Responsible Investment

This paper investigates the idea of building responsible borrowing and lending into Sovereign Wealth Fund (SWF) decision-making. SWFs, which currently manage US$8 trillion in assets, are influential institutional investors, but their role in sovereign debt markets needs to be further explored. In this context, this paper critically assesses the linkages and convergences between the Santiago Principles on Sovereign Wealth Funds and the United Nations Conference on Trade and Development (UNCTAD) Principles on Responsible Sovereign Lending and Borrowing.

The objectives of this research are twofold: examine to what extension the environmental, social and governance information ESG are disclosed in the Integrated Reports of three industry sectors and whether there is difference in the disclosure between these chosen sectors. The vehicle of analysis is the Integrated Report and in its absence, the Sustainability Report. The disclosure reference model of sustainability proposed by Ching, Toste and Tardelli was used to examine which ESG information described in this model are present in the companies' reports. The sample consists of 15 companies of automotive, consumer goods and health care sectors. There were different levels of ESG information disclosure in the reports of the chosen companies, both in the dimension and in sectors. The disclosure in Corporate Governance dimension as well as in the consumer goods sector was less reported. The conclusions are: (a) there is still a long way to go by companies on the importance of disclosing ESG information; (b) one may speculate whether the low level of disclosure in corporate governance is due to lack of knowledge or disregard by the companies for this information; (c) the integrate reports are still being adopted in a shy way, given that the first release of its framework was in 2012. Finally, there is a concern about how socially responsible fund managers and responsible investors are making their investment decisions, as their primary source of ESG information should be disclosed in the Integrated Reports or Sustainability Reports.

To restore trust in companies, business and capitalism many directors and boards need to build relationships with a wider range of stakeholders than shareholders and focus more upon the social impacts of corporate policies and activities and responsible and sustainable business development. Such a shift of emphasis can create new opportunities for collaboration with Governments, regulators and other bodies and interests to ensure that business activities benefit the many rather than just a few, and reduce the pressure for further intervention.

Published as: Coulson-Thomas, Colin (2016), Corporate Social Responsibility and Corporate Social Impact, Director Today, Vol II, Issue XII, December, pp 5-10

Institutional investment portfolios are currently, and will increasingly be, affected by the risks and opportunities resulting from climate change. In addition, capital from the institutional investment system is needed to help finance the mitigation of and adaptation to climate change globally. Despite this, most investment decisions continue to be made without due consideration of these issues. An empirical analysis of investors’ learning strategies, investment practices and understandings of climate change is thus developed to explore communication and integration methods that could facilitate greater awareness of climate change within the institutional investment systems of the UK and Australia.

In-depth interviews and a global investor survey identify an audience for climate information but the slow uptake of existing material. Contributing factors included a language barrier between climate scientists and investors, insufficient leadership within the investment chain, and a failure to fully comprehend the materiality of climate change to investment returns. The novel approach of combining Communication theory to highlight the importance of formal and informal, social and asocial learning opportunities, and Systems theory to identify leverage points that could catalyze a shift towards climate-aware investing is utilized to contribute to existing literatures on integrating climate change into investment decisions.

Our measures of performance and productivity may not adequately reflect the wider and social impact and consequences of what organisations do.  There may be missing elements or social aspects that we are not taking into account. This article raises the question of whether we should be taking a wider view of productivity and performance and the assessment of social productivity and social performance. There are aspects such as recycling and sharing to consider as well as externalities and impacts on a wider range of stakeholders. Areas examined include requirements for responsible business, clarifying responsibility and stakeholders, determining approval and assessment criteria and guidelines, external legal, regulatory and other requirements, measuring social performance, supporting concerned stakeholders, investor and other stakeholder reactions, and the importance of having a socially beneficial core business. While there are challenges facing mankind, there are also unprecedented opportunities to be responsible, have a beneficial social impact and restore trust and respect in business, corporate leadership, enterprise and entrepreneurship. Better measures of social efficiency, productivity and performance would help entrepreneurs and business leaders to determine which opportunities to pursue and help investors and other stakeholders to make decisions on which people, organisations and activities to support. Published as:

Coulson-Thomas, Colin (2018), Social Performance and Productivity, Management Services, Vol. 62 No. 1, Spring, pp 30-34

Institutional investors are key actors in combating climate change. They are exposed to the risks and opportunities of climate change, and represent a large pool of capital that could help finance the trillions of dollars required to transition to a low carbon economy. Recognition of these issues within investment institutions appears to be increasing, but understanding climate change, and its associated investment implications, remains far from universal among investment professionals.

