Socially responsible investing: a review of the critical issues

Abstract

Purpose – The purpose of this paper is to provide a review of the most recent work in major finance journals on socially responsible investment (SRI). While SRI involves individual investors, firms, and investment managers, the authors concentrate primarily on the investment view. Design/methodology/approach – The authors briefly review the development of socially responsible investing (SRI) and the theoretical issues related to SRI and investment choice. This is followed by a review of the empirical results concerning firm value. The question of whether SR mutual funds and SR indexes differ in performance or other characteristics from their conventional counterparts is discussed next, and lastly the authors present suggestions for future research directions. Findings – Despite the large and extensive amount of empirical research published on SRI in recent years, the authors find no definitive answer to the question of SR actions for either the firm or the investor. For firms, evidence linking corporate social responsibility (CSR) rankings with higher value is mixed, and depends on the type of CSR behavior studied as well as the measures of firm performance used. The performance of SR mutual funds and indexes generally are not significantly different from conventional funds or indexes, but again these results are also highly dependent on model specification, time period, benchmark, and other characteristics of the study. Practical implications – The value of SR investing has not been definitely proved. This means, however, that there is room for further on this important topic. Originality/value – This paper synthesizes and presents the most recent research on SRI from a wide variety of refereed sources.

Assessing the Relevance of Green Banking Practice on Bank Loyalty: The Mediating Effect of Green Image and Bank Trust

“…As with any other complex concept, there seems to be no consensus yet regarding the definition of the SRI theory [24]. For instance, terms such as ethical, sustainability, social, environmental, green investment, at different instances, have been inter used as a logic for SRI [25,26]. Moreover, community investing and impact investing are common phrases that have, on several occasions, been swapped for each other when talking about SRI theory.…”

“…Moreover, community investing and impact investing are common phrases that have, on several occasions, been swapped for each other when talking about SRI theory. SRI theory centers on integrating individual value and societal wellbeing as important factors which should be considered when evaluating investment choices [26,27]. Similar studies viewed SRI as a social impact investment that could be in-form of direct SRI or indirect SRI, with both categories significantly enhancing the social benefits of investors and that of the community [28,29].…”

The relation between corporate social responsibility certification and financial performance: An empirical study in Spain

“…Apart from this, companies that are more ethically and socially committed can expect their employees to be more enthusiastic and productive (Becchetti, Ciciretti, Hasan, & Kobeissi, ), their reputation facilitates their access to sources of cheaper financing (Brzeszczynski & McIntosh, ), and they also have fewer disputes, which in turn leads to a decrease in costs (Goldreyer, Ahmed, & Diltz, ). Consequently, all of this should contribute to an improvement in business performance (Junkus & Berry, ) and thereby increase a company's value for its shareholders (Porter & Van der Linde, ).…”

Sustainability and Ethics in the Process of Price Determination in Financial Markets: A Conceptual Analysis

“…Von Wallis and Klein [35] (p. 83) signaled that a cause of positive results could be that "managers will only take those SR decisions that improve corporate value". Junkus and Berry [36] provided a deep analysis of the critical issues on SRI. The meta-analysis of this paper includes the link between CSR and firm value together with the financial performance of SRI and socially responsible indexes.…”