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Encyclopedia of Business and Professional Ethics pp 1–9Cite as

Has the Mainstreaming of Responsible Investment Eroded Ethics? Insights from Investor Advocacy on Human Rights in Conflict Zones

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Synonyms

Conflict zones; Corporate social performance; Ethics; Human rights; Responsible investment

Introduction

By many accounts, the responsible investment story that has unfolded over the last two decades is impressive. The sector has seen staggering growth in the volume of assets being managed in line with responsible investment principles (GSIA 2017), and investor participation in sustainability-oriented networks continues to widen and deepen.Footnote 1 Nonetheless, these laudable gains in mainstreaming responsible investment have not precluded scholars and practitioners from pointing out that, aspirational commitments aside, forceful action by investors on pressing sustainability challenges remains elusive. These critiques have particularly resonated with regard to the social dimensions of responsible investing. As Louche and Hebb (2014) argue, the industry’s focus on the technicalities of integrating sustainability issues or related financial impacts, though important, has been...

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Notes

  1. 1.

    Examples include the UN-backed Principles for Responsible Investment and variety of regional sustainable investment industry associations such as the Institutional Investors Group on Climate Change, the Sustainable Stock Exchanges Initiative, the Farm Animal Investment Risk and Return Initiative, and the Asset Owners Disclosure Project.

  2. 2.

    Including, but not limited to, the International Bill of Rights, the International Labour Organisation’s Core Labour Standards, UN Declaration on the Rights of Indigenous Peoples, OECD Guidelines for Multinational Enterprises, UN Guiding Principles on Business and Human Rights, and the IFC Performance Standards for Environmental and Social Sustainability.

  3. 3.

    For this chapter, I have relied on the S&P Dow Jones Global Equity Index Series which uses three major country classifications: developed, emerging, and frontier. Qualitative and quantitative factors are used to determine a country’s classification. Emerging markets are those which exhibit full domestic market capitalization of over $2.5B, domestic annual turnover value over $1B, and an exchange development ratio over 5%, along with a combination of additional criteria relating to debt settlement periods, sovereign debt ratings, hyperinflation, foreign ownership restrictions, and freely traded foreign currency.

  4. 4.

    Based on cross-referencing the S&P Dow Jones Equity Index country list for Emerging Markets (2016) with Uppsala Conflict Data Program’s (2016) list of active conflicts.

  5. 5.

    These include the attributes of advocacy issues themselves (Keck and Sikkink 1998); the presence of “norm entrepreneurs” to champion an issue (Finnemore and Sikkink 2001); a favorable norm pool into which a new issue may be aligned (Price 1998), as well as a number of conditioning factors such as the level of media attention, donor resources, frame availability and network politics (Carpenter 2007).

  6. 6.

    The section covers equity investments only, noting that more research and empirical data is needed on how human rights requirements relate to other asset classes such as fixed income and private equity.

  7. 7.

    As part of a broader campaign, the filings were accompanied by substantial efforts to highlight the issue in mainstream Canadian media outlets, investor webinars that featured prominent human rights NGOs working on the issue, and proxy-voting advisories encouraging support for the resolutions.

  8. 8.

    This outcome may reflect the “home bias” in engagement, where investors prefer to engage domestic firms (see Bauer et al. 2013 for a broader discussion of this idea).

  9. 9.

    To be clear, this is not a position on the veracity of the complaints. Vigeo Eiris disputes these allegations, stating that it does not believe that international law or other human rights due diligence require them to seek any particular consent to carry out its bond certification work in the region. The full correspondence regarding this issue is available via the Business and Human Rights Resource Centre.

  10. 10.

    A significant amount of legal scholarship has been devoted to evaluating whether investors would be in breach of their fiduciary duties if they neglected to consider sustainability factors (see, e.g., Sullivan et al. 2015). The general consensus seems to be that investors would not be in breach of their fiduciary duties if they include within decision-making sustainability factors that are deemed to be material, i.e., expected to impact a company’s business, operations, industry, or financial position, or its future financial performance.

  11. 11.

    This is not to suggest that beneficiaries or affected stakeholders should be involved with the minutia of asset selection and management but rather that innovative governance models focused on gleaning social impact (such as citizen’s assemblies or targeted stakeholder meetings) could complement existing efforts to steward institutional assets with a high degree of financial prudence.

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Author information

Authors and Affiliations

  1. Department of Political Science, University of British Columbia, Vancouver, BC, Canada

    Priya Bala-Miller

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  1. Priya Bala-Miller
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Correspondence to Priya Bala-Miller .

Editor information

Editors and Affiliations

  1. Ottawa, Ontario, Canada

    Deborah C Poff

  2. Ottawa, Ontario, Canada

    Alex C. Michalos

Section Editor information

  1. Carleton University, Ottawa, Canada

    Tessa Hebb

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Bala-Miller, P. (2018). Has the Mainstreaming of Responsible Investment Eroded Ethics? Insights from Investor Advocacy on Human Rights in Conflict Zones. In: Poff, D., Michalos, A. (eds) Encyclopedia of Business and Professional Ethics. Springer, Cham. https://doi.org/10.1007/978-3-319-23514-1_39-1

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  • DOI: https://doi.org/10.1007/978-3-319-23514-1_39-1

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  • Publisher Name: Springer, Cham

  • Print ISBN: 978-3-319-23514-1

  • Online ISBN: 978-3-319-23514-1

  • eBook Packages: Religion and PhilosophyReference Module Humanities and Social SciencesReference Module Business, Economics and Social Sciences

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