Reframing the governance challenge for sustainable investment

Heather Hachigian and Sarah M. McGill

Journal of Sustainable Finance & Investment, 2012, vol. 2, issue 3-4, 166-178

Abstract: In an era of borderless financial markets the financial sector can serve as an important mechanism for addressing long-term environmental, economic and social degradation. In particular, institutional investors tasked with long-term asset--liability management are integrating environmental, social and governance considerations into their decision-making and ownership practices to navigate future investment opportunities and threats. Despite the increase in sustainable investment initiatives, the transition to a more sustainable economy remains an aspiration. We argue this is because sustainable investment has been conceived and executed largely through existing governance frameworks, which are incongruent with the ‘sustainability’ problems facing institutional investors. To illustrate this point, we draw a distinction between traditional and sustainability problems, arguing that the latter are characterized by residuals (as opposed to externalities), such as conflict and behavioural biases, and that these residuals are irreducible. This distinction provides critical insight into why institutional investors must invest in their own governance to meet the challenges and opportunities that sustainability problems raise. While far from a comprehensive research agenda, the article draws on shared insights from the graduate student papers in this special issue to explore questions of innovation in governance required to confront sustainability issues.

Date: 2012
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/20430795.2012.742632 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:jsustf:v:2:y:2012:i:3-4:p:166-178

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/TSFI20

DOI: 10.1080/20430795.2012.742632

Access Statistics for this article

Journal of Sustainable Finance & Investment is currently edited by Dr Matthew Haigh

More articles in Journal of Sustainable Finance & Investment from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().