Socially Responsible Investment in a Global Environment
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Socially Responsible Investment in a Global Environment

Hung-Gay Fung, Sheryl A. Law and Jot Lau

Socially responsible investment (SRI) is becoming increasingly popular and can be potentially rewarding to all parties concerned. This book discusses the opportunities, challenges, and practices of SRI in a global financial environment in a consistent and integrated framework of risk management. It also covers a wide variety of environmental, social, and corporate governance (ESG) issues related to various participants, such as values-based retail, institutional investors, corporations, banks, supranational agencies, and non-governmental organizations.
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Chapter 1: Socially Responsible Investment: Opportunities, Challenges, and Practices

Hung-Gay Fung, Sheryl A. Law and Jot Lau


INTRODUCTION Socially responsible investment or investing (SRI) is an umbrella term for investments and investment strategies that have taken into consideration the attempt to create positive social change, minimize environmental damage, and incorporate religious or ethical beliefs. SRI is not a new phenomenon but has taken over 80 years to reach its present-day popularity.1 Due to globalization, financial market participants are now cognizant that their investment decisions have ramifications around the world. Historically, concerned stakeholders used to be activists, non-governmental organizations (NGOs), and consumers. They clearly demonstrated their dissent over issues such as environmental problems, human rights issues, and other social concerns. However, our increasingly intertwined world makes it almost impossible for investors to make decisions without having some effect on the environment and social development. Thus, it is inevitable that investors for public and private corporations have garnered some concerns about their investment choices and are balancing positive financial returns with minimization of environmental and social damages. Investors now have choices in creating portfolios with profit and positive social and environmental impacts by incorporating social, environmental, and ethical considerations. Investors have taken actions so that boards of directors and corporate management consider their demands and create change in their firms. SRI has become a practical vehicle for investors who are concerned about the moral implications of their portfolio and the investment returns resulting from their investing decisions. SRI is also a practical way for fiduciaries to act in the best interest of their beneficiaries. Despite the increasing pressures to...

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