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November 14 - 15, 2008


The Promise of Socially Responsible Investing

The Danish Ministry of Economic and Business Affairs and the Bendheim Center for Finance at Princeton University are jointly hosting conference on Socially Responsible Investment (SRI), to take place on November 14 and 15 of 2008 (half-day Friday and Saturday) at Princeton University, Princeton, New Jersey.

The purpose of this conference is to bring together academics, policy makers and practitioners from around the world to debate and lay out a vision for generating new and practically applicable knowledge regarding the business case for and broader societal value of Socially Responsible Investment (SRI). SRI aims to maximize returns on investment by integrating social, environmental and ethical considerations into the strategic investment models of investors. SRI is a central part of the widespread debate on “Corporate Social Responsibility” (CSR) and, in particular, on whether there is a business case for CSR in terms of a positive relationship between corporate responsibility and firm economic performance.

Motivated by a variety of factors including concerns regarding climate change and sustainability, SRI is becoming an increasingly important part of the investment and corporate landscape. Nonetheless, there is little consensus as to the value of SRI. Can SRI lead firms to change their corporate behavior? Will SRI (e.g. through active ownership by institutional investors) lead to higher returns on investment? By bringing together a small diverse group of 25-30 participants with different perspectives on these issues, the goal of this conference is to establish a flow of ideas across different disciplines. We want to bring together not only practitioners in this field but also those who might bring a fresh perspective to old issues.

The conference is highly interactive, in the spirit of a roundtable format. A few participants in each session will make brief presentations to lead a group discussion on an issue of interest. The hope is that the combined intellectual efforts of the participants will lead to a deeper understanding of these important questions and lay a concrete agenda for further research and inquiry.

Organizing Committee

Harrison Hong, Princeton University; Carsten Ingerslev, Danish Ministry of Economic and Business Affairs; Christina Wolfeld Gehring, Danish Ministry of Economic and Business Affairs; Ole Kirkelund, Danish Ministry of Economic and Business Affairs; Flora Wu, Princeton University, Class of ‘08; This conference is by invitation only. Please contact Harrison Hong (hhong@princeton.edu) or Flora Wu (fwu@princeton.edu) with any inquiries.

Topics of Sessions

The Business Case for CSR: This session lays out the state of the art research (both theory and empirical) for whether CSR enhances a firm’s fundamental value. Do firms that score well on CSR metrics also score highly in terms of firm profits? What about valuations? If so, how do these valuations come about? What types of CSR practices of CSR lead to higher firm earnings? What are important issues, and how can we resolve them?

SRI, Cost of Capital and Change: This session lays out the state of the art for whether SRI, measured as roughly 1 in 10 dollars invested, can influence real change. Does boycotting a firm’s stock lead the firm to change their policies? If so, how? Is it through the cost of capital channel? If not, what are other channels? Is SRI redundant if there are already boycotts on the consumer product side?

Corporate Social Responsibility and Corporate Governance: Why do CEOs practice CSR? Does CSR lift the bottom line? What are their evidence and thinking? How do companies and investors combine the dual challenges of sustainability/corporate social performance and corporate financial performance? What are the drivers of decision making for sustainability, and what is the role of political framework conditions?

Sustainable Investing: Surprisingly, many mutual funds, hedge funds and venture capital funds also factor in CSR and SRI in their investing practices, particularly regarding sustainability practices. What is the basis for these decisions?

Role of Institutional Investors (Pensions, Endowments and Sovereigns): Institutional investors are the leaders in the implementation of SRI. Why? Is the rationale political catering to constituents or are there economic risk based reasons for staying away? Is this the right policy vis-à-vis stakeholders? This session lays out the case for the role of large institutional investors.

Rating Agencies and Markets for SRI: This session focuses on the difficult issues of rating firms on environmental, ethical and social considerations. Is there a consistent means to rate companies? Which screens are more difficult to implement? How can markets be used to help in the process?

Society’s case for CSR and SRI and the role of international standards/regulation: How do institutional factors (e.g. regulation and stakeholder relations) influence SRI strategies in the EU and USA? The session might focus more broadly on the role of international standards, and we might include CEO perspectives on why companies would want to join UNPRI, Global Compact or ISO standards. How may international standards influence the investment strategies of institutional investors?

Psychology, Sociology and SRI: Why do investors care about SRI? How will norms change over time with globalization? Will SRI become more or less important as the world becomes more globalized? This session will include theoretical perspectives on how norms and risk perception (aversion/seeking) inform decision makers and influence micro-economic behaviour.

A conference brochure summarizing the above is available for download (.pdf).

Airport information and shuttle to Princeton can be found at:
www.princeton.edu/main/visiting/travel/airports/

The conference is to be held in the Friend Center Convocation Room (Friend 113, on the ground floor). Friend Center is located at H1 on the campus map:
www.princeton.edu/pr/facts/map/map+key.pdf