...STOCKHOLM SCHOOL OF ECONOMICS Master thesis within Finance Evaluating the Performance of Socially Responsible Investment Funds: A Holding Data Analysis H. Camilla Stenström* Jessica J. Thorell** Abstract: This paper investigates the performance of regular mutual funds compared to Socially Responsible Investment (SRI) mutual funds, over the time period of January 2001 to September 2007. The paper extends the research on the performance of SRI funds by using holding data of regular funds to create replicating portfolios. In the replicating portfolios, unethical investments are excluded according to a norm-based screening list, hence creating artificial SRI funds. The replicating portfolio returns are then used as a benchmark to compare against the SRI funds’ and regular funds’ returns. Results from the study indicate that an exclusion of companies according to norm-based screening can improve a fund’s performance. However, when looking specifically at the fund management of SRI funds, the results point towards inferior performance compared to regular funds. Key Words: Socially Responsible Investment (SRI) funds, ethical investments, holding data analysis, norm-based screening PhD Stefan Engström 13:15-15:00, December 14, 2007 Room 349, Stockholm School of Economics Tutor: Presentation: Venue: * 19873@student.hhs.se ** 19924@student.hhs.se H.C. Stenström and J.J. Thorell ACKNOWLEDGEMENTS Special thanks to tutor PhD Stefan Engström for all support and guidance...
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...could also be framed as a valid statistical construct. Social responsibility had been positively associated with financial outcomes. Typical socially responsible investors tilt their portfolios toward stocks of companies with high scores on social responsibility characteristics and shun stocks of companies associated with tobacco, alcohol, gambling, firearms, and military or nuclear operations. Analyzing 1992-2007 returns of stocks rated on social responsibility, study found that this tilt gave such investors an advantage over conventional investors. The study also found that shunning resulted in a disadvantage for such investors relative to conventional investors. The advantage from tilting toward stocks of companies with high social responsibility scores is largely offset by the disadvantage from the exclusion of stocks of shunned companies. Socially responsible investors can thus do both well and good by adopting the best-in-class method in constructing their portfolios: tilting toward stocks of companies with high scores on social responsibility characteristics but refraining from shunning stocks of any company. Social responsibility is an ethical ideology or theory that an entity, be it an organization or individual, has an obligation to a act to benefit society at large. This responsibility can be passive, by avoiding engaging in socially harmful acts, or active, by performing activities that directly advance social goals. Businesses can use ethical decision making to secure...
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...Bottom of Form Email Sent! You have successfully emailed the post. Green Banking For Small Businesses Tim Chen, NerdWallet | Sep. 6, 2011, 9:07 PM | 635 | In an increasingly eco-conscious market, many small businesses are finding creative ways to go green. Whether it’s improving their energy efficiency, buying organic products, composting or just turning off electronics at night, being green means all sorts of things to different people. One small thing you may not have considered is green banking. Most banks have at least one green initiative in place (or claim to), and a few have made the extra effort to distinguish themselves as green businesses. But what does “green banking” mean exactly? Depending on whom you ask, it’s a marketing term, a social philosophy, an investment strategy, and everything in between. However, if you’re an entrepreneur, you probably want to know if it makes sense on a business level. The answer is yes! You’ll save money, you’ll help the planet, and if you’re already running a green business, it’s a great next step. That said, if you’re serious about getting a greener banking experience, you’re going to have to look at facts, not fluff. What is your bank really doing to be more environmentally friendly? Have they cut back on their paper and energy use? Do they invest in sustainable or green businesses? Do they give back to the local community in any way, or give money to charity? You don’t need to do that much digging to get some...
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...International business, corporate social responsibility and sustainable development This article discusses the issue of corporate social responsibility (CSR) and the sustainable development which associate with international business (IB) and the multinational enterprises (MNEs) role in these matters. The social and environmental problems caused by international business have emerged for a period, however, they only being seen as an important issue under the pressure of global problems such as climate change, poverty, human rights violation and HIV. In this situation, MNEs have to play an appropriate role using their global activities and influences as these issues exist as both a problem and an opportunity for MNEs. In the modern globalization era, the landscape of international business is no longer like a decade ago or past few decades. Therefore, MNEs will need to adjust their internationalization strategy to better suit with today’s globalization challenges. CSR is now considered something to be taken into account in MNEs in order to compete better in market. CSR activities are gradually become important as they influence the core business of the firm and determine firm’s ability to grow, earn profit and sustain in the tough environment. Some firms are actually work hard with CSR in order to get the competitive advantages in managing international operation or earning a ‘pass’ to operate business in countries with different cultures and values or different institutional...
