Development Bank of Japan
Research Report
No. 37

Trends in Socially Responsible Investment:
Corporate Social Responsibility in a New Phase

March 2003

Economic and Industrial Research Department
Development Bank of Japan

This report was originally published in Japanese as Chosa No. 40
in July 2002.

Contents
Summary ............................................................................................................................................... iii
Introduction ........................................................................................................................................... 1
I

Socially Responsible Investment (SRI) and Corporate Social Responsibility (CSR) .............. 2
1. Definition of Socially Responsible Investment (SRI).............................................................. 2
2. Principal Approaches to SRI................................................................................................ 2
2.1 Screening ....................................................................................................................... 3
2.2 Shareholder Advocacy................................................................................................... 3
2.3 Community Investment ................................................................................................. 4
3. Rising Interest in Corporate Social Responsibility (CSR)....................................................... 4II

Trends in SRI in US and Europe .................................................................................................. 7
1. Trends in SRI in US ................................................................................................................. 7
1.1 Development.................................................................................................................. 7
1.2 Trend of Outstanding Assets.......................................................................................... 8
1.3 Investors and Specialized Organizations ....................................................................... 9
1.4 Characteristics in Corporate Assessment Criteria ....................................................... 10
1.5 Evaluation of Investment Performance ....................................................................... 10
2. Trends in SRI in Europe......................................................................................................... 10
3. Trends in SRI in UK .............................................................................................................. 11
3.1 Development and Trend of Outstanding Assets .......................................................... 11
3.2 Trends in Adoption of SRI by Institutional Investors.................................................. 13
3.3 Advent of SRI Stock Index.......................................................................................... 17
4. Relations between CSR and SRI in UK................................................................................. 18
4.1 Outline of CSR in UK ................................................................................................. 18
4.2 Government Role in CSR ............................................................................................ 20

III Development of SRI in Japan and Pending Issues.................................................................... 21
1. Development of SRI in Japan ................................................................................................ 21
1.1 Current Status of SRI Retail Funds ............................................................................. 21
1.2 Future Development .................................................................................................... 23
2. Pending Issues for Companies ............................................................................................... 24
2.1 Orientation of CSR in Japan ........................................................................................ 24
2.2 Consideration of CSR Management ............................................................................ 24
3. Conclusion ............................................................................................................................. 27
References ............................................................................................................................................ 28

Development Bank of Japan Research Report/ No. 37iTrends in Socially Responsible Investment:
Corporate Social Responsibility in a New Phase
Summary
1. Socially responsible investment (SRI),
which has been promoted mainly in the US andEurope, is now attracting attention in Japan. SRI
signifies investment activities based not only on
financial assessment but also social assessmentof investment targets, using social, environmental and ethical criteria. Typical SRI approaches in the US include (1) screening, (2)shareholder advocacy and (3) community investment. Screening means to choose investment
targets in line with the values of the investors,
taking account of the social as well as financial
assessment of the companies concerned. Shareholder advocacy indicates exercising the rights
accompanying investment such as stockholder’s
proposal and voting rights to call on the management of the companies to fulfill their social
responsibility. Community investment means
investment in communities through community
development financial institutions (CDFIs).
The expansion of SRI in the US and Europe
is backed by rising concerns about the social responsibility of businesses. This responsibility isoften called corporate social responsibility (CSR)
in the US and Europe. CSR is now drawing attention as a concept of open and transparent
business practice that respects employees, communities and the environment among others,
based on ethical values. The adoption of a proper
CSR strategy is considered to enable a company
to (1) improve its social credibility, (2) ensure its
competitiveness, and (3) manage risks.
2. From the 1960s to the 1980s, SRI in the
United States was linked to contemporary social
concerns and criticism against businesses. With
the development of criteria such as social assessment of companies, SRI experienced a significant expansion in the 1990s, largely backed
by the buoyant stock market. Outstanding SRI
assets in the US more than tripled in the last six
years to $2,340 million (about ¥300 trillion) in
fiscal 2001, reportedly accounting for 12% ofmajor investment assets. SRI has been adopted
by a wide range of investors including institutional investors such as public corporations, universities, hospitals, foundations, insurance companies, pension funds, NPOs, churches andsynagogues, as well as personal investors. Specialized organizations to support social evaluation of businesses and shareholder advocacy
have also developed. Most of the evaluation criteria are related to the traditional negative
screening, avoiding investments in tobacco,gambling, alcohol and weapons. SRI financial
instruments seek to reconcile responsibility withinvestment performance, providing yields comparable with ordinary funds.
3. In Europe, 250 SRI funds were reported asof June 2001, with outstanding assets of 15.1
billion euro (about ¥1.6 trillion). They have been
expanding despite being affected by the fluctuations of the stock market. SRI and corporate social responsibility are discussed actively at various levels in Europe. The promotion of SRI andCSR has been progressing at the national level,
including through legislative measures.
SRI in the UK started with stock selection
based on religious ethics, but followed a similarcourse to its US counterpart in that it has developed in connection with social issues and criticism against businesses. SRI funds expanded
substantially toward the late 1990s. Recent years
have also seen the adoption of SRI by institutional investors including pension funds and insurance companies. The amended Pension Law,
which took effect in July 2000, requires pension
funds to disclose information about their SRI
policy. 60% of the pension funds are reported to
be favorable toward introducing SRI in someform. In October 2001, the Association of British
Insurers (ABI), a trade association for insurancecompanies, published guidelines requiring companies to disclose information about CSR risks(and opportunities). In addition, the advent of an
SRI stock index has increased the awareness of
CSR among listed companies.

