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Article
Publication date: 18 May 2015

Niklas Kreander, Ken McPhail and Vivien Beattie

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…

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1515

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.

Details

Accounting, Auditing & Accountability Journal, vol. 28 no. 4
Type: Research Article
ISSN: 0951-3574

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Article
Publication date: 1 April 2004

Christopher J. Cowton

Ethical investment funds are retail financial products which explicitly add social or ethical goals or constraints to normal financial criteria in selecting their…

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6286

Abstract

Ethical investment funds are retail financial products which explicitly add social or ethical goals or constraints to normal financial criteria in selecting their underlying share portfolio. By means of a case study of a UK fund, this paper explores how the relationship between ethical criteria and financial performance might be handled, which is one of the critical issues that arise in putting ethical investment into practice. The research confirms perceptions of a tension between the implementation of an ethical policy and the achievement of good financial performance, and it identifies some of the ways which fund managers might seek to cope with that tension. However, by studying the financial management of an ethical fund in practice, the paper also reveals the ways in which there might be a positive correlation between the financial performance and the ethical effectiveness of a fund, thus providing a complementary perspective to the earlier empirical studies and discussions which have focused on the possibility of ethical concerns undermining financial success.

Details

Accounting, Auditing & Accountability Journal, vol. 17 no. 2
Type: Research Article
ISSN: 0951-3574

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Article
Publication date: 1 April 1997

Bodo B. Schlegelmilch

Ethical investment funds are among the fastest growing investment vehicles in the UK. Explores some of the environmental changes leading to the popularity of these funds…

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3321

Abstract

Ethical investment funds are among the fastest growing investment vehicles in the UK. Explores some of the environmental changes leading to the popularity of these funds and briefly reviews some of the screening criteria used to establish ethical portfolios. Based on a sample of 172 investment professionals, analyses the relative importance of ethical and environmental screening compared to the traditional yardsticks of liquidity, return and risk. Discusses implications for the marketing of ethical investment funds and identifies future research directions.

Details

International Journal of Bank Marketing, vol. 15 no. 2
Type: Research Article
ISSN: 0265-2323

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Article
Publication date: 14 February 2018

Yu-Cheng Lin, Chiung-Yao Huang and Yu-Shan Wei

The purpose of this paper is to examine the ethical investment willingness decision-making process to understand how investors evaluate corporate social responsibility…

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1177

Abstract

Purpose

The purpose of this paper is to examine the ethical investment willingness decision-making process to understand how investors evaluate corporate social responsibility (CSR) actions.

Design/methodology/approach

Data were collected through a survey of 298 individual investors and analyzed using structural equation modeling.

Findings

Results reveal that perfectionist decision-making style is positively related to perceived moral intensity, substitutability of financial returns, and ethical investment willingness. In addition, perceived moral intensity and substitutability of financial returns are positively related to ethical investment willingness. Finally, perceived moral intensity is positively related to substitutability of financial returns, and a two-factor causal mediation model is supported.

Research limitations/implications

The limitation of this study was that the pre-tests and sampling methods required all participants to have investing experience; however, procurement of trading information for each investor was impossible; thus, actual investment behaviors were undetermined. This study shed light on the mediating roles of perceived moral intensity and the substitutability of financial returns. Future studies can further investigate the factors influencing perceived moral intensity and the substitutability of financial returns.

Practical implications

Future ethical investment education can focus on cultivate the ability to distinguish ethical investments and change ethical investment willingness into actual investment behavior.

Originality/value

Understanding the relationship between these variables can help understand why ethical investment willingness varies among investors and how the traditional financial theory investment decision model should be revised as, internationally, more people have begun to observe CSR and sustainable development.

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Article
Publication date: 1 July 2004

Niklas Kreander, Ken McPhail and David Molyneaux

While the literature contains a number of studies of ethical investment funds, relatively little is known about church investment processes and practices despite the…

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3456

Abstract

While the literature contains a number of studies of ethical investment funds, relatively little is known about church investment processes and practices despite the significant role they have played in the development of the sector. This paper attempts to address this lacuna by studying the ethical investment programmes of two UK churches: the Methodist Church and the Church of England. The paper initially explores the relationship between the Judaeo‐Christian church and the development of the ethical investment movement. This history reveals an engagement both at the institutional and individual level that challenges the assumed sacred secular divide now commonplace within the literature and the more recent guardian‐advocate dichotomy. Second, the paper delineates the way in which the churches theologically conceptualise this engagement and describes how these values are proceduralised through the operation of the funds. The final section provides an immanent critique of church investments both at a performative and theological level. The aim of this concluding section is to engage with the churches in exploring the broader potential for the church in effecting social change.

Details

Accounting, Auditing & Accountability Journal, vol. 17 no. 3
Type: Research Article
ISSN: 0951-3574

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Article
Publication date: 1 November 1997

Rodney Wilson

Reports that there are lessons which can be learned from the Western ethical “green” finance industry for Islamic investors. States that these are that the criteria for…

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23525

Abstract

Reports that there are lessons which can be learned from the Western ethical “green” finance industry for Islamic investors. States that these are that the criteria for investment selection are different, and the modes of permissible financing may also differ, but there are screening and reporting techniques which are of potential importance to both groups of investors. First addresses ethical fund management issues, which should shed some light on the dilemmas facing Islamic investors. Goes on to consider criteria for haram and halal investment, as well as the implications of company capital gearing or leverage for riba. Covers investment specific issues, including the treatment of capital gains in Islam and the evaluation of the conduct of market participants. Finally, surveys emerging markets in the Islamic world, as these are of obvious interest to Muslim investors wishing to broaden their portfolios.

