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Socially responsible investment and financial institution's response to secondary stakeholder requests

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  • Tim Benijts

Abstract

In order to gain influence over firms, secondary stakeholders can opt for socially responsible investment (SRI) - an investment approach that uses both financial and non-financial criteria to determine which assets to purchase [Guay, T., J. P. Doh, and G. Sinclair. 2004. "Non-governmental Organizations, Shareholder Activism and Socially Responsible Investments: Ethical, Strategic and Governance Implications." Journal of Business Ethics 52 (1): 125-139]. In this article, we argue that SRI, besides a tactic to gain influence over firms, can also be seen as a financial institution's characteristic on the basis of which secondary stakeholders can decide to (not) target a financial institution. It is theorized - based on organizational legitimacy theory - that a financial institution's supply of socially responsible financial products (proxied by the number of products and/or assets/deposits managed) signals a financial institution's likelihood of response to specific stakeholder requests. This relationship is theorized to be positive: the more important SRI is to a financial institution, the higher the likelihood of response to such requests.

Suggested Citation

  • Tim Benijts, 2014. "Socially responsible investment and financial institution's response to secondary stakeholder requests," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 4(4), pages 321-336, October.
    • Handle: RePEc:taf:jsustf:v:4:y:2014:i:4:p:321-336
    DOI: 10.1080/20430795.2014.946465
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    Cited by:

    1. Maria Carolina Rezende de Carvalho Ferreira & Vinicius Amorim Sobreiro & Herbert Kimura & Flavio Luiz de Moraes Barboza, 2016. "A systematic review of literature about finance and sustainability," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 6(2), pages 112-147, April.
    2. M. P. Afanas’ev & N. N. Shash, 2022. "ESG Transformation in the Corporate Sector: Systematizing the Global Approach," Studies on Russian Economic Development, Springer, vol. 33(6), pages 707-715, December.

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