Beyond economic sustainability: embedding social and environmental values in the governance of responsible investment

Abstract

The transition of global financial markets towards investment models that incorporate environmental and social dimensions is now well underway. This paper discusses the evolution of contemporary responsible investment (RI) and its relationship to sustainable development and environmental social governance(ESG). In the conception of ESG presented here, various well-known institutional arrangements, most notably interest representation, accountability and transparency, decision-making, and implementation are linked to the structures and processes of governance. Using a hierarchical framework of principles, criteria and indicators (PC&I), the paper presents a means for evaluating RI by way of an analysis of stakeholder perceptions regarding the sector’s governance quality. It concludes with some observations on the challenges confronting RI, notably the need for universally consistent quality of governance standards.