A plea for a stronger role of non-financial impact in the socially responsible investment discourse. Issue 2 (8th October 2020)

• Record Type: Journal Article
• Authors: Diener, Joel; Habisch, Andre
• Is Part Of: Corporate governance. Volume 21:Issue 2(2021)
• Page Start: 294
• Page End: 306
• Publication Date: 2020-10-08
• Subjects: Corporate social responsibility (CSR) -- Socially responsible investment (SRI) -- Environment -- Social -- Governance (ESG) -- Equilibrated socially responsible investment (ESRI) -- Non-financial impact (NFI); Corporate governance -- Periodicals; 658.4
• DOI: 10.1108/CG-01-2020-0039
• Languages: English
• ISSNs: 1472-0701

Abstract

Abstract : Purpose: This paper aims to emphasize the importance and current deficits of non-financial impact (NFI) assessment of socially responsible investment (SRI) with reference to the action plan of the European Commission (EC) for a greener and cleaner economy. Design/methodology/approach: The importance and current deficits of NFI assessment are evaluated theoretically and condensed to an equilibrated socially responsible investment (ESRI) perspective, based on a narrative literature review of highly ranked academic journals. Findings: Due to a deficient exploration of NFI in theory and practice, the role of SRI funds for sustainability transition has not yet been adequately discussed. This has enabled a situation where a constantly rising market share of SRI has not led to similar sustainability achievements. This strongly contrasts with investors' expectations, the self-portrayal of the sector and the goals of the EC's action plan. As a solution, the developed ESRI perspective elevates NFI as a second cornerstone for theory and practice. ESRI, contrary to the EC, sets a primer on the role of SRI fund management for achieving sustainability goals. Originality/value: This study reveals how SRI theory and practice neglect the importance of NFI. The presented ESRI perspective enables scholars to examine SRI practices more holistically through a new theoretical lens. One special focus is on the role of SRI fund management as a transmission mechanism to push portfolio companies' business practices toward more sustainable behavior.