Business Ethics and SRI Literature review Example | Topics and Well Written Essays - 1500 words

Business Ethics and SRI - Literature review Example This emerging phenomenon is known as Socially Responsible Investment (Hicks,2003; Schueth, 2003) Socially Responsible Investment (SRI), also known as ethical investment, is an investment discipline that in addition to the risk and returns issues in investment, takes into account social or environmental issues. The difference between SRI and conventional investment is the employment of specific investment strategies. The purpose of such strategies is to select or exclude certain assets from investment portfolio. (Renneboog et al., 2008,p. 1723). It simply means that conventional investment strategies are considered natural—having financial return on investment at the core. However, SRI strategies are either socially sensitive or socially dictating(Hicks,2003; Schueth, 2003) SRI has three major distinctive techniques, which may overlap or follow one another. These are screening, activism, and cause-based investment( Spark and Cowton,2004; Vivers, 2007) . Further, SRI may be carr ied out at individual as well as institutional level. Individuals normally develop mutual funds whereas institutions execute it through charitable foundations and pension funds. Since its modern emergence, SRI, its strategies, its terminology and its definition have been under strong debates ( Spark and Cowton,2004; Schueth, 2003 Hicks,2003). ... At the end of this review , I shall present the growing importance of SRI at international level. 2. Definition and basic terminology 2.1. Business Ethics In current literature of business ethics, there are two major streams. One expects that business shall not be immoral enterprise and the second that consider the morality and self-interest at certain point sometime are opposite. ( Hicks,2003). The first group assume that business is amoral whereas second argue that if it is amoral it is immoral ( Hicks,2003).In current stream of business ethics literature second group is becoming dominant and either calls for the practice of personal values or even urges the investors to play an active role for the implementation of those values into the businesses.( Hicks,2003; Schueth, 2003, Vivers, 2007). 2.2. SRI and Other Terms There are various terms representing the concepts of business ethics. For instance, "Socially Responsible Investing" , "social investing," "socially aware investing," " ethical investing," "mission-based investing," and "double-bottom line investing.". These terms has been used interchangeably in literature (Pan and Mardfin ,2001; Schueth, 2003;Spark and Cowton,2004). However the two most common terms are â€Å"ethical investing† and â€Å"Socially Responsible Investment† (Spark and Cowton,2004, p 46). Term â€Å"ethical investment† is relatively older one and it reflects the fact that the movement was initially religiously motivated and churches played a vital role in the development of earliest ethical funds in UK, USA and Australia(Schueth, 2003; Spark and Cowton,2004). Later on, the term has gradually been replaced by Socially Responsible Investment (SRI). Many people have reservation on the use of