The relative importance of ethics, environmental, social and governance criteria

Suzette Viviers, Janine Krüger, Danie JL Venter


Responsible investing (RI) is a growing phenomenon in the international investment arena. This article investigates the level of knowledge of members of South African pension/provident funds with regard to RI and the importance with which they view various ethical, environmental, social and governance (ESG) criteria. Respondents (n = 281) indicated a relatively low level of understanding of the concept of RI. Significant differences were noted in the perceptions of respondents about the relative importance of ethical and ESG criteria based on their gender and level of education. The findings could assist asset owners in reformulating their investment mandates, which in turn, will enable fund managers to invest in a more responsible manner. 


Corporate governance criteria; ethical criteria; environmental criteria; pension/provident funds; responsible investing; social criteria

Full Text:



Ballestero, E., Bravo, M. Pérez‐Gladish, B., Arenas‐Parra, M. and Plà‐Santamaria, D. (2012). Socially responsible investment: A multicriteria approach to portfolio selection combining ethical and financial objectives. European Journal of Operational Research, 216, 487‐94.

Barber, B.M. and Odeon, T. (2001). Boys will be boys: Gender, overconfidence and common stock investment. Quarterly Journal of Economics, 116 (1), 261‐92.

Barnett, M.L. and Salomon, R.M. (2006). Beyond dichotomy: The curvilinear relationship between social responsibility and financial performance. Strategic Management Journal, 27, 1101‐22.

Bauer, R., Koedijk, K. and Otten, R. (2005). International evidence on ethical mutual fund performance and investment style. Journal of Banking and Finance, 29 (7), 1751‐67.

Becht, M., Franks, J., Mayer, C. and Rossi, S. 2010. Returns to shareholder activism: Evidence from a clinical study of the Hermes UK Focus Fund. The Review of Financial Studies, 23 (3), 3093‐29.

Boasson, E., Boasson, V. and Cheng, J. (2006). Investment principles and strategies of faith‐based funds. Managerial finance, 36 (10), 837‐45.

Beal, D. and Goyen, M. (1998). Putting your money where your mouth is: A profile of ethical investors. Financial Services Review, 7 (2), 129‐43.

Cadman, T. (2011). Evaluating the governance of responsible investment institutions: an environmental and social perspective. Journal of Sustainable Finance and Investment, 1, 20‐9.

Cowton, C.J. (1998). Socially responsible investment. Encyclopaedia of applied ethics, 4, 181‐90.

Crotty, A. (2012a). SA shareholders slow to act on governance. Business Report, 8 May, [Online]. Available: element‐in‐the‐news/read/207/[Accessed on 1 August 2012].

Crotty, A. (2012b). CRISA will give governance a voting chance. Independent Online, 30 January. [Online]. Available: business‐news/crisa‐will‐give‐governance‐a‐voting‐chance‐1.1222680?ot= inmsa.ArticlePrintPageLayout.ot [Accessed on 4 February 2012].

Derwall, J., Koedijk, K. and Ter Horst, J. (2011). A tale of values‐driven and profit‐seeking social investors. Journal of Banking and Finance, 35, 2137‐47.

De Vries, I. and De Villiers, C.J. (1997). Ethical investing by South African unit trust managers. Meditari Accountancy Research, 31‐43.

Drut, B. (2010). Sovereign bonds and socially responsible investing. Journal of Business Ethics, 92 (Supplement), 131‐45.

Eccles, N.S. and Viviers, S. (2011). The origin and meanings of names describing investment practices that integrate a consideration of ESG issues in the academic literature. Journal of Business Ethics, 104 (3), 389‐402.

Eccles, N.S., De Jongh, D., Ndlovu, R., Coovadia, C. and Smith, J. (2009).

The state of responsible investment in South Africa. A survey of the approaches and perceptions of the South African investment community to environmental, social and governance issues Pretoria, UNISA Centre for Corporate Citizenship. [Online]. Available: colleges/coleconmanscience/ccc/docs/State%20of%20responsible%20 Investment%20in%20South%20Africa.pdf [Accessed on 1 February 2009].

EUROSIF. (2008). 2008 European SRI Study. [Online]. Available: www. [Accessed on 1 December 2008].

Dembinski, P., Bonvin, J.M., Dommen, E. and Monnet, F.M. (2003). The ethical foundations of responsible investment. Journal of Business Ethics, 48 (2), 203‐13.

Fernandez‐Izquierdo, A. and Matallin‐Saez, J. (2008). Performance of ethical mutual funds in Spain: sacrifice or premium? Journal of Business Ethics, 81 (2), 247‐60.

Finlay, A. (2004). Investing in social responsibility, 20 August. [Online]. Available: [Accessed on 14 July 2008].

