Ethical investment

Corporate environmentalism is an evolving concept for environmental protection. In this case, business takes a pro-active stance independent of regulatory authorities. This can be in recognition of social responsibilities, but is more successful when compelled by competition in the market place. Thus, a hrm can conscientiously target environmentally aware consumers (through marketing environmentally friendly products or processes) or can be better placed for hnancial support from ethical investment funding bodies. 

It can hardly be denied that shareholders seek profits. It is an open question as to whether they have motivations other than profits. In recent times, there has been an emergence of an ethical investment sector, where managed funds pursue profits in conjunction with additional ethical objectives, such as environmental protection. These additional objectives are often satisfied simply by placing constraints on the types of firms these Hinds will invest in. On other occasions, the fiind is a more active participant in guiding firm policies. Even so, however, the question of most interest in the popular press is whether the ethical sector is more or less profitable than other sectors. In short, the focus is still squarely on profits, and it is safe to proceed on the assumption that shareholders seek profit maximization (see Baumol, 1958 Jensen and Murphy, 1988 Murphy, 1985). 

The Ethical Investment Research Services (EIRIS) and Sustainable Asset Management (SAM) have developed and applied composite indices to assess corporate sustainability practices based on company questionnaires and analysis of public information. The Investor Responsibility Research Center (IRRC) pointed out the value-chain perspective that analysts increasingly apply, considering risks beyond the company s immediate sphere of control. 

Ethical Investment Research Service (EIRIS) located in London is one organisation that screens companies for suitability in this area of investment and has now vetted more than 1500 companies. 

In the USA, the ethical investment market is substantially greater, accounting for a reported 500 billion. 

It is also essential that the wider impacts and risks are considered when strategic business decisions are made. In CSR, the confidence between the companies and the stakeholders increases and also unexpected effects on the business image may be reduced. Ethical investment offers investors something extra over and above conventional collective investment. An ethical investment is an investment which explicitly seeks to take into account environmental, social and ethical issues. It applies the combination of financial and ethical objectives to the selection of investments. 

Concepts such as ethical investments are likely to be low on the agenda of senior management but in recent years there has been a flurry of proposals, strategies, suggestions etc. that their investments should be linked with... 

The Co-operative Bank pic. Ethical Investment Policy, The Co-operative Bank pic, Skehnersdale (2001)... 

Cockburn, I. and R. Henderson (1994), Racing to invest Dynamics of competition in ethical drug discovery , Journal of Economics and Management Strategy, 3, pp. 481-519. 

Cockburn, lain, and Rebecca Henderson. 1994. Racing to Invest The Economics of Competition in Ethical Drug Discovery. Journal of Economics and Management Strategy 33 481-519. 

Current research ethics do not adequately address the issue of international research on the diversity of the human genome. Under current research standards, this research will widen the gap between developed and underdeveloped countries. New ethics standards for this research should frame this research so the market value of property rights from such research fosters the development of research institutions, a scientific workforce, and access to investment and venture capital within underdeveloped countries. The 1992 CBD offers just such a foundation. 

And while it is also true that thirty pharmaceutical companies alone account for 60 percent of worldwide ethical drug sales, the sums of money invested in research do not always get their full return. Thus it is that a small company like Janssen s laboratory, Janssen Pharmaceuticals, in Belgium, which was acquired in 1979 by Johnson and Johnson and which has among its discoveries diphenoxylate (1963) and loperamide (1975), has proved more innovative over the last fifteen years than the Rhone-Poulenc group, which has produced no major new molecule during the same time, although it devotes far more money to its research. 

In Europe, calls for increased disclosure got a boost in 2001 when the Association of British Insurers (ABI), a 400-member trade association of Britain s insurance industry, issued new guidelines. The ABI members account for more than 20 percent of stockmarket investment in London. These guidelines ask companies to disclose information about the social, environmental, and ethical risks and opportunities they face and how they plan to handle them. ABI officials say the guidelines represent an important opportunity for investors and companies to work together both to protect shareholder value and improve their understanding of corporate social responsibility (see www.abi.org.uk). 

R. Bauer, K. C. G. Koedijk and R. Otter, International Evidence of Ethical Mutual Fund Performance and Investment Style, Linberg Institute of Financial Economics Working Paper No. 02.59, 7 March 2002. 

Mexican law does not restrict payment of a doctor for both expenses and time invested in scientific meetings. However, the code of ethics of the National Chamber for the Pharmaceutical Industry has general provisions that require companies to act responsibly in donations and sponsorships. 

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