Can the UK Experience Provide Lessons for the Evolution of SRI in Japan?

Abstract

In this paper we review the growth of socially responsible investment (SRI) in the UK and in Japan. We consider the various factors which have given rise to the growth of SRI in both countries. As SRI is currently more mature in the UK than in Japan, we consider ways in which the UK experience may provide some lessons for the growth of SRI in Japan. Significantly, we consider that the use of corporate governance mechanisms such as engagement and dialogue by large shareholders, to solve social, ethical and environmental (SEE) problems in companies, is a realistic route for the development of SRI in Japan. However, these mechanisms need to be designed so that they may operate more efficiently. Pension funds and other investment institutions need to appreciate the value of engagement over screening as an SRI stra-tegy. Further, the disclosure of SRI strategies by pension funds in Japan may contribute to enhancing consciousness about the responsibility of shareholders for the SEE outcomes of corporate activities that they invest in indirectly. We acknowledge, however, that this suggestion may be difficult to implement in the near future. Copyright Blackwell Publishing Ltd. 2004.

Stakeholder engagement and corporate social responsibility reporting: the ownership structure effect

“…Financial investors, according to Holderness and Sheehan (1988), Pound (1992) and Solomon et al (2004), have strong interest not only in the fi nancial performance of the fi rms in which they invest, but also in the social and environmental strategies and activities of those companies. This kind of shareholder is unable to move quickly in and out of funds without affecting share price (Qu, 2007).…”

Socially Responsible Investment in Japan: Its Mechanism and Drivers

“…3 billion USD) as of 31 January 2007. 1 While some reports document the historical and recent development of SRI in Japan (ASrIA, 2003;Kawaguchi, 2006;Solomon et al, 2004;Tanimoto, 2003) as well as its prospects for mainstreaming (Kato, 2006;Kawaguchi, 2006) and its limitations (Japan Research Institute, 2004, pp. 73-74;Solomon et al, 2004), very little has been done to analyse why and how SRI developed in Japan.…”

Shareholder activism for corporate social responsibility: what do we know?

“…Lessons from the UK experience of socially responsible investment are put in a Japanese context by Solomon et al (2004). The authors argue that Japanese investors should not put too much effort into excluding environmentally and socially undesirable companies from their portfolios (which they indicate is already an outdated approach in the UK) but rather use their ownership for active engagement, for example through dialogue with corporate management.…”