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Purpose – Responsible investor (RI) engagement seeks to change corporate strategic priorities while balancing the financial imperative. This chapter uses an institutional theory framework to explore the tension between financial performance and environmental, social, and governance (ESG) issues in RI engagement.

Methodology – Discourse of the proponent, supporters and opponents of Australia’s first climate change shareholder resolution – a minority proposal, will be analyzed using framing analysis.

Findings – Framing indicated that the discourse emphasized the dominant financial performance logic while often omitting the ESG logic. One possible explanation is that the process of shareholder proposal nomination and the financial imperative of investment organizations effectively co-opted the engagement.

Research limitations – A case of responsible investment engagement is used to illustrate multiple logics in the investment field. Although there are significant limitations to drawing inferences from a single example, the discussion is relevant to RI support for engagement initiatives such as the UN Principles of Responsible Investment clearinghouse and Carbon Disclosure Project Carbon Action. This chapter argues that attempts to change corporate strategic actions on climate change by RI through engagement will be less effective while the financial performance logic provides relatively more legitimacy to investors.

Practical implications – Integrating the ESG logic with the financial logic is vulnerable to co-optation due to incommensurability. Operationalizing both logics requires establishing a boundary between ESG and financial logics to develop legitimacy.

Social implications – RI engagement on climate change has the potential to be an important part of the social response to the sustainability agenda.

Originality – In applying institutional theory to RI climate change activism this chapter presents original insights into the potential of engagement to effect change.

Socially responsible investment (SRI) engagement currently performs a variety of supportive regulatory functions such as reframing norms, establishing dialogue and providing resources to improve performance, however corporate responses are voluntary. This chapter will examine the potential gains in effectiveness for SRI engagement in a responsive regulatory regime.

Global warming is a pressing environmental, social and governance (ESG) issue. By using the example of climate change the effectiveness of SRI engagement actors and the regulatory context can be considered. This chapter builds the conceptual framework for responsive regulation of climate change.

SRI engagement may face resistance from corporations due to its voluntary nature and conflict with other goals. Legitimacy and accountability limit the effectiveness of SRI engagement functioning as a voluntary regulatory mechanism. This chapter argues that the effectiveness of SRI engagement on climate change could be enhanced if it served as part of a responsive regulation regime.

Engagement is used by SRIs for ESG issues. A comprehensive regulatory regime could enhance corporate adaptation to climate change through increasing compliance with SRI engagement. The implication for SRI practitioners is that lobbying for a supportive regulatory regime has a large potential benefit.

Responsive regulatory policy involves both support and sanctions to improve compliance, enhancing policy efficiency and effectiveness. There are potentially large net social benefits from utilising SRI engagement in a regulatory regime.

In seeking to re-articulate voluntary and legal approaches this research addresses a gap in the literature on climate change regulation.

The purpose of this paper is to explore the differences in KiwiSaver portfolio composition between investors who receive financial advice and those who do not.

Using proprietary data which contain information of 405,107 individual KiwiSaver accounts, this paper examines who receives advice, compares the asset allocations of advised accounts with non-advised accounts, explores the relation of asset allocation with demographic characteristics and compares differences in returns between advised and non-advised investors.

Three key findings are presented in this paper. First, female investors, relatively older investors and investors with higher levels of funds under management (invested wealth) are more likely to receive financial advice. Second, advised investors hold more equity assets. Third, differences in performance between advised and non-advised accounts are marginal.

Panel data are not used, which prohibit investigating asset allocation choices overtime. The time series for returns is short, as KiwiSaver has only been operating since 2007. The total portfolio that people own is not known; thus, the values on investment fund information do not represent the total wealth of each person, as other accounts elsewhere may exist.

There are broad implications for the New Zealand capital market, retirement policy, financial advice industry and development of financial literacy programmes.

The paper examines individual investor behaviour on a nationwide sample and explores how receiving financial advice relates to asset allocation.

