Publication Details

M. L. Gold & P. Ali (2002). An Appraisal of Socially Responsible Investments and Implications for Trustees and Other Investment Fiduciaries. University of Melbourne: Centre for Corporate Law and Securities Regulation.


This paper examines the suitability for trustees and other investment fiduciaries of the class of investments known variously as "socially responsible", "ethical", "screened", "social" or "sustainable" investments, in the context of the legal duties imposed on fiduciaries to invest the fund entrusted to them in a prudent manner. The paper is intended to provide trustees and investment fiduciaries with the legal tools for appraising socially responsible investments, a task fraught with difficulties given the political sensitivities and controversies associated with such investments. An estimated $1.9 billion has been invested according to socially responsible investment r'SRI") strategies by Australian managed investment schemes and superannuation funds (as at 31 December 2001).2 The value of funds under management is likely to increase substantially, in line with the growing perception on the part of Australian investors in managed investment schemes and members of superannuation funds that funds can be invested in a socially responsible manner without sacrificing financial performance. 3 Moreover, the adoption of SRI strategies by trustees and other investment fiduciaries has been tacitly advanced by the Financial Services Reform Act 2001 (Cth). This Act - pursuant to amendments introduced in the Senate by the Australian Democrats in August 2001 - requires ttproduct Disclosure Statements" issued in respect of managed investment funds and other investment products to disclose the extent to which labour standards or environmental, social or ethical considerations have been taken into account by the manager of the fund or product in selecting, retaining and realising investments.4