Gay, G.R. and Klaassen, J.A. (2005). Retirement investment, fiduciary obligations and socially responsible investing. Journal of Deferred Compensation, 10 (4), 34‐49.

Giamporcaro, S. and Pretorius, L. (2012). Sustainable and responsible investment (SRI) in South Africa: A limited adoption of environmental criteria. Investment Analysts Journal, 75, 1‐19.

Gillham, B. (2004). Developing a Questionnaire. London: Continuum. Gilligan, C. (1982). In a Different Voice: Psychological Theory and Women’s Development. Cambridge: Harvard University Press.

Government Employees Pension Fund. (2009). Welcome to the GEPF

Website [Online]. Available:[Accessed on 1 October 2009].

Guay, T., Doh, J.P. and Sinclair, G. (2004). Non‐governmental organizations, shareholder activism and socially responsible investments: Ethical, strategic and governance implications. Journal of business ethics, 52 (1), 125‐39.

Haigh, M. and Hazelton, J. (2004). Financial markets: A tool for social responsibility? Journal of Business Ethics, 52 (1), 59‐71.

Herringer, A., Firer, C. and Viviers, S. (2009). Key challenges facing the socially responsible investment (SRI) sector in South Africa. Investment Analysts Journal, 70 (Nov), 11‐26.

Hill, R., Ainscough, T., Shank, T. and Manullang, D. (2007). Corporate Social Responsibility and Socially Responsible Investing: A Global Perspective. Journal of Business Ethics, 70 (2), 165‐74.

Hummels, H. and Timmer, D. (2004). Investors in need of social, ethical and environmental information. Journal of Business Ethics, 52, 73‐84.

Huppé, G.A. and Bala‐Miller, P. (2011). Shareholder passivity: A viable explanation for corporate governance failures at NewsCorp? Journal of Sustainable Finance and Investment, 1, 180‐94.

Hussein, K. and Omran, M. (2005). Ethical investment revisited: Evidence from Dow Jones Islamic Indexes. Journal of Investing, 14 (3), 105‐24.

Investec’s largest investor votes against resolutions. (2012). Moneyweb, 6 August, [Online]. Available: en/moneyweb‐financial?oid=581911andsn=2009+Detailandpid=292674 [Accessed on 4 February 2012].

Johnson, R.A. and Greening, D.W. (1999). The effects of corporate governance and institutional ownership types on corporate social performance. Academy of Management Journal, 42 (5), 564‐76.

Jones, S., van der Laan, S., Frost, G. and Loftus, J. (2008). The investment performance of socially responsible investment funds in Australia. Journal of Business Ethics, 80 (2), 181‐203.

Karima, W. (2012). Responsible investment toolkit for retirement fund trustees. COVER, June, 80.

Klein, A. and Zur, E. (2009). Entrepreneurial shareholder activism: Hedge funds and other private investors. The Journal of Finance, 64 (1), 187‐229.

Krumsiek, B. (1997). The emergence of a new era in mutual fund investing: Socially responsible investing comes of age. Journal of Investing, 6 (4), 26‐31.

Lee, K. (2009). ‘Gender differences in Hong Kong adolescent consumers’ green purchasing behaviour. Journal of consumer marketing, 26 (2), 87‐96.

Lewis, A. and Mackenzie, C. (2000). Morals, money, ethical investing and economic psychology. Human Relations, 53 (2), 179‐91.

Mclachlan, J. and Gardner, J. (2004). A comparison of socially responsible and conventional investors. Journal of Business Ethics, 52 (1), 11‐25.

Mill, G.A. (2006). The financial performance of a socially responsible investment over time and a possible link with corporate social responsibility. Journal of Business Ethics, 63 (2), 131‐48.

Neubaum, D.O. and Zahra, S.A. (2006). Institutional ownership and corporate social performance: The moderating effects of investment horizon, activism and coordination. Journal of Management, 32 (1), 108‐31.

Özden, M. (2008). Environmental awareness and attitudes of student teachers: An empirical research. International research in geographical and environmental education, 17 (1). [Online]. Available: web.ebscohost. com/ehost/pdf?vid=5andhid=4andsid=491c395b‐f60a‐458c‐8d5d‐e6734 9dceaa%40sessionmgr [Accessed on 29 January 2010].

Poulsen, T., Strand, T. and Thomsen, S. (2010). Voting power and shareholder activism: A study of Swedish shareholder meetings. Corporate Governance: An International Review, 18 (4), 329‐43.

Proffitt, W.T. (Jr) and Spicer, A. (2006). Shaping the shareholder activism agenda: Institutional investors and global social issues. Strategic Organisation, 4 (2), 165‐90.

Proudly South African. (2010). Welcome to Proudly South African. [Online]. Available: us/about.htmlandtitle=./gfx/pages/about.jpg [Accessed on 4 January 2010].