This discussion paper outlines the current understanding of climate change in the investment markets in the UK and Australia, providing novel insights from 58 semi-structured interviews with a range of investment professions and a survey of 154 investors. The UK and Australia both have substantial and growing institutional investment systems, as well as increasing activism surrounding Responsible Investment (EY, 2015). Given this, more responsible management of these assets could, potentially, provide significant impetus in shifting capital towards lower carbon economies.

The level of understanding of climate change, and how it relates to the investment system, was shown to vary hugely among participants in this research. The majority of participants focus more on climate risks than on the investment opportunities likely to arise from environmental change, although this divide was more noticeable in Australia than in the UK, partly due to the greater focus on regulatory risk in Australia. Another reason for this focus was the greater availability of investment products catering to climate risks, such as fossil-free indices and negative screening, compared to products that might be able to capture investment opportunities.

Raises a series of questions to encourage thinking and discussion ahead of the 11th International Conference on Corporate Social Responsibility in response to academic, legislator and public criticisms of business leaders and under various headings, including whether regulators, Governments and business leaders now have a shared interest in addressing certain common interests and could collaborate to create more caring and responsible companies that address a wider range of stakeholder interests and increase beneficial social impact.

Published as: Coulson-Thomas, Colin (2016), [Theme Paper for 11th International Conference on Corporate Social Responsibility] Embedding CSR in Corporate Strategy for Responsible Growth, www.iodglobal.com, [http://iodglobal.com/images/csr2017/theme-paper.pdf], 2nd December

The focus of Corporate Governance is shifting from the role of directors to active ownership. Based on their fiduciary duty to other shareholders, it is believed that institutional investors have an important role to play in this regard. However, the Pension Funds and the Sovereign Wealth Organisations are not driven by the same set of objectives. In addition, Environmental Social and Governance (ESG) issues in investment decision-making are now becoming more important and they are capable of becoming the mainstream in the future. However, there are widespread variations in perception of fiduciary responsibilities, ESG issues appraisal, as well as the strategies adopted by institutional investors on shareholder engagement as responsible investors. Responsible Investment market is largely driven by institutional investors and they are expected to continue to lead the way. This research work investigates the role of the main asset owners and their advisors in responsible investment practices in the UK. It adopts a qualitative approach using semi-structured interviews, questionnaire and meetings observations. Gathered data is analysed using grounded theory and the findings highlight the perception of the various investor groups to corporate governance. The research work contributes to the body of knowledge by assessing the corporate governance perspectives of the various classes of institutional investors which may have practical implications for other countries.

Institutional investment portfolios are currently, and will
increasingly be, affected by the risks and opportunities resulting from climate change. This paper contributes new empirical data from 58 in-depth interviews and a global investor survey to explore how climate change is being learnt socially and a socially within the institutional investment industry. This research seeks to identify ways in which the relatively novel concept of ‘stranded assets’ can be better disseminated to investment professionals. Importantly, both social and asocial learning can affect investment decisions, with some actors usefully providing information via both channels. Better learning, language and leadership within the institutional investment system could facilitate the dissemination of climate and stranded asset discourses among investors, but an imperative to communicate effectively rather than simply communicating more is noted. This paper should interest both investment professionals keen to learn more about the issue and academic researchers seeking to engage investors on these topics.

1. UN Sustainable Development Goals
2. Principles for Responsible Investment
3. Sustainability Accounting and Reporting
4. Global Reporting  Initiative
5.Responsible Finance Institute Foundation
6. Maqasid Al Sharia
7. Compatibility of Islamic Finance to Sustainability Standards
8. Conclusion

Suggestions have been made that the activities of many boards and companies have benefited some to a greater extent than others. Explores a range of related issues and various options for widening the range of stakeholders whose interests are taken into account, restoring trust and confidence in more sustainable, responsible and inclusive companies, building a more responsible and collaborative form of capitalism and achieving more sustainable and inclusive growth.

