Defining “Responsible Investing”
Principles for Responsible Investment, a global network of investors that includes more than 300 signatories representing more than US$100 trillion in assets, defines responsible investing as the following: “Responsible investment is an approach to investment that explicitly acknowledges the relevance to the investor of environmental, social and governance (ESG) factors, and the long-term health and stability of the market. It recognizes that the generation of long-term sustainable returns is dependent on stable, well-functioning and well-governed social, environmental, and economic systems. Responsible investment requires investors and companies to take a wider view, acknowledging the full spectrum of risks and opportunities facing them, in order to allocate capital in a manner that is aligned with the short and long-term interests of their client and beneficiaries.”
There is a large and growing literature on responsible investing with several unsettled questions. For example, there is a debate on whether responsible investing has a positive, neutral or negative impact on portfolio performance; on how to disclose and measure risks associated with climate change and sustainability-related issues; on the role of ESG investors and the best strategy to have a positive impact on society and contribute to a more sustainable economy.
Selection of Relevant Work
Ge, W. and Liu, M., 2015
“Corporate social responsibility and the cost of corporate bonds”, Journal of Accounting and Public Policy, 34(6): 597- 624.
Ding, S., Jia, C. and Wu, Z., 2016
“Mutual Fund Activism and Market Regulation during the Pre-IFRS Period: The Case of Earnings Informativeness in China from an Ethical Perspective”, Journal of Business Ethics, 138(4): 765-785.
Chkir, I., El Haj Hassan, B., Rjiba, H. and Saadi, S., 2021
“Does Corporate Social Responsibility Influence Corporate Innovation? International Evidence.”, Emerging Markets Review.