Integrating societal issues into the asset allocation and selection strategies of ethical funds: the case of socially responsible funds and Islamic funds

Ezzedine Ghlamallah, Laurence Gialdini and Sami Ben Larbi

Sustainability Accounting, Management and Policy Journal, 2025, vol. 17, issue 4, 1139-1169

Abstract: PurposeThe purpose of this study is to examine how ethical investment funds, particularly socially responsible investment funds (SRI) and sharī’ah-compliant investment funds (SCI), integrate societal issues into their asset allocation and selection strategies.Design/methodology/approachThis study is based on a multiple-theoretical framework and uses a qualitative methodology. Thirty semi-structured interviews were conducted with SRI, SCI and conventional asset management professionals to understand the asset allocation and selection processes.FindingsThe results show convergences in the integration of societal issues between SRI and SCI funds but also significant divergences linked to the underlying principles. Three manager profiles are identified: committed, chameleon and cosmetic. The seven stages in the process of integrating the issues of the Anthropocene Era into the management practices of SCI and SRI are highlighted, as is the process of SCI–SRI hybridization currently at work in the industry.Research limitations/implicationsThe research was limited by sample size, and regulatory variations were not considered. Future studies should explore the impact of emerging technologies on ethical investing.Practical implicationsEthical funds need to align their strategies with societal issues to maintain their legitimacy and differentiate themselves in the market while avoiding “greenwashing” and “islamicwashing” practices.Social implicationsThis study highlights the importance of strengthening the integration of environmental, social and corporate governance criteria for SRI funds and sharī’ah compliance for SCI funds to meet stakeholder expectations and promote overall sustainable development.Originality/valueThis study proposes a new theoretical approach that integrates financial, institutional and strategic concepts to analyze the integration of societal issues into ethical fund practices.

Keywords: Islamic finance; ESG; Greenwashing; Sustainable finance; Islamic funds; Islamicwashing (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eme:sampjp:sampj-08-2024-0854

DOI: 10.1108/SAMPJ-08-2024-0854

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