This paper reviews the development of socially responsible investment (SRI) over recent years and highlights the prospects for an increasingly strong connection with the practice of corporate social responsibility. The paper argues that not only has SRI grown significantly, it has also matured. In particular, it has become an investment philosophy adopted by a growing proportion of large investment institutions. This shift in SRI from margin to mainstream and the position in which institutional investors find themselves is leading to a (...) new form of SRI shareholder pressure. Although this bears some resemblance to lobbying campaigns which might take advantage of shareholder rights, we seek to distinguish it as an important phenomenon in its own right — one to which corporate executives are likely to be paying increasing attention in the years to come. We further argue that this approach potentially meets some of the earlier ethical criticisms of certain forms of SRI but, ironically, probably owes its existence to those pioneering approaches. We conclude with some suggestions for further research to inform discussion of the issues highlighted in the paper. (shrink)

Regulation must target the financial sector, which often funds and profits from environmentally unsustainable development. In an era of global financial markets, the financial sector has a crucial impact on the state of the environment. The long-standing movement for ethically and socially responsible investment (SRI) has recently begun to advocate environmental standards for financiers. While this movement is gaining more adherents, it has increasingly justified responsible financing as a path to be prosperous, rather than virtuous. This trend partly owes to (...) how financial institutions view their legal responsibilities. The business case motivations that now predominantly drive SRI are not sufficient to make the financial sector a means to sustainable development. Some modest legal reforms to improve the quality and extent of SRI have yet to make a tangible difference. A more ambitious strategy to promote SRI for environmental sustainability is possible, based on reforming the fiduciary duties of financial institutions. Such duties, tied to concrete performance standards, could make financiers invest in more ethically responsible ways. Other collateral reforms to financial markets, including improved corporate environmental reporting, are required to promote sustainability. (shrink)

Can SRI be a means to make investors both virtuous and prosperous? This paper argues that there can be significant tensions between these goals, and that SRI (and indeed all investment) should not allow the pursuit of maximizing investment returns to prevail over an ethical agenda of promoting social and economic justice and environmental protection. The discourse on SRI has changed dramatically in recent years to the point where its capacity to promote social emancipation, sustainable development and other ethical goals (...) is in jeopardy. Historically, SRI was a boutique sector of the market dominated by religious-based investors who sought to invest in accordance with the tenets of their faith. From the early 1970s, the aspirations of the SRI movement morphed significantly in the context of the divestment campaign against South Africa's apartheid regime. No longer were social investors satisfied with just avoiding profit from immoral activities; instead, they also sought to change the behavior of others. Business case SRI is a problematic SRI benchmark for several reasons: often there is a countervailing business case for financing irresponsible activities, given the failure of markets to capture all social and environmental externalities; secondly, even if investors care about such concerns, there may be no means of financially quantifying their significance for investment purposes; and, thirdly, even if such factors can be financially quantified, they may be deemed to be such long-term financial costs or benefits that they become discounted and ignored. The ethics case for SRI and ethical business practices more generally takes the view that both investors and the companies they fund have ethical responsibilities that trump the pursuit of profit maximization. Ethical investment should be grounded on this foundation. However, it may not be enough. To keep ethical investment ethical will likely require institutionalizing new norms and governance standards, in such domains as reforming fiduciary duties and the internal governance of financial organizations. SRI's own codes of conduct including the UNPRI have yet to demonstrate the robustness to move the financial community beyond business as usual. (shrink)

There has been tremendous growth in the sales of certified fair trade products since the introduction of the first of these goods in the Netherlands in 1988. Many would argue that this rapid growth has been due in large part to the increasing involvement of corporations. Still, participation by corporations in fair trade has not been welcomed by all. The basic point of contention is that, while corporate participation has the potential to rapidly extend the market for fair trade goods, (...) it threatens key aspects of what many see as the original vision of fair trade – most notably a primary concern for the plight of small producers and the goal of developing an alternative approach to trade and development – and may even be undermining its long-term survival. The primary purpose of this article is to explore the normative issues involved in corporate participation in fair trade. In order to do that, however, it first provides a positive analysis of how corporations are actually involved in fair trade. In order to achieve both of these ends, the article draws upon global value chain analysis. (shrink)

This paper examines two issues related to research of certified fair trade goods. The first is the question of how agendas for fair trade research should be developed. The second issue is the existence of major gaps in the fair trade literature, including the study of the particular features of fair trade practice in individual northern countries. In taking up the first of these issues, the paper proposes that normative analysis should provide the basis for developing research agendas. Such an (...) approach is important to ensure that the necessary types of questions to make normative judgments and policy decisions are posed and that biases that tend to favor mainstreaming practices in the generation of knowledge are minimized. The paper addresses the second research issue by examining the development of research agendas at the level of individual countries, using Canada as a case. (shrink)

