Imagine that you are a responsible investment money manager. One of your clients is asking you to sell her holdings in a company because it has been accused in the press of contracting with suppliers that have abusive labour conditions. You have to evaluate and benchmark the CSR performance of a number of companies from the same industry but among them there are companies, primarily the smallest, that provide little or no CSR information. One of your major clients is asking you to exclude companies involved in nanotechnology What would you do? Responsible investment (RI) - the integration of environmental, societal and governance (ESG) issues into investment decision-making - can be difficult and complex. Including or excluding companies, engaging with companies, partnering with stakeholders, evaluating environmental and societal controversies, defining criteria and, all the while, producing a competitive return for investors can raise multiple questions that cannot be dealt with simply. The practice of RI faces many such dilemmas as it seeks to balance the competing goals of business, society, and finance and to judge how best to reconcile what are often conflicting concerns.
Dilemmas in Responsible Investment examines the problems responsible investment practitioners face daily. It emphasises the importance of asking the right questions as well as getting the right answers; and the importance of process as well as product. The authors pay attention to the diversity of opinion and variety of approaches available. They also raise fundamental questions about the very purpose of investment and the responsibilities of investors, both economic and societal.
Although dilemmas in RI are not always easily resolved, Louche and Lydenberg believe that they are also a source of valuable and necessary debate about the appropriate role of corporations in society and the ability of the financial markets to appropriately serve the societies in which they operate. Such dilemmas provide a valuable framework for public debate and can encourage the emergence of innovative answers and approaches. Responsible investors join in these debates when they examine the societal and environmental implications of business activities, actions and behaviour Facilitate dialogue between corporations and their stakeholders Encourage corporate transparency on societal and environmental issues Reward companies that are making genuine efforts towards sustainability Integrate societal and environmental data into financial analysis.
The book first of all provides a state-of-the-art overview of responsible investment, its history and development, explanations of key terms and a guide to the different actors involved in the field. Second, it presents 12 diverse hypothetical case studies that examine a wide spectrum of the challenges facing RI professionals, raising questions about the relationship between business and society, about the purpose of investment, and about the responsibilities of investors to various segments of society and the environment. The (often interconnected) cases present a dilemma, possible approaches available, variable factors, a variety of quotations and suggested responses from 35 leading professionals in the responsible investment community, real-world examples and comparisons and recommendations.
Accessible, vivid and illuminating, Dilemmas in Responsible Investment is the first book specifically written for teaching and professional training in responsible investment. It will be required reading for students, academics and practitioners in the areas of finance, ethics and CSR.
Publisher: Taylor & Francis Ltd
Number of pages: 240
Weight: 363 g
Dimensions: 235 x 159 x 13 mm
Social Responsible Investment sounds easy enough. Step 1: Negative screening, positive screening, decide and place your cash where it will do what you want it to do. Step 2: Review the financials with set values in mind and pick your portfolio. Step 3: Against sin stocks, for the environment, what could be simpler? When you read Dilemmas in Responsible Investment, you realize that it isn't as simple as it sounds. While written for responsible investment practitioners, the book has much to teach anyone with an interest in how money makes the sustainable world go round. Dilemma 1: Conventional Money Manager & Responsible InvestmentYou are a conventional money manager and have become interested in the responsible investment market. You advertise your responsible investment services and four different types of potential clients approach you. A single working mother, passionate about sustainability issues with a modest sum to invest; a wealthy investor, who is toying with the idea of directing his investments towards a more environmentally friendly portfolio; a CFO for a small church with an endowment to invest and a focus on fairness and societal justice; and the head of the board of trustees for a large pension fund, pressured by retirees not to invest in companies that manufacture landmines. How do you prepare for these meetings? You can either start with one general presentation for all four clients or tailor your response to each one's specific needs, right? Or you can target your presentations with a focus on ethical issues or sustainability issues, highlighting business risk/opportunity elements and, therefore, potential consequences for your clients' return on investment. Dilemma One is a taster for the series of progressively more specific and detailed dilemmas or case studies (12 in total), which teach us the detailed considerations that come in to play when responsible investment is the subject. This first dilemma shows how each potential responsible investor comes with certain expectations, a greater or limited understanding of responsible investment options and the need for investment practitioners to develop customized investment products to accommodate different needs. Dilemma One may not sound that complicated, however, so let's consider some other dilemmas that come up:
A client has read about a manufacturer of electronic games in China which has abusive labor conditions, and wants you to sell the stock. However, the company in question denies the allegations and the facts are not altogether clear. Sell, buy time to investigate or tell your client not to believe everything he reads?
Ten years ago, you sold a large successful company that was criticized for poor labor conditions, poor environmental record, discrimination in the workplace and more. In the two years, the company has apparently turned things around and is now talking CSR. Do you continue to stay away or recommend your clients to invest?
You want to develop a Responsible Investment product that will have global appeal. However, responsible investment standards are different in several countries and many have conflicting demands or standards. How do you balance local values and practices in a single new investment product?
Your client, an environmental foundation, wants you to hold back on any investments, which include use of nanotechnology. She fears that use of nanotechnology can be potentially harmful with unpredictable consequences for human health and the environment. Scientists are divided on the issue - there is no clear cut case against nanotechnology. Do you immediately sell all nanotechnology-related stocks or do you try to persuade your client that it is premature to exit?
This is but a small selection of the interesting questions posed in the field of responsible investment. In the book, Dilemmas in Responsible Investment, Louche and Lyndenberg dissect these issues from multiple angles and offer possibilities for action and the implications of each. A fascinating read, like I said before, for anyone even remotely interested in understanding the connections between sustainability, ethics, financial services and our global economy. -- Elaine Cohen * CSR Wire, 21 December 2011 *