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...Barrett believes that organizational values are more important today than at any other time in history because the personal and societal context within which business operates is changing. Who you are as an organization, and what you stand for, is just as important as what you sell. The values that an organization lives by are important to a variety of stakeholders: Societal: Organizational values need to meet society’s expectations with regard to environmental stewardship and social responsibility. Failure to support society’s values can have a very significant impact on financial performance. Shareholders: Organizational values need to meet the needs of the new breed of shareholders that are only investing in companies that: (a) meet socially responsible investment criteria; and (b) compete to be the best companies to work for, or other quality awards. Potential employees: To attract the best people, the organizational values need to meet the needs of potential new employees who are choosing to work in organizational cultures...
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...BAE Business Report on Woolworths LIU Ying (Rina) 22967 BAE 4 2012.01.10 TABLES OF CONTENTS EXECUTIVE SUMMARY……………………………………………………………………ⅰ INTRODUCTION……………………………………………………………………………….1 Evaluation of company in terms of an ethical issue…………2 Evaluation of company in financial terms of profitability…..4 Recommendation…………………………………………………..5 References…………………………………………………………..7 Executive Summary The purpose of this report is to provide an ethical and financial evaluation of Woolworths for a client to help him decide whether to invest in this company. The respect for the right of employees was chosen as an ethical issue and the company was evaluated from two aspects: the right of employees and safety. Profitability was the financial factor which was also be used for the evaluation. Woolworths has showed respect for the rights of employees and performed well in achieving safety standards for employees. It is an ethical company. In addition, the profit of Woolworths is going up every year and there is an upward trend in the profit. Thus, the recommendation of this report is that Woolworths is an ethical company with an ability to gain profit, which is good for investment. Introduction This report aims at evaluating the company of Woolworth from ethical and financial aspects to help a client who is interested in ethical investing. So the client can make a decision as to...
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...Case study: Nike’s CSR Challenge After the widespread report on the workers of Nike in the plantation in 2005, Nike worked on the reports of social and environmental practices. Nike needs to consider the welfare of the workers and the profits they are earning. Nike’s future depends on the reconstructing the information that are being sent to customers, suppliers, investors, so that company is sustainable as well as profitable. Changing the rules and regulation is not only enough but they should also engage in transcending leadership and should be able to resolve systematic problems to achieve the goals of the organization. If they don’t make any changes in the financial markets, all their changes are worthless. 1) What are the challenges regarding corporate social responsibility that companies in the apparel industry face in its supply chains around the world? * There were many cases found such as mistreating employees in more than one third of Nike’s south Asian plants. There were also reports claiming most of the factories in the same region didn’t allow access to toilet or to drink water. And in some factories the workers were forced to work all seven days of the week. They were also paid below the minimum and were also punished if they refused to work overtime. They wanted to reconstruct the signals being given out so that they could be sustainable as well as profitable. 2) Discuss the meaning and implications of the statement by a Nike representative that “Consumers...
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...clients, and its employees. With this in mind, it is important for each and every business to be socially responsible. According to Meeting Professionals International, “social responsibility” is defined as the responsibility of an organization for the impacts of its decisions and activities on the society, the environment, and its own prosperity. (“Committed to Improving Our World”, 2012). This approach does two things: It helps to build the company’s reputation which will have a great impact on its customer base, and it also gives back to the community, which in turn helps our economy. In a price-conscious world, it is difficult for businesses to welcome the idea of “giving back” to the community. However, in the long run, giving back is what will help to increase the customer base over time. After all, the community that the business is giving back to is the same community that provides daily financial support for the business. Company Q faces several challenges that further goes to support why it should practice social responsibility. Being a small chain store in a big metropolitan area, the competition alone from the big brands stands to reason why Company Q should opt to support certain philanthropic activities, even it means taking a small loss in the beginning. Currently, it appears that Company Q is rather closed-minded toward being socially responsible. There are three areas where I would recommend Company Q improve as it relates to social...
