Ethical and socially responsible investment funds: Are they ethically and responsibly marketed?

Abstract

Purpose

The purpose of this paper is to evaluate the marketing of ethical and socially responsible investment (ESRI) funds to retail investors and to analysis the plausibility of the claims made in regard to their performance, achievements and prospects.

Design/methodology/approach

The paper presents an analysis of the claims and marketing strategy adopted in the ESRI industry's Action Guide for Financial Advisors document, produced for their National Ethical Investing Week, 2010.

Findings

The analysis indicates that the ESRI fund industry's Action Guide uses a number of unethical marketing techniques to induce retail investors into investing in ESRI funds and that many of the claims made on behalf of ESRI investing are implausible. Given the past history of mis‐selling in the investment fund sector, these findings ought to be of some concern to regulators and retail investors.

Originality/value

This is the first article that has linked the promotion and marketing of ESRI funds to possible mis‐selling practices.

Citation

Watson, R. (2011), "Ethical and socially responsible investment funds: Are they ethically and responsibly marketed?", Journal of Financial Regulation and Compliance, Vol. 19 No. 2, pp. 100-110. https://doi.org/10.1108/13581981111123825