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Academic developments in responsible investing (RI )

Academic developments in responsible investing (RI ). Prof Suzette Viviers Department of Business Management Stellenbosch University sviviers@sun.ac.za. Structure of the presentation . Introduction Trends in international RI research (1975 – 2009) Prominent research themes (2009 +)

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Academic developments in responsible investing (RI )

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  1. Academic developments in responsible investing (RI ) Prof Suzette Viviers Department of Business Management Stellenbosch University sviviers@sun.ac.za

  2. Structure of the presentation • Introduction • Trends in international RI research (1975 – 2009) • Prominent research themes (2009+) • RI research in South Africa • Conclusions

  3. Introduction • The purpose of research… • reviewing, reflecting on and synthesising existing knowledge; • investigating some existing situation or problem; • providing solutions to a problem; • exploring and analysing more general issues; • constructing or creating new procedures or systems; • explaining new phenomena; and • generating new knowledge and theories.

  4. Trends in international RI research • Viviers and Eccles conducted a review of 190 academic articles on RI from 1975 – 20091 & 2 • Primary name of the phenomenon: Socially responsible investing (SRI) • Research themes: Financial performance, fiduciary duty and legal aspects of RI • Ethical foundations: Predominantly utilitarian i.e. the greatest good for the greatest number; increased mention of ethical egoism (self-interest) in later periods • RI strategies: Negative screening, positive screening and shareholder activism • Gapsin the RI literature: RI in emerging markets

  5. Trends in international RI research • Since 2009 the number of academic articles on RI and ESG related topics has grown exponentially • Special edition in the Journal of Business Ethics • Journal of Sustainable Finance and Investment • International journals dedicated to corporate governance, sustainability, behavioural finance etc. • Explosion of non-academic publications on the topic

  6. Prominent research themes (2009+) • Nature and extent of shareholder activism3 - 10 • Factors that impede / support successful activism • Hedge funds, NGOs, trade unions • Financial performance11 - 18 • Cross-country studies / best practices in financial research • Studies on fixed-income and Shari’ah instruments • Fiduciary duty and legal aspects of RI19-21 • Private investors22 - 24 • Motives to invest in a responsible manner • Decision making models

  7. Prominent research themes (2009+) • ESG criteria25 - 33 • Relative importance of individual screens • Impact of individual screens on financial performance • Problems experienced when attempting to integrate ESG considerations • Sustainability indices34 • Composition and financial performance • A critique of “business case RI”35-38 • Sustainable property investments39 & 40 • RI in emerging markets41- 43

  8. RI research in South Africa • An increase in the number of researchers and topics covered (current projects indicated with a *) • Definition and nature of RI in South Africa44-48 • Drivers, barriers and enablers of RI in South Africa49 & 50 • Financial performance51 * • Legal/ethical considerations52- 54 • FTSE/JSE SRI index55 * • ESG criteria in the South African context56 & 57 * • CSR / ESG / Integrated reporting58 – 70 * • Impact investing71 • Shareholder activism*

  9. Conclusions • King Solomon (Ecclesiastes 1) and Bon Jovi agree - the more things change, the more they stay the same • There is nothing new about RI… • We are drowning in information, yet thirst for knowledge • Researchers should focus less on “what is” and more on “what ought to be” • They should also focus less on the “business case” for RI and more on the “ethical case” for RI ------oOo------

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