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Socially Responsible Investment

Written by Dimitris Micharikopoulos and Felina Danalis (The research was carried by the Institute of Social Innovation, in collaboration with G & D Social Lab Ltd in Cyprus and AccountAbility in the UK)


In recent years, the global economy has grown increasingly complex, interconnected and harder to understand. Long-held economic theories and dogma have proven inadequate to deal with increasing discontent in developed countries such as those in the EU facing hitherto unknown economic insecurity and demographic pressures while developing countries like China, India and Brazil seek to raise the standards of living for billions of previously poor and disenfranchised. Old formulas about market economics and free trade, for example, are under more and more pressure. At the same time, there is an increasing awareness that the requirements of sustainable development, in which natural resources are used today while keeping in mind the ability of future generations to use them, demand new theoretical and practical approaches to solving these complex challenges. Indeed, the growing consensus around the world about the demands imposed by sustainable development is that they are at the center of the conflict about economic growth and a judicious use of the planet’s limited natural resources.

At the core of the challenge in many ways is the inter-temporal conflict between demands for growth and increased economic prosperity today and the demands of tomorrow. In an ever-more fast paced world, in which decisions are based on quarterly earnings and expectations, and competition is fierce, thoughts of tomorrow are often left by the wayside not to mention those of future generations. Indeed, the recent global financial crisis, aside from being primarily a tragic failure of good governance,
is also indelibly marked by short-termism gone rampant.

In this context, however, there is a growing trend that seeks to fuse the demands for economic growth today with the long term questions of social and environmental sustainability. Socially Responsible Investment (SRI) is an approach to investing that seeks to do exactly that. While definitions and practicesof SRI vary greatly around the world, as will be shown below, they all contain at their core the notion that non-financial issues can and should also be used in decision-making models about investing. The concept is frequently defined as one that seeks to align personal profit with societal goals, such as that of the universal owner.

As a way of contributing to the uptake of SRI, this study presents the current legal and regulatory framework in three EU countries at varying levels of economic development and SRI uptake (Cyprus, Greece and the United Kingdom), a survey of current investment practices used by financial institutions and owners and makes recommendations to public and private actors interested in promoting increasing integration of environmental, social and governance (ESG) issues into investment decision-making. As part of the broader project, “Strategies and Tools to Promote Responsible Investment”, this study will serve as a focal point to stimulate discussion among relevant stakeholders in the three focus countries including representatives from the business and financial communities, regulatory authorities, pension fund trustees and managers, investment analysts, asset fund managers and others.

This report was published by This publication summarizes the results of research conducted in the context of the project “Strategies and Tools to Promote Responsible Investment”, co-funded under the European Union’s PROGRESS Programme. The project was led by the Planning Bureau of the Republic of Cyprus. You can find the full report published by the Institute for Social Innovation here.