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...Third Assignment Title: ‘Imagine that you are the CEO of Syngenta, a global agricultural chemicals supply company based in Basle, Switzerland. Read the article about the ‘Pesticide Nun’, then review your strategic options and outline your decision for the future of the UK business.’ Write a statement of the purpose of this assignment. Then identify three sub-questions to be answered: 1.1 What is Syngenta and what does it do? 1.2 Company’s statement of Corporate Responsibility 1.3 Consideration of the evidence presented in the article ‘Pesticide Nun’ 1.4 Strategic positions that Syngenta might take and the conclusion The purpose of this assignment is to consider the evidence of the article ‘Pesticide Nun’ and implications of this ruling for both the UK and the global business of Syngenta. Furthermore, company’s statement of Corporate Responsibility will be discussed and then in the end the conclusion will be drawn with the decision for the future of the UK business. 1.1. Syngenta is a world-leading plant science company based in Basel, Switzerland which promotes sustainable agriculture through inventive technology and research. Furthermore, the company ranks third in the high value commercial seeds market and is a leader in crop protection products (pesticides) (Syngenta, 2009). It has more than 24,000 employees in over 90 countries committed to the purpose to bring plant potential to life. Moreover, through global reach, world-class science and obligation to the customers...
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...TIMBERLAND’S MODEL OF CORPORATE SOCIAL RESPONSIBILITY TIMBERLAND’S MODEL OF CORPORATE SOCIAL RESPONSIBILITY Timberland is a manufacturer of rugged outdoor boots, clothing, and accessories. Founded in1918 in Boston by an immigrant shoemaker named Nathan Swartz, the company has been run for almost a century by three generations of the Swartz family. Today, the company sells its product in department and specialty stores as well as in its own retail outlets in North America, Europe, Asia, South Africa, Latin America, and the Middle East. Although the company was taken public in 1987, the Swartz family and its trust and charitable foundations continue to hold about 48 percent of Timberland stock. The company’s mission embodies a strong social responsibility theme “: to equip people to make a difference in their world. We do this by creating outstanding products and by trying to make a differene in the communities where we live and work.” In 1989, Timberland was approached by City Year, an urban service corps, for young people, with a request for a donation of boots. Jeff Swartz, a grandson of the founder and CEO, said yes and agreed to join the corps for half a day of community service. Swartz later described his experience: I found myself, not a mile from our headquarters…face to face with a vision [of] America not unlike the one that drew my grandfather to leave Russia in steerage so many years ago. I spent four hours with the corps members from City Year and some young recovering...
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...on several logical fallacies that constitute abstract relations meant to stir the emotions of the reader. By creating a false society where income and collective good are mutually exclusive, social accountability compares to communism, and workers are separated from the society. Friedman’s narrow argument is devoid of scale and methodical firmness and fails to persuade the reader of its logical qualities. This commentary aims at clarifying the significance of corporate social responsibility and establishes how organizations can achieve their profit motives in a socially responsible manner. First, Friedman pushes the reader to take his side by creating an abstract division amid profits and social accountability. In his view of a capitalist economy, the one and only responsibility of a corporation is to use its possessions and participate in actions aimed at increasing its profits. Business people can pursue a socially responsible course without the objectionable results claimed. Contrary to Friedman’s view, broad social responsibility that is common today requires businesses to interpret ethical norms more extensively than it features in Friedman’s assertion....
