Charity ethical investments in Norway and the UK: A comparative institutional analysis including the impact of a sovereign wealth fund

Abstract

Purpose

The purpose of this paper is to explore whether, how and why ethical investment practices of charities differ between two countries with quite different ideological and institutional frameworks – Norway and the UK.

Design/methodology/approach

The paper uses mixed methods and a cross-sectional field study design to explore the ethical investment practices of 300 of the largest charities by investments in the UK and Norway. Practices are theorized using the dual lens of institutional theory and social origins theory.

Findings

The paper provides evidence on why charities established the practice of ethical investment. The results show that large charities were more likely to have an ethical policy; that charities with moderate public sector funding were more likely to have an ethical policy. In line with institutional theory some Norwegian charities with public sector funding mimic the policy of the Government Pension Fund, and the ethical investment policy of Norwegian charities was more influenced by donors. Institutional entrepreneurs (charity founders) had a more prominent influence in UK charities.

Research limitations/implications

The paper highlights that more research is needed on sovereign wealth funds, their investment practices and how they affect charities.

Practical implications

The findings of this paper highlight the potential role that the ethical investment practices of sovereign can play a soft regulatory function in changing the behaviour of other investors.

Social implications

To the extent that ethical investment practices are construed as having a positive social impact, then this study shows how a government sovereign wealth fund can influence the spread of ethical investment practices.

Originality/value

This paper, which sits at the nexus of the charity and corporate social responsibility (CSR) literatures, contributes by responding to calls for more research on charity practices in different countries and CSR practices in different countries. This comparison also contributes to the development of institutional theory by shedding light on the institutional influence of a sovereign wealth fund and its impact on others. The paper will be of value to academics, policy setters and regulators.

Citation

Kreander, N., McPhail, K. and Beattie, V. (2015), "Charity ethical investments in Norway and the UK: A comparative institutional analysis including the impact of a sovereign wealth fund", Accounting, Auditing & Accountability Journal, Vol. 28 No. 4, pp. 581-617. https://doi.org/10.1108/AAAJ-09-2012-1113