Rehbein, K., Waddock, S. and Graves, S.B. (2006). Understanding shareholder activism: Which corporations are targeted? Business and Society, 43 (3), 239‐67.

Renneboog, L., Ter Horst, J. and Zhang, C. (2011). Is ethical money financially smart? Nonfinancial attributes and money flows of socially responsible investment funds. Journal of Financial Intermediation, 20, 562‐88.

Renneboog, L., Ter Horst, J. and Zhang, C. (2008a). The price of ethics and stakeholder governance: The performance of socially responsible mutual funds. Journal of Corporate Finance, 14, 302‐22.

Renneboog, L., Ter Horst, J. and Zhang, C. (2008b). Socially responsible investments: Institutional aspects, performance and investor behaviour. Journal of Banking and Finance, 32, 1723‐42.

Richardson, B.J. (2011). From fiduciary duties to fiduciary relationships for socially responsible investing: Responding to the will of beneficiaries Journal of Sustainable Finance and Investment, 1, 5‐19.

Rosen, B.N. and Sandler, D.M. (1991). Social issues and socially responsible investment behaviour: A preliminary investigation. Journal of Consumer Affairs, 25 (2), 221‐35.

Schepers, D.H. and Sethi, S.P. (2003). Do socially responsible funds actually deliver what they promise? Business and Society Review, 108 (1), 11‐32.

Schueth, S. (2003). Socially responsible investing in the United States. Journal of Business Ethics, 43 (3), 189‐94.

Shank, T.M., Manullang, D.K. and Hill, R.P. (2005). Is it better to be naughty or nice? Journal of Investing, 14 (3), 82‐8.

Sjöström, E. (2008). Shareholder activism for corporate social responsibility: What do we know? Sustainable Development, 16, 141‐54.

Solomon, J., Solomon, A. and Norton, S. (2002). Socially responsible investment in the UK: Drivers and current issues. Journal of General Management, 27 (3), 1‐13.

Sonnenberg, D. and Hamman, R. (2006). The JSE Socially Responsible Investment Index and the state of sustainability reporting in South Africa. Development Southern Africa, 23 (2), 305‐20.

Sparkes, R. and Cowton, C.J. (2004). The maturing of socially responsible investments: A review of the developing link with corporate social responsibility. Journal of Business Ethics, 52 (1), 45‐57.

Syriopoulos, T., Merikas, A. and Vozikis, G.S. (2007). Corporate Social Responsibility and Shareholder Value Implications. Corporate Ownership and Control, 5 (1), 96‐108.

Thamotheram, R. and Wildsmith, H. (2007). Increasing long‐term market returns: Realising the potential of collective pension fund action. Corporate Governance: An International Review, 15 (3), 438‐54.

Vanderkerckhove, W., Leys, J. and Van Braeckel, D. (2007). That’s not what happened and it’s not my fault anyway! An exploration of management attitudes towards SRI‐shareholder engagement. Business Ethics: A European Review, 16 (4), 403‐18.

Vermeir, W., Van De Velde, E. and Corten, F. (2005). Sustainable and responsible performance. Journal of Investing, 14 (3), 94‐100.

Visser, W. (2005). Corporate citizenship in South Africa: A review of progress since democracy. Journal of Corporate Governance, 18, 29‐38.

Viviers, S., Bosch, J.K., Smit, E. vd M. and Buijs, A. (2009). Responsible investing in South Africa. Investment Analysts Journal, 69 (May), 1‐14.

Viviers, S., Bosch, J.K., Smit, E. vd M. and Buijs, A. (2008). The risk‐adjusted performance of responsible investment funds in South Africa. Investment Analysts Journal, 68 (November), 1‐17.

Wen, S. (2009). Institutional investor activism on socially responsible investment: Effects and expectations. Business Ethics: A European Review, 18 (3): 308‐33.

Williams, G. (2007). Some determinants of the socially responsible investment decisions: A cross‐country study. The Journal of Behavioural Finance, 8 (1), 43‐57.

Winfield, J. (2011). The landscape of proxy voting at South African asset managers. RisCura, July. [Online]. Available: research/SpoiltVotesHigh_Aug 2011.pdf [Accessed on 1 December 2011].

World Economic Forum. (2005). Mainstreaming Responsible Investment. January. [Online]. Available: [Accessed on 4 January 2006].



  • There are currently no refbacks.

ISSN 0976-3600 (on-line) ; ISSN 1817-7417 (print)

Powered by OJS and hosted by Stellenbosch University Library and Information Service since 2014.


This journal is hosted by the SU LIS on request of the journal owner/editor. The SU LIS takes no responsibility for the content published within this journal, and disclaim all liability arising out of the use of or inability to use the information contained herein. We assume no responsibility, and shall not be liable for any breaches of agreement with other publishers/hosts.

SUNJournals Help