The objective of this chapter is twofold. It first introduces the theme of the book. There are many ways of looking at socially responsible investment (SRI). It can be viewed as a financial product where the financial performance is the outmost important aspect and cannot be compromised. Or it can be regarded as a force for change to promote and stimulate a more sustainable development. In this chapter we provide a literature review on SRI especially on the notion of the impact and how it has been addressed so far in the literature. The second objective of the chapter is to provide an overview of the volume by introducing each chapter.

This chapter reviews the literature on SRI as well as the chapters included in this volume.

If SRI is about making a change toward sustainability, we ought to study its societal and environmental impacts. Although scholar articles on SRI have gained importance in the two last decades, very little is known on its impact. Research has developed from a narrow concern with negative screening and divestment in isolated cases to a rigorous analysis of its financial performance across a range of ethical and ESG issues. While we have identified some studies that are beginning to explore the potential impact of SRI for society, this remains a crucial area to explore.

The chapter contributes to the debates on the societal impact of SRI, a debate that needs to be continued even if or just because it raises some fundamental questions that are complex and difficult but also necessary to advance SRI.

Purpose – This chapter introduces this book’s topics, purpose, and key themes. It summarizes the purpose of the book which is to explore through both descriptive and conceptual means the use of power by institutional investors in bringing about changes to corporate behavior, so that corporations engage in improved environmental, social, and governance actions.

Methodology/approach – This chapter reviews literature and chapters and offers conceptual development.

Findings – The forces driving the actions of institutional investors are different from many other shareholders being determined by a unique set of costs, benefits, and objectives. As such three general categories of institutional elements constrain and guide this behavior: regulative elements which include constitutions, laws, and property rights; normative elements which include informal norms, values, and codes of conduct; and cultural-cognitive elements which include shared beliefs, identities, and mental models. It highlights the role of regulation and “soft” law, the impact of values and customs, and the way sense-making and cognition impacts on decisions and actions.

Practical/social implications – The chapter highlights the interplay between hard and soft law in progressing the agenda. It seems that hard law is a hygiene factor forming the base on which initial gains can be made in the application of institutional shareholder power. Moreover, the use of soft law such as the Global Reporting Initiative and the newly founded Sustainability Accounting Standards Board, institutional investors can gain improved disclosure of sustainability performance to incorporate into their investment decisions. Moreover, it highlights the gaps in the use of the power that exists. The movement is still emerging with the focus on corporate governance and environmental considerations primarily. There are still improvements to be made for institutional investors in the social aspects of the responsibility agenda as well in pushing companies to be more transparent, improve reporting, and engage in more long-term decision-making.

Originality/value – The chapter contributes to the debate on governance convergence between liberal market economies (LMEs) and coordinated market economies (CMEs). It is important to look beyond national characteristics alone and demonstrate that organizations, even though they are impacted by institutions, are not necessarily passive acceptors of their fate. Hence this chapter highlights that in expanding from a dyadic approach comparing LMEs and CMEs, the strategic choice of decision-makers, the power of the actors, and the processes used by institutional investors in changing corporate behavior are important considerations.

The purpose of this paper is to explore the Shariah governance practices of Islamic fund management companies (IFMCs) in Malaysia, with the principal goal of reviewing the need for a comprehensive Shariah governance framework for the Islamic fund management industry.

The study was conducted using a qualitative approach via 14 semi-structured interviews with three companies (i.e. Company A, Company B and Company C) involving face-to-face interviews, telephone interviews and emails. Data from the interviews were recorded and later analysed using content analysis.

The study finds that Shariah governance processes among the IFMC examined are well-managed; and the current regulations issued by the regulators are sufficient to ensure the Shariah compliance of Islamic fund management industry. In spite of the absence of a comprehensive Shariah governance framework for the industry, most Shariah functions (i.e. Shariah risk management, Shariah review and Shariah audit) are performed by the parent company, except for Shariah research. Nevertheless, Shariah research is not an important function in Islamic fund management because the investment instruments are generally selected from a predetermined list of Shariah-compliant investment options.

The study offers an overview of Shariah governance practices in the Islamic fund management industry to policymakers and practitioners for the future development of Shariah governance practices among IFMC.

This is the first paper to study Shariah governance practices in the Islamic fund management industry in Malaysia.