satz, 2003. "Child Labor: A Normative Perspective," The World Bank Economic Review, World Bank, vol. 17(2), pages 297-309, December.
    7. 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.
    8. Michael Weisbach, 2010. "Corporate Governance," NBER Books, National Bureau of Economic Research, Inc, number weis10-1, March.
    9. Adam M. Kanzer, 2009. "The Use of Shareholder Proposals to Address Corporate Human Rights Performance," Palgrave Macmillan Books, in: Henri-Claude Bettignies & François Lépineux (ed.), Finance for a Better World, chapter 5, pages 71-87, Palgrave Macmillan.
    10. Jonas Nilsson, 2008. "Investment with a Conscience: Examining the Impact of Pro-Social Attitudes and Perceived Financial Performance on Socially Responsible Investment Behavior," Journal of Business Ethics, Springer, vol. 83(2), pages 307-325, December.
    11. 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.
    12. Rebecca Strätling, 2003. "General Meetings: a dispensable tool for corporate governance of listed companies?," Corporate Governance: An International Review, Wiley Blackwell, vol. 11(1), pages 74-82, January.
    13. Jeanne Logsdon & Harry Buren, 2009. "Beyond the Proxy Vote: Dialogues Between Shareholder Activists and Corporations," Journal of Business Ethics, Springer, vol. 87(1), pages 353-365, April.
    14. Benjamin Richardson, 2009. "Keeping Ethical Investment Ethical: Regulatory Issues for Investing for Sustainability," Journal of Business Ethics, Springer, vol. 87(4), pages 555-572, July.
    Full references (including those not matched with items on IDEAS)

    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. 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.
    2. 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.
    3. 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.
    4. Lars Hornuf & Eliza Stenzhorn & Tim Vintis, 2020. "Are Sustainability-Oriented Investors Different? Evidence from Equity Crowdfunding," Bremen Papers on Economics & Innovation 2011, University of Bremen, Faculty of Business Studies and Economics.
    5. 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.
    6. Lars Hornuf & Eliza Stenzhorn & Tim Vintis, 2020. "Are Sustainability-Oriented Investors Different? Evidence from Equity Crowdfunding," CESifo Working Paper Series 8339, CESifo.
    7. 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.
    8. 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.
    9. Mazzuca, Maria & Panzera, Elena & Ruberto, Sabrina, 2023. "The investor's participation in social impact bonds," International Review of Economics & Finance, Elsevier, vol. 86(C), pages 349-363.
    10. Nilsson, Jonas & Jansson , Johan & Isberg, Sofia & Nordvall, Anna-Carin, 2011. "Determinants of customer satisfaction with socially responsible investments: Do ethical and environmental factors impact customer satisfaction with SRI profiled mutual funds?," Sustainable Investment and Corporate Governance Working Papers 2011/2, Sustainable Investment Research Platform.
    11. 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.
    12. 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.
    13. Blanca Pérez-Gladish & Karen Benson & Robert Faff, 2012. "Profiling socially responsible investors: Australian evidence," Australian Journal of Management, Australian School of Business, vol. 37(2), pages 189-209, August.
    14. Felipe Arias Fogliano de Souza Cunha & Erick Meira & Renato J. Orsato, 2021. "Sustainable finance and investment: Review and research agenda," Business Strategy and the Environment, Wiley Blackwell, vol. 30(8), pages 3821-3838, December.
    15. 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.
    16. 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.
    17. Federica Ielasi & Monica Rossolini, 2019. "Responsible or Thematic? The True Nature of Sustainability-Themed Mutual Funds," Sustainability, MDPI, vol. 11(12), pages 1-17, June.
    18. N. Eccles & S. Viviers, 2011. "The Origins and Meanings of Names Describing Investment Practices that Integrate a Consideration of ESG Issues in the Academic Literature," Journal of Business Ethics, Springer, vol. 104(3), pages 389-402, December.
    19. 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.
    20. 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.

    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:hhb:sicgwp:2010_003. 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: Pontus Cerin (email available below). General contact details of provider: https://edirc.repec.org/data/iikthse.html .

    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.