Socially responsible investment

Thèmes abordés

Socially responsible investment, green washing, SRI industry

Résumé du document

Banks have an influence on the global economy through their capacity of funding. Regarding the policy of the banks, they can ease or not the funding of sustainable development policies or projects. Apart from "greenwashing" strategies the initiatives taken to fund sustainable development are limited but permitted by the socially responsible investment.

Socially responsible investment "also known as sustainable, socially conscious, green or ethical investing, is any investment strategy which seeks to consider both financial return and social good". It is a set of investment decisions based on criteria that integrate social and environmental positive or negative side effects. "SRI industry can be summarized as environment, social justice, and corporate governance, as in environmental social governance (ESG) issues". The investment decision is taken after an accurate financial analysis of the firm or project that needs funding.

Extraits

[...] Here lays the reason why socially responsible investment exists and grows. It is meant to tackle market failures and to readjust the equilibrium of the economy, because traditional financial systems and organizations could not cope with these issues. We will then analyze this new socially responsible market. SRI DEFINITION Banks have an influence on the global economy through their capacity of funding. Regarding the policy of the banks, they can ease or not the funding of sustainable development policies or projects. [...]

[...] – Stockholder engagement: Shareholders and money managers alike are increasingly incorporating ESG criteria in their investment criteria and supporting shareholder resolutions. – Improved choices: The expanding number of choices available to investors and variety of options has opened the possibility of social investing to a wider range of investors The actors of this sector and SRI strategies We can now ask ourselves, who are the ethical investors who would provide these responsible products? We can find public/private responsible investors: – Pension funds such as the CALPERS: Californian public employees' retirement system, – Public funds, – Individuals, – Organizations, – Institutions In 2011, according to Novethic, here was their respective weight on the market: Why do banks are crucial for the development of SRI's and furthermore for sustainable development? [...]

[...] But then comes the difficulty of investigation, and it takes time. We can't be sure about the quality of the information we have, even the method of these organizations isn't sufficient and there is a lack in the standards used. They often base their studies on official papers not on observations on the field. That is why independent organizations such as NGO's should keep analyzing their methods and honesty. We have for example the Bank Track network, which includes 14 NGO's, it keeps an eye on the impacts of banking projects on population and environment. [...]

[...] Indeed the CERES noted that from 2005 a net improvement has been seen in the banking system, which is the basis of the economy, by taking into account the global warming in its risk management. Even though economic agents believe that sustainable indexes are coming to complete the traditional ones regarding the performance of corporations, profitability stays a non-marginal criterion for investors. If SRI's are less risky than the average the return on investment is also lower than the average. [...]

[...] It has a policy of carbon neutrality applied to investment policy. It means that their indirect polluting activities are counterbalanced by the funding of eco-friendly projects. It has also signed the UN Global Compact and is the first long term investor in France. It has also launched a biodiversity protection fund in 2008. – The CAISSE D'ÉPARGNE wanted to provide all of its products with an SRI tag with 3 criteria: carbon intensity, financial risk and Social/Environmental impacts, but they have given up in front of its complexity. [...]