1. Article Review- Ethical investment Process and Outcomes
The Article entitled “Ethical Investment Processes and Outcomes” was written by Grant
Michelson, Nick Wailes, Sandra van der Laan, and Geoff Frost which was published in Journal
of Business ethics by Springer on Jun., 2004. This article highlights the key themes in the field
and identifies some of the major theoretical and practical challenges facing both scholars and
practitioners. It focuses on the approach that “There’s nothing wrong with making money but its
how you make the money that counts”.
Ethical investment is broadly defined as the integration of personal values, social considerations
and economic factors into the investment decision. Investors in ethical funds appear to spread
their investment across wide range with verities of risk-return profiles. Better performing ethical
funds attract the investor who have ethics and also the conventional investors. Persons who are
attached to their socially responsible investments and who care their personal values are
generally involved in ethical investment. Ethical investment process informs actual and potential
investors about the involvement of organizations in activities which are seen either as of concern.
The authors have been able to integrate the social screening process in the ethical investment
process which focuses on the investment portfolios based on a range of social ethics in two
aspects that is positive and negative screening. So, it also provides the insight about which
investor is more blended towards investing in socially responsible investment through the
ethical process, provides better pays or not and does it matter for the future or not. The insight
about changing the corporate behavior via the social investment practices in the external
environment.
It also emphasizes on the two issues ignored by the other literatures having influence on the
firm’s behavior. First one is that it ignores the impact of the operation of the financial market on
the value of ethically invested funds and secondly, the problem regarding the showing of returns
in the short runs favoring near term earnings and discount future earnings.
But however, it doesn’t provide adequate research evidence in order to support the idea related to
who actually invests in the socially responsible investment. In some cases, it has not been able to
correctly report the facts of the particular study.
Therefore, it can further be taken as a subject of research to make the ambiguity related to ethical
investment, crystal clear and to unveil various scopes/ changes in the scope of ethical investment
with the changing periods of time.
Ram Krishna Tiwari
MFC 23
Tribhuwan University