Hostname: page-component-cd9895bd7-7cvxr Total loading time: 0 Render date: 2024-12-27T19:44:06.995Z Has data issue: false hasContentIssue false
  • English
  • Français

Exit versus voice – options for socially responsible investment in collective pension plans

Published online by Cambridge University Press:  20 May 2019

Peter Dietsch
Peter Dietsch*
Affiliation:
Département de Philosophie, Université de Montréal, C.P. 6128, Succursale Centre-ville, Montréal, QC, H3C 3J7, Canada
*
Email: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

What do we owe participants in collective pension plans in terms of socially responsible investment (SRI)? This paper draws into question current conventional wisdom on SRI, which considers investor engagement a more effective strategy than divestment to change morally problematic corporate behaviour. More fundamentally, in light of reasonable disagreement about the objective of SRI, the paper argues that participants in collective pension plans are owed some kind of control over their investments. The final section considers four different institutional arrangements to respect this requirement in practice, ranging from democratic decision procedures to the availability of SRI alternatives.

Keywords

socially responsible investmentcollective pension plandivestmentshareholder engagementinvestor ethics profile
Type
Article
Information
Economics & Philosophy , Volume 36 , Issue 2 , July 2020 , pp. 246 - 264
Copyright
© Cambridge University Press 2019

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Apfel, D.C. 2015. Exploring divestment as a strategy for change: an evaluation of the history, success, and challenges of fossil fuel divestment. Social Research: An International Quarterly 82, 913–937.Google Scholar
Australian Superannuation Act 2005. Available at https://www.legislation.gov.au/Details/C2014C00299, accessed 2 April 2019.Google Scholar
Daskal, S. 2013. Saving for retirement without harming others. Journal of Business Ethics 113, 147–156.CrossRefGoogle Scholar
Davis, R.B. 2008. Democratizing Pension Funds. Corporate Governance and Accountability. Vancouver: UBC Press.Google Scholar
Foo, M. 2017. A Review of Socially Responsible Investment in Australia. An independent report for National Australia Bank (NAB) by the Australian Centre for Financial Studies (ACFS) at Monash Business School. Available at https://australiancentre.com.au/wp-content/uploads/2017/06/socially-responsible-investing-in-australia.pdf, accessed 2 April 2019.Google Scholar
Freshfields, Bruckhaus Deringer 2005. A Legal Framework for the Integration of Environmental, Social and Governance Issues into Institutional Investment. Geneva: UNEPFI.Google Scholar
Gilabert, P. 2012. From Global Poverty to Global Equality: A Philosophical Exploration. Oxford: Oxford University Press.CrossRefGoogle Scholar
Hall, N., Lacey, J., Carr-Cornish, S. and Dowd, A.-M. 2015. Social licence to operate: understanding how a concept has been translated into practice in energy industries. Journal of Cleaner Production 86, 301–310.CrossRefGoogle Scholar
Hebb, T. 2008. No Small Change: Pension Funds and Corporate Engagement. Ithaca, NY: Cornell University Press.Google Scholar
Hirschman, A.O. 1970. Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States. Cambridge, MA: Harvard University Press.Google Scholar
Hussain, W. 2012. Is ethical consumerism an impermissible form of vigilantism? Philosophy & Public Affairs 40, 111–143.CrossRefGoogle Scholar
Irvine, W.B. 1987. The ethics of investing. Journal of Business Ethics 6, 233–242.CrossRefGoogle Scholar
Kolers, A. 2001. Ethical investing: the permissibility of participation. Journal of Political Philosophy 9, 435–452.CrossRefGoogle Scholar
Kolstad, I. 2016. Three questions about engagement and exclusion in responsible investment. Business Ethics: A European Review 25, 45–58.CrossRefGoogle Scholar
Larmore, C. 1990. Political liberalism. Political Theory 18, 339–360.CrossRefGoogle Scholar
Leys, J. 2007. Having a look at the effectiveness of SRI-endeavours. Philosophica 80, 121–130.Google Scholar
Marriage, M. 2016. Pension funds review tobacco divestment. Financial Times, 24 April.Google Scholar
Miller, A.J. 1991. Socially Responsible Investing– How to Invest with your Conscience. New York, NY: New York Institute of Finance.Google Scholar
Organisation for Economic Co-operation and Development (OECD) 2017. Pension Markets in Focus. Paris: OECD. Available at http://www.oecd.org/pensions/private-pensions/Pension-Markets-in-Focus-2017.pdf, accessed 2 April 2019.Google Scholar
Ransome, W. and Sampford, C. 2010. Ethics and Socially Responsible Investment: A Philosophical Approach. Farnham: Ashgate.Google Scholar
Richardson, B.J. 2007. Do the fiduciary duties of pension funds hinder socially responsible investment? Banking and Finance Law Review 22, 145–201.Google Scholar
Richardson, B.J. 2013. Socially responsible investing for sustainability: overcoming its incomplete and conflicting rationales. Transnational Environmental Law 2, 311–338.CrossRefGoogle Scholar
Richardson, B.J. and Cragg, W. 2010. Being virtuous and prosperous: SRI’s conflicting goals. Journal of Business Ethics 92, suppl. 1, 21–39.CrossRefGoogle Scholar
Rivoli, P. 2003. Making a difference or making a statement? Finance research and socially responsible investment. Business Ethics Quarterly 13, 271–287.CrossRefGoogle Scholar
Sandberg, J. 2011. What are your investments doing right now? In Vandekerckhove, W., Leys, J., Alm, K., Scholtens, B., Signori, S. and Schäfer, H. (eds), Responsible Investment in Times of Turmoil. Berlin: Springer, 165–77.Google Scholar
Sandberg, J. 2013. (Re-)Interpreting fiduciary duty to justify socially responsible investment for pension funds. Corporate Governance 21, 436–446.CrossRefGoogle Scholar
Sandberg, J. and Nilsson, J. 2015. Do ethical investors want purity or effectiveness? An exploratory study on the ethical preferences of mutual fund investors. Journal of Financial Services Marketing 20, 34–45.CrossRefGoogle Scholar
Teoh, S.H., Welch, I. and Wazzan, C.P. 1999. The effect of socially activist investment policies on the financial markets: evidence from the South African boycott. Journal of Business 72, 35–87.CrossRefGoogle Scholar
Trinks, P.J. and Scholtens, B. 2017. The opportunity cost of negative screening in socially responsible investing. Journal of Business Ethics 140, 193–208.CrossRefGoogle Scholar
Université de Montréal (RRUM), annual reports, http://www.rrum.umontreal.ca/informations-financieres/rapports-annuels/, accessed 2 April 2019.Google Scholar
Watt, G. 2006. Trusts and Equity (2nd edn). Oxford: Oxford University Press.Google Scholar
Zweig, J. 1996. Why ‘socially responsible’ investing isn’t quite as heavenly as it might sound. Money 25, 64.Google Scholar