Development Bank of Japan Research Report/ No. 37

iii

The interest of consumers and investors in
CSR has increased rapidly in recent years in the
UK. Strong expectations can be observed particularly in such areas as education, reemployment support for the unemployed, support for thedisabled, and the environment. SRI and CSR
have a positive correlation in development. In
this context, the UK Government has initiatedpolicy measures to facilitate CSR, including theidentification of successful cases, support, administrative coordination, international advocacy
and extension to small- and medium-sized enterprises.
4. In Japan, an investment trust product considering the environment-conscious activities ofbusinesses first appeared in August 1999 as aform of SRI trust. Nine such products have beenmarketed so far, most of which use positive
screening with criteria focusing on the environment. Financial intermediaries are expected toassume the fiduciary duty typical of SRI such as
information disclosure to investors, timely review of criteria and their rationality. Looking
ahead, efforts by companies to adopt non-environmental criteria may become increasingly
important in their evaluation by society. Criteria
focusing on the compliance with laws and regulations on corporate ethics have already been
adopted for evaluating businesses.
5. Since SRI and CSR are still in their infancy
in Japan, there are opportunities for companies toemphasize CSR to enhance their competitiveness,thus adding value. However, individual companies will have different priorities and criteria tobe met. Also, to ensure that management concerning CSR takes root and functions properly inJapan, voluntary efforts by businesses must be
evaluated positively by stakeholders including
investors and consumers in order to provide incentive for corporate managers. On the other
hand, there is a trend toward the standardizationof CSR at the international level, and future developments in this regard need to be monitored.
The contemporary role of SRI is to serve asan economic system that encourages businesses
to meet the challenge of sustainable development.
Further progress in this direction is expected inJapan.
[Shuichi Yoshida (e-mail: shyoshi@dbj.go.jp)]

iv

Development Bank of Japan Research Report/ No. 37

Introduction
In recent years, a new style of investment thatconsiders social as well as financial aspects ofcorporate activities has been expanding mainlyin the US and Europe. This type of investment,
called socially responsible investment (SRI),
has also begun to draw attention in Japan.
Outstanding assets of SRI in the US
reached ¥2,340 billion in fiscal 2001. In the UK,
institutional arrangements have been made for
information disclosure related to SRI. SRI financial instruments have gained support due tofavorable investment results in the past, as well
as because they can incorporate personal values
in the act of investment. Major financial institutions have started to deal in such products as apromising business.
The concept of SRI itself is not new. Some
US investors were involved in such transactions
for religious reasons as early as in the 1920s.
However, it was not until the late 1990s that
SRI became accepted by a wide range of investors and grew strongly. The current expansionof SRI is characterized by the increased interestof investors and analysts in the social responsibility of businesses, based on the idea that acompany’s position on the environment andsocial issues may have a strong financial impact.
Although the responsibility of businesses has
been discussed repeatedly over the years, it has
been drawing renewed attention in the US andEurope under the term ‘corporate social responsibility’ (CSR). It is reported that companies
have started to emphasize CSR in management
and marketing for maximizing their business
worth or as part of risk management.
This report examines this rising interest in
CSR in the economy and society from the aspect of SRI. Chapter 1 describes the concept of
SRI and CSR, focusing on its contemporary
meaning. Chapter 2 looks at the current statusof SRI in the US and Europe, where SRI is undergoing significant development, and considers its implications for Japan. Chapter 3 describes the current status of SRI in Japan andconsiders issues to be addressed by companies.

