Is responsible investing ethical?

Abstract

A growing number of investors, globally and in South Africa, are embracing the concept of Responsible Investing (RI). In essence RI refers to a combination of investment strategies that integrate ethical as well as environmental, social and corporate governance considerations into investment analysis and decision making processes. Given the growing influence that investors are exerting on corporate decision making, the purpose of this paper was to position RI within an appropriate ethical framework. It is shown that RI constitutes a form of moral investing as responsible investors express a concern for universal principles which exceed the prescriptions of the law. The practice of RI was further contextualised in relation to seven approaches to ethical reasoning, namely ethical egoism, utilitarianism, deontological ethics, the ethics of care, virtue theory, the conventional approach to ethics as well as emotivism. From the evidence presented, it seems as if responsible investors in South Africa give preference to the principles underlying deontological ethics as well as the ethics of care (particularly with regard to the protection of human rights and equality as well as the promotion of distributive and compensatory justice).

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