Details

International Journal of Social Economics, vol. 24 no. 11
Type: Research Article
ISSN: 0306-8293

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Article
Publication date: 1 May 2003

Michael Ross Jayne and Glynn Skerratt

Ethical and environmental investment criteria, now known as socially responsible investment (SRI), are increasingly commonplace in the market today. Some investors have…

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3443

Abstract

Ethical and environmental investment criteria, now known as socially responsible investment (SRI), are increasingly commonplace in the market today. Some investors have specifically set themselves up as ethical investors. Consequently, ethical considerations are a cornerstone of their investment policy. Many of the funding institutions have ethical investment arms, even where these are not their mainstream activity. Understanding the role of ethical investors, and their ethical considerations, within the property market would appear, therefore, to be of increasing importance to the property professions. The activities of funding institutions specifically marketing themselves as ethical and those not so doing are explored, using an in‐depth questionnaire, in order to determine what these environmental criteria are and the way in which they are considered. The results are placed in the context of property and property investment. It is concluded that a knowledge of ethical issues is advantageous for property professionals, especially when advising ethical investor clients.

Details

Property Management, vol. 21 no. 2
Type: Research Article
ISSN: 0263-7472

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Article
Publication date: 2 November 2015

Anett Wins and Bernhard Zwergel

This paper aims to provide an overview of the literature to point out similarities and differences among private ethical investors across countries and time. Over the past…

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1551

Abstract

Purpose

This paper aims to provide an overview of the literature to point out similarities and differences among private ethical investors across countries and time. Over the past three decades, many surveys have been conducted to advance the understanding of the demographic characteristics, motivation and morals of private ethical investors across countries and time. To date, the survey-based evidence on private investors into ethical funds is geographically rather segmented, and the research questions are fairly diverse. This permits only very temporally or regionally selective conclusions. Thereby, the authors identify interesting topics for future research.

Design/methodology/approach

To identify the relevant literature for our review, the authors carried out a structured Boolean keyword search using major library services and databases.

Findings

When questions about negative screening criteria are presented in a direct investment context, the consensus of private ethical investors “worldwide” (on average) is that social screening issues are most important, followed by ecological and moral topics. The percentage of ethical funds in the fund portfolio of the average private ethical investor in Europe seems to increase when the investor exhibits high degrees of pro-social attitudes and perceived consumer effectiveness. European private ethical investors are of the opinion that ethical funds perform worse but are less risky than conventional funds.

Practical implications

The authors make suggestions on how investment companies should design their funds so that they can attract more socially responsible investors.

Originality/value

The paper is of particular value because it focuses on private investors in the fast growing retail market of socially responsible investment funds.

Details

Qualitative Research in Financial Markets, vol. 7 no. 4
Type: Research Article
ISSN: 1755-4179

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Book part
Publication date: 2 September 2019

Sarah Lenz and Sighard Neckel

German ethical banks have experienced a significant increase in customers, deposits, and lending. They aim to establish a fairer banking system. But the simultaneous…

Abstract

German ethical banks have experienced a significant increase in customers, deposits, and lending. They aim to establish a fairer banking system. But the simultaneous pursuit of social, ecological, and economic goals leaves them vulnerable to conflicting orders of worth. The authors examine the normative foundations that ethical bank employees refer to when they describe their everyday practices and identify the specific problems that arise from negotiating between moral principles and economic demands to provide insights into the impacts, constraints, and paradoxes of normatively oriented business practices. Drawing on the theoretical framework of the sociology of critique, the authors assume that moral categories, social processes of interpretation, and justification are an essential part of markets. Ethical banking is characterized by the need to meet both market-limiting and market-expanding requirements, and this particularly becomes contentious when dealing with economic growth. By analyzing ethical banks’ freely accessible documents, the authors first outline the institutional guidelines. In a second step, the authors analyze 27 qualitative interviews with employees of ethical banks to gain insights into everyday lending practices and action-guiding normative orientations. The goal of this chapter is to examine the tensions that may arise from applying normative guidelines under the condition of increasing economic requirements and to disclose the way that ethical banks negotiate between mechanisms of expansion and limitation. The analysis of this chapter points out a paradox of ethical banking: due to the banks’ economic expansion, investments corresponding to their ethical commitments tend to become a luxury they cannot afford.

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Article
Publication date: 1 January 1999

Lorne S. Cummings and Roger L. Burritt

To attract funding from ethical investment trusts, it is expected that investee companies will need to undertake corporate social disclosure (CSD) in annual reports. This…

Abstract

To attract funding from ethical investment trusts, it is expected that investee companies will need to undertake corporate social disclosure (CSD) in annual reports. This paper first explores the notion that companies included within the portfolio of ethical investment trusts (ETIs), are likely to provide a greater quantity of CSD than companies in which ethical trusts have not invested (NETIs). Second, the paper examines the characteristics of companies that undertake CSD, and their relationship to the ETI/NETI classification. Results from the examination of a sample of 300 Australian annual reports for 147 companies over a five‐year period (1990–1994), indicate that CSD is related to size, industry visibility, and company presence in both foreign countries and foreign stock exchanges. The significance of this paper, in addition to building upon empirical research into CSD, is that, in a range of circumstances, companies with an ethical investor as a shareholder, provide greater transparency about their social and environmental activities, than companies without an ethical investor. As a result, case can be made for the direct regulation and monitoring of ETI companies to be reduced, relative to NETIs, given that ethical investment may fulfil a market based regulatory function.

Details

Asian Review of Accounting, vol. 7 no. 1
Type: Research Article
ISSN: 1321-7348

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