Development Bank of Japan Research Report/ No. 37

1

I Socially Responsible Investment(SRI) and Corporate Social Responsibility (CSR)
1.

Definition of Socially Responsible
Investment (SRI)

In recent years, socially responsible investment
has been expanding mainly in the US andEurope. It has also begun to attract attention in
Japan.
Simply put, SRI means investment activities that take into account the social as well as
financial assessment of the company concerned,
including social, environmental and ethical criteria. However, various terms are used to indicate similar investment activities, as there is no
official definition.1
For example, Social Investment Forum, a
US national nonprofit membership association,
explains, “Integrating personal values and societal concerns with investment decisions iscalled Socially Responsible Investing (SRI).
SRI considers both the investor's financial
needs and an investment’s impact on society.
With SRI, you can put your money to work tobuild a better tomorrow while earning competitive returns today.” This explanation is geared
toward general investors.

Citing the definition of the UK Government, Mark Mansley (2000) states that SRI
means “investment where social, environmental
or ethical considerations are taken into accountin the selection, retention and realization of investments, and the responsible use of rights(such as voting rights) attaching to investments.”
SRI expanded rapidly toward the late
1990s mainly in the US and Europe. As mentioned later, outstanding SRI assets in the US
reached $2,340 billion in fiscal 2001, the largest
among the countries for which relevant statistics are available. In the UK, institutional arrangements have been made for information
disclosure related to SRI, contributing to theincrease in the number of institutional investors
adopting SRI.
2.

Principal Approaches to SRI

How has SRI been put into practice? In the US,a country with a long tradition of SRI, typicalapproaches to SRI include: (1) screening, (2)shareholder advocacy and (3) community investment (Figure 1-1).

Investors(personal investors, institutional investors)
Realization of one’s own values
Reduction of investment risks

Ditto

Screening

Shareholder advocacy

Community investment

・Securities investments that

・Exercise of rights attached to・Lending and various operations

select target companies
according to social
assessment criteria

investment (voting right ofstockholder)・Dialogue with managers (in abroad sense)

Figure 1-1

through Community
Development Financial
Institutions (CDFIs)

Principal Approaches to SRI in US

CDFIs: Community Development Financial Institutions.
Note:
Source: Compiled by DBJ.

1Other terms include social investing, socially aware
investing, ethical investing, mission-based investing, etc.
2

Renewal and revitalization of local
communities(directly linked with social benefit)

Development Bank of Japan Research Report/ No. 37

2.1

Screening

Screening means to choose investment targets,particularly stock investment targets, that are inline with the values of beneficiaries, based not
only on the financial assessment but also thesocial assessment of the companies including
social, environmental and ethical performance.
There are two methods of selecting investment targets from the social point of viewaccording to the criteria used: negative screening and positive screening.
Negative screening is a traditional technique that excludes the stock of those companies providing products or services that are inconsistent with the values of beneficiaries (e.g.,
tobacco, gambling, alcohol and weapons). Merits of this method include the simplicity ofchoice (although the thorny issue of delimitation arises when potential target companies diversify their businesses) and the ease of understanding by beneficiaries. However, the portfolio may be somewhat biased as target companies are often limited.2
Positive screening, on the other hand, is amethod of choosing “good” companies by setting criteria concerning social concerns such asindustrial relations, contribution to communities,
response to environmental issues, respect forinternational human rights and the manufactureof safe products.
The two concepts are not necessarily mutually opposite, as they are suited for different
purposes and are influenced by the extent of thesocial orientation of beneficiaries. Indeed, investment target companies are often assessedby using multiple methods including negative
screening and positive screening to allow investment funds to take account of various social
concerns. The results of the assessment are
weighted to produce final ratings. This technique is called the “scoring system.”

