Buying Corporate Social Responsibility with employees’ pensions?
What is it about?
People’s pensions largely depend on their pension fund value. Hence, employees should expect financial aspects to be predominant when employers choose employees’ pension funds management. By contrast, in an attempt to appear as socially responsible company managers may emphasize social responsibility (SR) in pension fund choices. By using a conjoint experiment, this paper examines to what extent managers for small and medium-sized companies emphasize SR vs. expected returns when choosing investment managers for their employees’ pension funds.
Why is it important?
A Norwegian survey indicates that employees seem to prefer returns rather than ethics for their pension fund investments. Moreover, extant research indicates that most employees do not know how employers invest their deposits and that individuals generally have limited knowledge about their future pensions. In this paper we find that employers placed the greatest weight to fund managers adhering to socially responsible investments (SRI), whereas expected return was considered not to be very important. The findings also indicate that the managers may use their SRI preferences to appear as socially responsible. Since the managers’ investment decisions do not affect their company’s financial performance, the ethics of their choices might be questionable.
The following have contributed to this page: Dr Harald Biong