Institutional investors and the adoption of socially responsible investment: an explorative case study of Dutch pension funds

Abstract

Although socially responsible investment (SRI) is on the rise, little is known about the adoption process of SRI practices by institutional investors. In this study, we formulate expectations for SRI adoption based on corporate social responsibility (CSR) stage models. These expectations were then tested using a unique dataset containing information on the SRI practices of 50 Dutch pension funds. We find that CSR stage models can plausibly be applied to SRI. In line with CSR stage models, target setting and the involvement of stakeholders is most likely accomplished through pension funds that already follow well-developed SRI practices. Additionally, there is a clear order followed in the implementation of SRI instruments. To further delineate the way in which CSR stage models translate into SRI, it is important to account for the particularities of specific asset classes, the role of the investment chain, and the regulatory and societal conditions in different markets.