Choosing between self-interest and the broader interests of society is one of the most fundamental dilemmas we all face in our everyday lives. As investors, we try to avoid this dilemma by distinguishing financial returns and societal benefits as two separate and disconnected categories. Investors adopting this perspective often consider it is not their mandate to care about the impacts of their investment decisions on the environment or society in general. Instead, the only concern they should have is their self-interest or, put differently, how to maximise their return. But are there ways to take both self-interest and the interests of others into account?
Responsible investment inevitably provokes thinking about this and many other dilemmas that are part of the investment process, but are often brushed aside by those outside, and even inside, the responsible investment world. How does one invest and still maintain those ethical standards that are so important for a well-run society? Is it ever worth the effort and truly effective to communicate with companies on social and environment issues? How can one tell when a company is actually taking a turn for the better or worse in these areas? Responsible investment cannot always, and may not ever, fully resolve these dilemmas, but it is in struggling with issues such as these that this discipline helps investors transcend the habits of business as usual.
It is precisely through wrestling with dilemmas such as these that responsible investment has developed and progressed. It would be wishful thinking to suppose that the simple growth of responsible investment practices, with an increase in assets under management and the number of skilled professionals at its disposal, will make these dilemmas vanish. It is in fact in recognising these dilemmas as an inherent part of a responsible investment process — and in recognising the continuing struggle with them as one of responsible investment’s strengths — that investment will continue to refine its ability to bring the financial world a perspective of long-term benefit for society and the environment.
But the question remains: how can investors confront daily dilemmas that have no easy resolution and still practise investment responsibly? Or, in other words, what would responsible investment be without dilemmas?
What about you: Do you agree? Have you ever faced such a dilemma? How have you resolved it?
Assistant Professor in Corporate Social Responsibility
AVAILABLE NOW: Dilemmas in Responsible Investment examines the problems responsible investment practitioners face daily and both the economic and societal responsibilities of investors.
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