Some funds also employ a technique called
the “best in class.” This technique sets up
original (business) sectors to select the best (orabove-average) companies in each sector inlight of criteria based on social concerns. Thisapproach has the merit of building balanced
portfolios.
A more important question is how to balance social screening of the investment universe (the set of investment-grade companies)
with financial performance, on the premise that
financial return is (more or less) essential forany beneficiary. In actual investments, arrangements are made to improve financial performance. For instance, social screening is applied only in the final stage of selection after
financial assessment has been made, or thedefinition of “good” companies is widened (tothe extent acceptable to the beneficiaries) in thebest-in-class technique to increase the latitudeof investment (thus leaving room for the fundmanagers to use their expertise).
2.2

Shareholder Advocacy

Shareholder advocacy means to require themanagement of investment target companies toassume its social responsibility by exercising
the rights attached to investment including
stockholder’s proposal and voting rights.
Shareholder advocacy has also been attracting
attention in Japan, but rather in its relation withcorporate governance related to terms such as“shareholder activism,” or more plainly“shareholders with voice.”
As noted by many researchers, one of thereasons for the development of shareholder advocacy in the US is that the idea of expressing
one’s demand for increasing business worth on
the premise of diversified share investment andlong-term shareholding has gained groundamong large institutional investors including
pension funds3 as well as among investors in

2

Taka (2002) also points out its limit by arguing thatnegative screening “would be the simplest way by far for
rating agencies and investment trust companies (investing
agencies, etc.), if they could take or leave target companies by focusing on types of business or contents of services. However, this technique is potentially problematic
because values of a certain cultural area are used to makejudgment on other cultural areas based on the dichotomyof what is ethical and what is unethical.”3

In the US, civil service pension funds in the public sector without any long-term business relations with privatecompanies are said to be active in shareholder advocacy,
including the New York City Pension Fund and California
Public Employees’ Retirement System (CalPERs).

Development Bank of Japan Research Report/ No. 37

3

volved in index investments4. For such investors, shareholder advocacy is less costly andless risky, as they are concerned that they cannot exit the market by selling off their hugeshare holdings because they cannot find purchasers, nor can they easily sell shares of particular companies.
The opinions of investors (discontent, expectation, etc.) are communicated to the management of the company through shareholder
advocacy. The contents thus communicated can
be classified into those intended for the improvement of corporate management efficiency
and those concerning social matters including
social, environmental and ethical issues (certain
issues may overlap such as accountability fordirector’s remuneration). Shareholder advocacy
in the US spans a wide range of social concerns,
demanding that companies operating in South
Africa withdraw investment from the country as
part of the anti-Apartheid movement, or encouraging companies to adopt the code of environmental conduct (CERES Principles) toaddress environmental issues.
There are other approaches than the direct
exercise of investor’s rights, including direct
dialogue, particularly communicating to corporate managers necessary improvements fromthe viewpoint of corporate social responsibility
and monitoring their implementation. This approach is called “engagement.” Those approaches may be included in the voicing
mechanism as a means of conveying to the
management the opinions of investors on social
concerns.

4

Investments for the same price movement as in benchmark indices (e.g., S&P500, Nikkei Average Share Priceand TOPIX). Without any research or analysis of individual companies, as conducted by active funds, they have amerit of reducing investment cost.

4

Development Bank of Japan Research Report/ No. 37

2.3

Community Investment

Whereas screening and shareholder advocacy
mainly target public companies, community
investment means investment in communities
through community development financial institutions (CDFIs). CDFIs are financial institutions that have community development as theirprimary mission. CDFIs provide funds for theconstruction of housing for low-income households, for which financing from conventional
financial institutions is difficult to obtain, as
well as for local small businesses. They also
provide professional or technical advice andvocational training.5 Investment in CDFIs is aclear and easy-to-understand technique for investors, for it is directly linked to the renewal orrevitalization of communities. Most CDFIs are
non-profit organizations. One notable exception
is the South Shore Bank (established in 1973),
the first community development bank in the
US. The Bank takes the form of commercial
business, seeking to balance its social orientation and profitability.
3

Rising Interest in Corporate Social
Responsibility (CSR)

The expansion of SRI in the US and Europe isbacked by the rising interest in corporate social
responsibility, especially on the part of investors and shareholders.
Then, what is corporate social responsibility?
As in the case of SRI, the term itself is notnew, but has been repeatedly discussed everywhere over the years as an underlying principleof corporate behavior.
According to Archie B. Carroll, corporatesocial responsibility can be classified into four
categories based on the extent of social obligation and expectation: economic responsibility,
legal responsibility, ethical responsibility and5

CDFIs are further classified into four categories: (1)community development banks, (2) community development credit unions, (3) community development loan
funds, and (4) community development venture capitals.
Each type of CDFI may be called differently.

