SRI’s normative and ethics-based rationale

Socially responsible investment (SRI) has a long lineage. Faith-based investors practised it for centuries to ensure they did not invest in “sin.” In recent decades other types of investors have embraced it, challenging apartheid, tobacco, and fossil fuel industries. The SRI sector has grown dramatically, and with this growth its rationales have changed. While some investors embrace SRI as a matter of ethical compulsion, many act for other reasons including their financial self-interest. Some may even no longer speak of SRI or “ethical investment,” but instead refer to “environmental, social and governance” (ESG) issues as “financially material” (Ransome and Sampford 2011). This article evaluates the principal rationales for SRI, namely legal compliance, to avoid complicity in undesirable activities, to use leverage to enable positive change, and to accrue financial advantages.