This paper examines two issues related to research of certified fair trade goods. The first is the question of how agendas for fair trade research should be developed. The second issue is the existence of major gaps in the fair trade literature, including the study of the particular features of fair trade practice in individual northern countries. In taking up the first of these issues, the paper proposes that normative analysis should provide the basis for developing research agendas. Such an (...) approach is important to ensure that the necessary types of questions to make normative judgments and policy decisions are posed and that biases that tend to favor mainstreaming practices in the generation of knowledge are minimized. The paper addresses the second research issue by examining the development of research agendas at the level of individual countries, using Canada as a case. (shrink)

The international organic agricultureand fair trade movements represent importantchallenges to the ecologically and sociallydestructive relations that characterize the globalagro-food system. Both movements critique conventionalagricultural production and consumption patterns andseek to create a more sustainable world agro-foodsystem. The international organic movement focuses onre-embedding crop and livestock production in ``naturalprocesses,'' encouraging trade in agriculturalcommodities produced under certified organicconditions and processed goods derived from thesecommodities. For its part, the fair trade movementfosters the re-embedding of international commodityproduction and distribution in ``equitable socialrelations,'' developing a (...) more stable and advantageoussystem of trade for agricultural and non-agriculturalgoods produced under favorable social andenvironmental conditions. The international market forboth organic and fair trade products has grownimpressively in recent years. Yet the success of thesemovements is perhaps better judged by their ability tochallenge the abstract capitalist relations that fuelexploitation in the global agro-food system. While theorganic movement currently goes further in revealingthe ecological conditions of production and the fairtrade movement goes further in revealing the socialconditions of production, there are signs that the twomovements are forging a common ground in definingminimum social and environmental requirements. I arguefrom a theoretical and empirical basis that what makesfair trade a more effective oppositional movement isits focus on the relations of agro-food trade anddistribution. By demystifying global relations ofexchange and challenging market competitiveness basedsolely on price, the fair trade movement creates aprogressive opening for bridging the wideningNorth/South divide and for wresting control of theagro-food system away from oligopolistic transnationalcorporations infamous for their socially andenvironmentally destructive business practices. (shrink)

Although Fair Trade has been in existence for more than 40 years, discussion in the business and business ethics literature of this unique trading and campaigning movement between Southern producers and Northern buyers and consumers has been limited. This paper seeks to redress this deficit by providing a description of the characteristics of Fair Trade, including definitional issues, market size and segmentation and the key organizations. It discusses Fair Trade from Southern producer and Northern trader and consumer perspectives and highlights (...) the key issues that currently face the Fair Trade movement. It then identifies an initial research agenda to be followed up in subsequent papers. (shrink)

This article examines the development of and contestation over the standards for certified fair trade, with particular attention to the U.S. context. It charts fair trade's rapid growth in the United States since the 1999 advent of formal certification, explores the controversies generated by the strategy of market mainstreaming in the sector, and focuses on five key issues that have generated particularly heated contention within the U.S. fair trade movement. It offers a theoretical framework based in the literatures on agrifood (...) systems, social movements, and public-choice economics, for understanding the corporate response to alternative markets such as fair trade. The article suggests a typology of responses by social movement actors to this increased corporate participation, and assesses the relevance of the U.S. case for the future prospects of fair trade, both in other national contexts and as an international movement. (shrink)

Recent years have seen a substantial increase in alternative agrifood initiatives that attempt to use the market to curtail the negative social and environmental effects of production and trade in a globalized food system. These alternatives pose a challenge to capital accumulation and the externalization of environmental costs by large agribusiness, trading and retail firms. Yet the success of these alternatives also makes them an inviting target for corporate participation. This article examines these dynamics through a case study of the (...) two most significant such food system alternatives—organics and fair trade—focusing on corporate involvement in establishing and renegotiating the standards undergirding these initiatives. We compare the development of and contestation over the standards for both certified organic and certified fair trade, with particular attention to the U.S. context. We provide a brief history of their parallel processes of rapid growth and market mainstreaming. We examine claims of cooptation by movement participants, as well as the divergences and similarities between the organic and fair trade cases. Analyzing these two cases provides useful insights into the strategic approaches that corporate firms have deployed to further capital accumulation and to defuse threats to their profit margins and to status quo production, pricing, labor, trading and retailing practices. It can also offer valuable lessons regarding the most effective means of responding to such counter-reforms and of protecting or reasserting the more transformative elements at the heart of these alternative systems. (shrink)