Shareholders

Investors

Mass
media
Government

Expectations fromstakeholders
Financial
institutions

Companies

Employees

Consumers

Figure 1-2

Classification

Social expectation

ExamplesPhilanthropic
responsibility

Desired bysociety

Mécénat, philanthropy; contribution to local
communities; donation to philanthropy,
volunteer leave

Ethicalresponsibility

Expected bysocietyTransparency in transactions; respect foregal spirit; respect for human rights andculture; environmental conservation; safety,
leadership, reputationLegal
responsibility

Required bysociety

Economic
responsibility

Required bysocietyNGOs
Local
population

Business
partners

Patterns of corporate social responsibility (classification of Archie B. Carroll)

Antimonopoly legislation; bribery, bid
rigging and other commercial and penal law
violations;various regulations; administrative
guidance
Profit maximization; share enlargement,
business efficiency; anticipatory investment;
management strategy; job security;
technological innovation; dividend
maximization

Patterns of Corporate Social Responsibility

Source: Umezu (1997).
Data compiled by DBJ.

philanthropic responsibility (Figure 1-2).6 Notethat the scope of legal responsibility has widened in contemporary discussions. With increased emphasis on private-sector initiatives,
regulations have been developed to requirecompanies to take account of environmental
burdens and equality in employment. Furthermore, increased focus is now placed on ethicaland philanthropic responsibilities in cases
where mere compliance with legal provisions is
not enough (responsibility of a higher order).
As in the case of the UK, which will be
described later, companies are increasingly required to improve transparency in the eyes ofthe shareholders and provide bona fide explanations (accountability), in addition to actuallydischarging their social responsibility.
As has been discussed by many analysts,
the wide range of social responsibility required
6

The classification of corporate social responsibility is not
limited to the four categories described in this report. According to Tanimoto (2000), for example, CSR can beclassified into four patterns based on the operational levelat which companies exert impact on society: (1) the incorporation of social justice and ethics into the process ofbusiness activities, (2) the development of social products
and businesses, (3) social contribution particularly throughdonation, and (4) support and voluntary activities for local
communities utilizing corporate managerial resources(facilities, human resources, technology, etc.). He argues
that the market society has come to appreciate activities
not only at Levels (3) and (4) but also at Levels (1) and (2)since the 1990s.

of companies reflects the diversity of the parties
concerned (generally known as stakeholders),
including investors, shareholders, employees,
consumers, business partners and communities.
Stakeholders comprise those who have direct orindirect interest in the company as employees,
purchasers of goods and services, depositors or
corporate pension holders. Typically, they havea mutual relationship with the company,
influencing corporate behavior through their
expectations while also being affected by thecompany.
Historically, numerous action principles
have been developed concerning corporate social responsibility to urge companies into responsible behavior. Examples include the
Global Sullivan Principle (1974), OECD Multinationals Guideline (1976) and United Nations
Global Compact (1999). In recent years, partnerships with NGOs and NPOs have been emphasized in the CERES Principle (1989), International Labor Standard (SA8000, 1997), Sustainability Reporting Guideline (Global Reporting Initiative: GRI, 1999/2000), etc. (Table
1-1).
Interest in the social responsibility ofcompanies also increased in Japan as industrial
pollution worsened in the era of rapid economic
growth. The social contribution of companies(philanthropy, etc.) became the primary focus
of attention in the early 1990s. Concerns about
Development Bank of Japan Research Report/ No. 37

5

Table 1-1
Classification

Rules/
guidelines

Principles on Corporate Social Responsibility

Name

Year of publication/
establishment

Global Sullivan Principle

1974

OECD Multinationals Guideline

1976

CERES Principle

1989

Keidanren Charter of Business Behavior

1991

UN Global Compact
Sustainability Reporting Guideline

1999
1999/2000

Caux Round Table Conference

1986

BSR

1992

Organizations

Standards

SA80001997

AA1000ECS2000

1999
1999

Content
Corporate behavior guidelines advocated by Rev. Sullivan ofSouth Africa.
Principle concerning desirable corporate behavior, fourth
revision in 2000.
Environmental ethics standard for businesses, published by
CERES, a US NGO.
10 principles concerning desirable corporate behavior, revisedin 1996.
Corporate activity principle endorsed by SG Kofi Annan in
Davos.
Published by GRI, a US NGO.
Organization of Japanese, US and European business people
based in Caux, Switzerland. Published an Action Agenda for
Moral and Responsible Companies.
Membership organization supporting responsible businessactivities.
International labor standard, formulated by SAI (ex-CEPAA)
of US.
Accountability standard, published by ISEA of UK.
Ethical standard, published by Reitaku Research Center.

