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| Author: | Adam, A.M. Shavit, T. |
| Title: | How can a ratings-based method for assessing corporate social responsibility (CSR) provide an incentive to firms excluded from socially responsible investment indices to invest in CSR? |
| Journal: | Journal of Business Ethics
2008 : NOV I, VOL. 82:4, p. 899-905 |
| Index terms: | corporate responsibility social responsibility stock markets investments indexing |
| Freeterms: | CSR |
| Language: | eng |
| Abstract: | Socially Responsible Investment (SRI) indices have a key role in the stock markets. There is the following question: Does the ratings-based (here as: r-b.) methodology (as: mdgly.) for assessing corporate social responsibility (CSR) provide an incentive to firms excluded from SRI indices to invest in CSR? Not in its current format. The r-b. mdgly. used by SRI indices in their selection processes excludes many companies by creating limited-membership lists. This received r-b. structure, however, offers an incentive for most of the excluded companies to invest in improving their levels of CSR. This article aims to offer a theoretical reply to the question of the title. Among others, it is shown that when all firms are publicly ranked according to SRI index parameters, such indices can create a market incentive for increased investment by firms in improving their performance in the area of CSR. |
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