Published as:  Coulson-Thomas, Colin (2017), Responsible Companies, Capitalism and Growth, in Institute of Directors, 11th International Conference on CSR, 'Embedding CSR in Corporate Strategy for Responsible Growth', Souvenir, 20-21 January, Bengaluru, New Delhi, Institute of Directors

This paper examines the recent rise of initiatives for responsible agricultural investment and provides a preliminary assessment of their likely success in curbing the ecological and social costs associated with the growth in private financial investment in the sector over the past decade. I argue that voluntary responsible investment initiatives for agriculture are likely to face similar weaknesses to those experienced in responsible investment initiatives more generally. These include vague and difficult to enforce guidelines, low participation rates, an uneven business case, and confusion arising from multiple and competing initiatives. In addition, the large diversity of investors and high degree of complexity of financial investments further complicate efforts to discern who bears the burden of responsibility in practice. As a result, there is a strong likelihood that voluntary governance initiatives for responsible agricultural investment will shift discourse more than they will change practice.

A dilemma faced by an increasing number of investors is whether to boycott environmentally damaging businesses or whether to enter into a dialogue with them. This predicament now has its epicentre in Cambridge, England, where the ancient university faces great pressure from students and staff to respond to the threat of climate change. Having already received two reports on its approach to responsible investment, the university has appointed a new chief investment officer (CIO) who needs to consider the question of whether to divest or to engage. What would be the financial effects of each choice, and what would be the outcome in terms of environmental impact? Our case describes the background and the research behind the debate. The new CIO and her recently-appointed colleague, the chief financial officer, will present their ideas to the university. In contrast with other Journal articles, we do not propose solutions. Instead, we ask you, the reader, to consider the arguments and to take a position.

Customers and other stakeholders may hold a diversity of views on what is excellent and innovative and employ differing criteria for deciding what represents excellence and innovation. These can also evolve over time and as situations and circumstances change. Excellence and innovation may now be less about differentiation and more about our collective survival. The strategic direction a board provides for excellence and innovation could be to support responsible corporate and collective responses to existential challenges facing mankind such as climate change adaptation and mitigation and the pursuit of UN SDGs. Ethical and responsible innovation is required, which may involve challenging conventional wisdom, the support of transition and transformation journeys and the transfer of capabilities and resources, recognising the importance and value of diversity, reviewing values, changing habits, practices and priorities, and collective and community innovation. Whether or not an individual company is excellent and/or innovative may be less important than whether a community or society is and will also be able to cope. Collaborative innovative responses to existential challenges and related opportunities, at the level of a local community, city or wider society are now required, rather than isolated breakthroughs by individual enterprises that might not be widely adopted until it is too late to prevent a disaster.

The focus of Corporate Governance is shifting from the role of directors to active ownership. Based on their fiduciary duty to other shareholders, it is believed that institutional investors have an important role to play in this regard. However, the Pension Funds and the Sovereign Wealth Organisations are not driven by the same set of objectives. In addition, Environmental Social and Governance (ESG) issues in investment decision-making are now becoming more important and they are capable of becoming the mainstream in the future. However, there are widespread variations in perception of fiduciary responsibilities, ESG issues appraisal, as well as the strategies adopted by institutional investors on shareholder engagement as responsible investors. Responsible Investment market is largely driven by institutional investors and they are expected to continue to lead the way. This research work investigates the role of the main asset owners and their advisors in responsible investment pr...

This paper examines the institutional framework of socially responsible investment markets in Great Britain and Germany. Methodologically, the paper operationalizes investment products of SRI markets according to their shareholder- and stakeholder-orientation. The developments over time are analyized and interpreted within the Varieties-of-Capitalism-approach. Ultimately, the outcomes are compared to the ideal-typical modells of British and German market economies and allow for an evaluation stating where the SRI markets "fit" the modells and where they diverge.