Note:

GRI: Global Reporting Initiative, BSR: Business for Social Responsibility, SA8000: Social Accountability,
ECS2000: Ethics Compliance Standard, SAI: Social Accountability International.
Source: Compiled by DBJ.

social responsibility of companies have beenrenewed in recent years in terms of response toenvironmental issues and corporate misconducts.
In the US and Europe, corporate social
responsibility has often been referred to as CSR
in recent years. It has been attracting attention
as a concept of open and transparent businesspractice that respects employees, communities,
the environment, etc., based on ethical values7.
With the rising expectations from stakeholders

7

Various definitions also exist for CSR. The definitioncited here is by the Prince of Wales Business Forum. This
report use the term as indicating contemporary implications of “social responsibility of companies.”

6

Development Bank of Japan Research Report/ No. 37

including consumers and investors, the adoption of appropriate CSR strategies by companies is considered effective for (1) improvingsocial reputation, (2) securing competitiveness,and (3) managing risks.
This chapter has described the concept of
SRI and corporate social responsibility (CSR),
which has a close relationship with SRI, withfocus on their contemporary meanings. The
following chapter outlines actual trends in SRI.

inception, diffusion and expansion (Table 2-1).

II Trends in SRI in US andEuropeThis chapter outlines SRI trends in the US andEurope. First, the discussion focuses on thecurrent status of SRI in the US, which reportedly holds the largest SRI assets in the world.
This is followed by a description of trends in
the UK, where SRI has been growing rapidly,with a focus on the efforts of the government
and institutional investors to encourage the disclosure of SRI and CSR information, and theunderlying development of the CSR concept.
1.

Trends in SRI in US
1.1

Development

The long history of SRI in the US apparently
has had considerable impact on the development of its concept. This section outlines thedevelopment of SRI in the US in three stages:
Table 2-1

Inception (circa 1920s)
Although various arguments exist as to the origin of SRI, the contemporary style of SRI dates
back to the 1920s, when US churches stopped
investing in the stock of companies involved inalcohol, tobacco and gambling.
Diffusion (late 1960s – 1980s)
The US economic society experienced numerous social challenges including the civil rights
movement and the Vietnam War in the 1960s,
consumer campaigns and nuclear accidents in
the 1970s, and the anti-Apartheid movement
and environmental issues in the 1980s. During
this period, mechanisms were formed to consider corporate social responsibility in investment activities. The 1970s saw a continued
slump in the stock market, sometimes referred
to as the “demise of stock8.” At the same time,companies came under fire for not assuming
their social responsibility. Campaign GM 9

Development of SRI in US

1920s-

Companies mainly involved in alcohol, tobacco and gambling are excluded from asset investments by
Christian churches.

1960s-

Social issues and corporate criticism are linked to SRI.

1970

Campaign GM is initiated (inception of shareholder advocacy).

1971

The first mutual fund that considers a wide range of social issues is created.

1971

A religious group (ICCR) is established to put shareholder advocacy into practice.

1972

IRRC, a SRI survey company is established.

1973

The first US community development bank (South Shore Bank) starts operation.

1974

Elisa Law is enacted. Defined contribution pension plan (401k) is created.

1985

SIF is incorporated as a federation of organizations involved in SRI.

1988

A SRI survey company (KLD) is established.

1990s-

Rapid growth of SRI market.

Note:

ICCR: Interfaith Center for Corporate Responsibility
IRRC: Investor Responsibility Research Center
KLD: Kinder, Lydenberg, Domini
Source: Compiled by DBJ.

