Socially responsible investing: from the ethical origins to the sustainable development framework of the European Union

Abstract

In this work, we present an overview of the historical development of socially responsible investing (SRI). We will argue that such a financial activity has been boosting in recent decades from a niche, mainly as a religious-led exclusionary practice, towards a mainstream strategy of risk analysis for institutional and retail investors. We also discuss the advances and possible drawbacks that regulatory activity and harmonization process on such industry have achieved at international level in recent years, with a special focus on the European Union. The study shows that the lack of a globally accepted taxonomy on what constitutes sustainable activities, of regulatory clarity and of high-quality data allowing for comparisons across industries and regions, together with practical and behavioural complexities are major critical issues that discourage SRI industry at the global level.