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Management practices in Australasian ethical investment products: a role for environmental regulation?

Haigh, Matthew and Guthrie, James (2010). Management practices in Australasian ethical investment products: a role for environmental regulation? Business Strategy and the Environment, 19(3) pp. 147–163.

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This paper adds to the literatures on socially responsible investment (SRI), investment management, regulation of financial services and social accounting by providing a comprehensive survey of investment methods used in SRI products and regulated social reporting in financial services. Australian and New Zealand regulations require issuers of self-declarative SRI products to provide details on methods used in portfolio construction. Regulators' objectives to standardize the reporting of portfolio construction and thus improve its comparability were identified by examination of parliamentary debates and other public reports. Portfolio construction styles of 86 SRI products managed by 63 financial institutions in Australia and New Zealand were chosen for analysis. Statistical analysis was conducted to identify associations between styles, construction methods and assessment techniques over a four-year period: 2004–2007. These aspects were further examined in 18 case studies. Over the period, diversity and intensity of construction methods had increased both within and between investment managers. The non-standard nature of management consultation used in SRI products, marketing needs to distinguish rather than standardize investment methods and the types of information thought relevant to clients did not reconcile easily with the types of information required by regulation. The more recent products in the sample tended to reference market indexes in portfolio construction, separate social considerations from financial considerations and delegate qualitative assessments of invested companies. Consumer policy implications arise from questions bearing on the integrity of information attached to investment products and the effective monitoring of delegated investment processes.

Item Type: Journal Item
Copyright Holders: 2008 John Wiley & Sons, Ltd and ERP Environment
ISSN: 1099-0836
Project Funding Details:
Funded Project NameProject IDFunding Body
Not SetNot SetAustralian Council of Super Investors
External Collaborative Research Grants SchemeNot SetMacquarie University
Keywords: ethical investment; financial service regulation; social reporting; socially responsible investment; SRI; sustainable development
Academic Unit/School: Faculty of Business and Law (FBL) > Business > Department for Accounting and Finance
Faculty of Business and Law (FBL) > Business
Faculty of Business and Law (FBL)
Item ID: 50560
Depositing User: Matthew Haigh
Date Deposited: 17 Aug 2017 15:40
Last Modified: 12 May 2019 19:56
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