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...Overview What responsibilities do businesses have? Who takes priority when decisions are made? Are shareholders the most important to consider, or is it the customer? Should a company simply meet the required regulations, or attempt to go above-and-beyond the requirements? All of the questions involve corporate social responsibility. Corporate Social Responsibility can be defined as “the continuing commitment by business to behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as of the local community and society at large” (World Business Council for Sustainable Development). Cash is King Many organizations and individuals feel that businesses simply have the responsibility to make profits (Friedman, 1970). These companies or individuals place emphasis on satisfying the desires of its shareholders, primarily through high profits. Generally, these companies will spend only enough money on social responsibilities to comply with regulations. The money spent going above the required amount is considered to be spending someone else’s money. “Insofar as his actions in accord with his "social responsibility" reduce returns to stockholders, he is spending their money. Insofar as his actions raise the price to customers, he is spending the customers' money” (Friedman, 1970). They feel that employees can individually donate their time or money to contribute to society. CSR is Overrated Ultimately...
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...Case Study: Wal-Mart DeLeon A. Rich Management and Strategy Webster University May 15, 2013 Table of Contents Table of Contents 1 Introduction 2 Wal-Mart’s Threats and Challenges 2 Priorities of Wal-Mart CEO during the October Address 2 Wal-Mart Board’s Strategic Initiatives 3 Recent Wal-Mart Initiatives 4 Recent Initiatives 4 Comment: Strategy 5 Comment: Personal Relations 5 Wal-Mart’s Social Challenges 5 Conclusion 5 References 5 Introduction Every business organization in the contemporary world continues to face serious challenges and turbulences. Such challenges and turbulences have called on to business enterprises to re-structure and re-engineer their strategic plan in order to establish effective strategic initiatives. Dynamisms and increased competition are some of the challenges that business enterprises continue to face. One example of a business enterprise that has had to re-structure and re-engineer its strategic plan amidst increased dynamisms and competition with Wal-Mart. Late in 2005, Wal-Mart announced a series of sweeping new strategic initiatives. Such strategic initiatives are aimed at enhancing the position of the business within the industry and the market as well as performances. This case study provides an in-depth analysis of Wal-Mart in respect to its current strategy and challenges. Analysis of the threats and challenges coupled with priorities that Wal-Mart CEO, Lee Scott set in the address on “Twenty-first...
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...Curse of the ethical executive Why “corporate social responsibility” is not a welcome fashion The Economist, Nov 15th 2001 | From the print edition IT IS more than 200 years since Adam Smith observed that people enjoy their daily bread thanks not to the benevolence of their baker, but to his selfish pursuit of profit. In that observation and its implications lies the case for market capitalism. In their economic lives, people behave as though they had no regard for the public good. Yet the outcome, through the operation of the invisible hand, serves the public good better than any social planner could ever do. Nowadays the triumph of the market is taken for granted. But this victory is far from complete—because Smith's insight is, even now, not widely believed. Social progress is still thought to issue not from profit-seeking behaviour, nor even from enlightened government policy (current orthodoxy, after all, frowns on too much of that), but from the benevolence of the baker. Companies are enjoined to do more than serve their customers and make money. Instead they must be “good corporate citizens”; they must attend to the needs of their “stakeholders”; they must contribute to “sustainable development”; they must strive to “raise standards” at home and abroad. Increasingly, companies respond to these admonitions, or affect to, with zeal. So firmly has this view taken root that only a brave man would be willing to go on record against it. In a new booklet for the Institute...
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...Background The need for corporate governance among listed and unlisted companies and state-run enterprises is so great in Zimbabwe. The drive toward corporate governance has been fuelled by a number of factors. There is wide recognition that corporate governance can contribute to the economic success of corporations and to their long-term sustainability (going concern). It is also recognised that good corporate governance can enhance corporate responsibility and improve the reputation of companies, which in turn can attract local and foreign investors. Corporate governance is also seen as a deterrent to corruption and unethical business practices that has scared our business image.( WOYO MANNERS 2013) The market discipline and transparency that can result from good corporate governance further drive the quest for good governance in Zimbabwe. There are many obstacles that frustrate the quest for good corporate governance. Prominent on the list of obstacles are the lack of effective regulatory and institutional frameworks that can ensure the enforcement of the standards of good corporate governance. The King III (2010) code provides for the board‟s responsibility for risk governance. The essential focus of the code is that the board should exercise leadership to prevent risk management from becoming a series of activities that are de-punched from the realities from the company‟s spirit or activities. Greater emphasis is placed on the board to ensure that it is satisfied with...
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