Socially Responsible Investment in a Global Environment
Show Less

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.
Buy Book in Print
Show Summary Details
You do not have access to this content

Chapter 2: SRI Approaches and Criteria

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


INTRODUCTION This chapter outlines the general criteria used to include or exclude investments in a SRI portfolio and reviews the common screening strategies used in index construction as well as SRI portfolios. Construction of SRI portfolios is based on several premises. Portfolios can address specific concerns or be generic exclusions of the common ‘sin’ stocks. Sin stocks conventionally refers to the common stock of companies with core business in alcohol, arms and weapons, and tobacco products. Other SRI portfolios are inclusive of companies with stellar corporate governance, environmental management and social considerations, companies that adhere to international or industry standards, and companies with awards and recognition from third parties, such as NGOs. Specific concerns addressed in SRI portfolios are dependent on the investor. They range from investing with religious requirements (for example, Islamic investing), moral convictions, or other interests such as clean fuels and green technology. Similarly to developing a conventional portfolio, SRI investors must specify their investment objectives, ascertain their risk tolerance, and determine their investment horizon. However, SRI fund managers must take the additional step that makes SRI different from conventional investing. The fund manager must identify the values and beliefs held by the investor, and work towards aligning the portfolio to these additional goals. As discussed in Chapter 1, some of these goals are seen by SRI detractors as being additional constraints to all the possibilities in the investment universe. However, investing with an SRI mandate incorporates the belief that doing good with investments will ultimately translate...

You are not authenticated to view the full text of this chapter or article.

Elgaronline requires a subscription or purchase to access the full text of books or journals. Please login through your library system or with your personal username and password on the homepage.

Non-subscribers can freely search the site, view abstracts/ extracts and download selected front matter and introductory chapters for personal use.

Your library may not have purchased all subject areas. If you are authenticated and think you should have access to this title, please contact your librarian.

Further information

or login to access all content.