How Socially Responsible Investment Is Defined : An analysis of how SRI investment management firms put ethical criteria into practice

Several organisations have called for clarifications on sustainable investment. The aim of this study is to map and compare the ethical criteria used by Socially Responsible Investment (SRI) funds in their assessment of companies. My attention is also to seek for clarifications on the definition on SRI. A theoretical framework has been used to identify core issues of socially responsible investment. The areas of interest are charitable giving, environmental technologies, negative and positive screening and shareholder activism. The empirical material consisted of qualitative interviews with 4 fund managers from 5 investment management firms in addition to written documents on the funds’ ethical criteria. The conclusions are that all of the funds use negative criteria in their assessment of companies, with similarities in what may be considered as unethical activity and differences in the extent. Most of the funds also seek to identify better-managed companies through an assessment of how companies comply with international agreements. Differences occur in the choices of international agreements as well as the minimum criteria for investing. Most of the investment management firms engage in shareholder activism with the aim to influence the companies’ corporate behaviour, thus with different levels of engagement. Some have dialogue with whom they invest in, some favour the idea of communicate with companies they do not invest in as well. Furthermore, the results of this study show that investments in environmental technologies are rare since these companies are too small. When it comes to charitable giving, donations to charity may be seen as SRI or may not be seen as SRI depending on if the concept refers to investment criteria