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An Investigation into the Psychology of Socially Responsible Investment Decisions


Type

Thesis

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Authors

Barwick-Barrett, Matthew 

Abstract

The Forum for Sustainable and Responsible Investment (US SIF) defines socially responsible investing (SRI) as an investment discipline that considers environmental, social and corporate governance criteria to generate long-term, competitive financial returns and positive societal impact (US SIF, 2016a). In contrast, conventional investing strategies aim to generate longterm competitive financial returns but do not consider societal impact.

Recent trend reports estimate that the total value of US-domiciled assets under management using SRI strategies is $8.72 trillion (US SIF, 2016a), while in Europe it is more than €10 trillion (Eurosif, 2016). Consequently, the importance of SRI is considerable to both academics and practitioners, as is the influence that this form of investing can have on the practices of major corporations.

This dissertation analyses whether behavioural economic theory and theory relating to psychological biases can potentially be utilised in the promotion of SRI to increase the quantity of capital being invested through SRI strategies. The analysis finds that the way SRI decisions are framed can significantly affect the propensity with which investors choose to invest through SRI strategies and that the promoters of SRI, can potentially utilise framing and choice architecture to increase the prevalence of this form of investing. This important finding enhances the current academic and practitioner literature relating to SRI, whilst also adding additional depth to the literature pertaining to behavioural economics.

Description

Date

Advisors

Keywords

sustainable, SRI

Qualification

MSc

Awarding Institution

University of Cambridge