8

Business Week, a US economic magazine, featured anarticle entitled “The Demise of Stock” in 1979. The US
stock market remained stagnant throughout the 1970s,
with the Dow Jones Industrial Average moving within the$600-1,000 range.
9
The problem of defective cars triggered an active campaign demanding responsible corporate behavior from GM.
A stockholder’s proposal was presented at the next annual
general meeting (1971), urging the company to take comprehensive measures for minority employment, pollution
control, etc.
Development Bank of Japan Research Report/ No. 37

7

marked the start of shareholder advocacy in1970. 1971 saw the advent of the first SRI trust(mutual fund) 10 involved in social screening
based on a wide range of social, environmental
and other criteria (currently Pax World Balanced Fund). In 1972, a specialized organ was
created (IRRC) to conduct social assessmentsof companies. Further, the first community development bank (the aforementioned South
Shore Bank) commenced operation in 1973. In
the 1980s, various events such as theanti-Apartheid movement helped increaseawareness of SRI among general investors.

considered SRI as an option in investment.
Thus, SRI started as a marginal investment
activity in the US but became linked to contemporary social concerns and corporate criticism from the 1960s through the 1980s. With
the development of necessary infrastructure
including the social rating of companies, SRI
grew spectacularly in the 1990s, backed largelyby the buoyant stock market.
1.2

According to the “2001 Trends Report,” published by the aforementioned US Social Investment Forum (SIF), total outstanding assets
of SRI in the US (biennial, as of November)rose from $40 billion in fiscal 1984 (almost ¥10trillion @ ¥239/$) to ¥695 billion in fiscal 1995
(almost ¥70 trillion @ ¥100/$) and to $2,340
billion (¥300 trillion @ ¥130/$) in fiscal 2001,
thus more than tripling in the last six years (Table 2-2).
Taking account of the fact that the US
economy experienced its longest expansion in
the post-war era, with the buoyant stock market

Expansion (1990s onward)
With favorable US stock market conditions,
SRI experienced a full-scale expansion, particularly in stock investment, as SRI financial
instruments showed good performance andconcerns about corporate responsibility heightened largely due to the anti-tobacco sentiment.
The expansion of SRI was also helped by theflow of funds into investment funds throughdefined contribution pension plans, which often

Table 2-2

Trend of Outstanding SRI Assets in US

1984

1995

1997

1999

(Unit: $ billion, %)Change
99/01
2001

N/A

162

529

1,497

2,030

Classification
Screening

CY

35.6

Mutual funds

12

96

154

153

-0.6

Separate accounts

150

433

1,343

1,870

39.2

529

736

922

906

-1.7

Investors also involved in screening*

84

265

601

126.8

Investors involved in shareholder advocacy only

652

657

304

-53.7

Shareholder advocacy

Community investment

N/A

N/A

4

4

5

8

40.2

40

695

1,185

2,159

2,340

8.4

Total (excluding *)Note:* Excluded from total due to duplication with screening.
Some totals do not add up due to rounding.
Source: Compiled by DBJ from SIF data.
10

Typical corporate type open-ended investment trust. A
corporate type investment trust establishes a stock company for investment, in which the investors become
stockholders by acquiring issued shares. An open-ended
mutual trust allows free conversion in cash after initialestablishment by repurchasing issued securities. The conversion is based on the value of net assets.

8

Trend of Outstanding Assets

Development Bank of Japan Research Report/ No. 37

and the doubling of the composite share priceindex, the growth of the SRI market in the
1990s was largely supported by rising shareprices, as well as by the inflow of new money.
Underlining its popularity in the US, the SIF
reported that SRI assets accounted for 12% of
the major investment assets throughout thecountry in fiscal 2001, and that “nearly one outof eight dollars under professional managementin the US today is involved in SRI.”
In fiscal 2001, outstanding screening assets11 amounted to $2,030 billion, accounting
for as much as 86.8% of total assets outstanding
and increasing 35.6% in two years since fiscal
1999. Out of the screening assets, SRI funds(mostly mutual funds in the US) account for$153 billion, which is only 6.5% of the total.
Thus, an overwhelming part of the total outstanding assets belong to individual and institutional investors who use screening in their investment strategy (separate accounts). Althoughmutual funds showed a strong increase in number from fiscal 1999 (168 to 230), their outstanding assets decreased slightly, affected byfalling share prices (from $154 billion to $153
billion).
Outstanding assets of shareholder advocacy accounted for 38.7% of the total ($906
billion), showing a slight decline of 1.7% fromfiscal 1999. Of these assets, however, outstanding assets of methodologically “active”
SRI, involved in both screening and shareholder
advocacy, amounted to $601 billion, more thandoubling from fiscal 1999 (up 126.8%). This ismainly due to the increase in the number of institutional investors who avoid tobacco-related
stocks and are also involved in some kind of
shareholder advocacy. The assets subjected toboth screening and shareholder advocacy are
excluded from the total SRI assets to avoid duplication.
Finally, community investment amounted
to $7.6 billion, showing a substantial growth of
40.2% from fiscal 1999, but only accounted for
0.3% of the total. This extremely small volume
of community investment assets can be ex11

