New Values in Responsible Investment

Abstract

This chapter is a story of disquiet – I think we may have fooled ourselves. In it I trace the evolution of responsible investment (RI) from noble beginnings through to a current form which, rather cynically speaking appears to have been leached of much of the original good intent. I suggest how this shift in ethical posture may well have been the unintended consequence of the drive to mainstream RI, and more specifically of the approach that was adopted to achieve this mainstreaming. Essentially I argue that over time, RI has come to conform to the spirit of mainstream investment which has as a singular focus the pursuit of maximum risk adjusted return. Through this, any confrontation with the fiduciary duties paradigm based on the Rational Man 1 model of human character which apparently prevails in many legal jurisdictions (Freshfields et al. 2005) has been avoided. Unfortunately, it is fairly easy to demonstrate how this very paradigm of fiduciary duties is itself likely to be a source of irresponsible investment behavior. This is certainly the case in the context of a class of societal problems known as social dilemmas (Kollock 1998) in which individual rationality is at odds with collective rationality.