Although screening assets in these statistics are limited
to those officially subjected to social screening, this is adefinition in a wider sense because assets with a single
screening criterion are all counted in.

plained by the fact that this statistic only counts
in the outstanding assets of CDFIs, whereas in
the US, community investment is basically required of every commercial bank under theCommunity Reinvestment Act (CRA)12.
1.3

Investors and Specialized
Organizations

A wide variety of investors adopt SRI in the US,
ranging from personal investors to institutional
investors such as public corporations, universities, hospitals, foundations, insurance companies, pension funds, NPOs, churches and synagogues.
As it is inefficient and cumbersome forthose numerous investors individually to collectinformation, make judgment on investment andmonitor management, in practice organizations
specialized in SRI have been established tosupport the social assessment of companies andshareholder advocacy.
Typical examples of organizations specialized in SRI include the Interfaith Committee
on Corporate Responsibility (ICCR: shareholder advocacy), Investor Responsibility Research Center (IRRC: corporate rating andshareholder advocacy) and Kinder, Lydenberg,
Domini (KLD: corporate rating). In spite of thedifference in their forms, such as private enterprises and NPOs, they are highly independent
in their actions. The ICCR is an inter-religious
center (religious group) for corporate responsibility established in 1971. The IRRC is a research agency/investment advisory company(NPO) to support shareholder advocacy, established in 1972. KLD, a research agency whichrates corporations on social responsibility on
behalf of institutional investors, provides a paid
database called the Social Responsibility Rating
Database (SOCRATES), which contains as12

Legislation requiring the elimination of discrimination
against low-income persons and minorities in bank loans(redlining), given that safe and sound banking management of the financial institutions is maintained. Compliance by each bank is rated (excellent, good, improvement
required or unsatisfactory) by the supervising authorities
almost every two years as regards lending, investment andservice. The results are made public. The supervising authorities must consider this rating result when authorizing
new bank branches or mergers.

Development Bank of Japan Research Report/ No. 37

9sessments of more than 1,600 companies. KLD
also launched in May 1990 a Domini 400 Social Index, the first benchmark for SRI investors with multiple social criteria.
1.4

Characteristics in Corporate Assessment Criteria

What kind of criteria are used commonly in the
US for screening? The share of each screening
item in all portfolios in fiscal 2001 (SIF survey)
indicates that criteria concerning tobacco, theenvironment, human rights, employment, gambling, alcohol and weapons are used in morethan 50% of all portfolios (Table 2-3).
Table 2-3 Major Screening Items for
SRI in US(Share in all portfolios)
50% or over

30% - less than 50%

Less than 30%* Tobacco* Environment* Human rights* Employment/equality* Gambling* Alcohol* Weapons* Labor relations* Animal testing/rights* Community investing* Community relations* Executive compensation* Abortion/birth control* International labor standards

Source: Compiled by DBJ from SIF data.

The most recent “1999 Trends Report”
provides more detailed information: tobacco(96%), gambling (86%), alcohol (83%), weapons (81%) and the environment (79%) wereadopted in about 80% of the portfolios, followed by human rights (43%), labor (38%),
birth control and abortion (23%) and animal
welfare (15%).
The above data indicate that the traditional
type of negative screening against companies
dealing in tobacco, gambling, alcohol andweapons in particular is most common in the10

Development Bank of Japan Research Report/ No. 37

US, although a wide variety of social concerns
are reflected in SRI.13 It is reported, however,that screening items used currently in less than
30% of the portfolios (such as international labor standards) may become more popular in theyears ahead.
1.5

Evaluation of Investment Performance

In the US, SRI financial instruments subjectedto screening are evaluated as not inferior to ordinary funds in terms of investment performance. According to the aforementioned KLD,
for instance, the growth of the Domini 400 Social Index (annual rate) has exceeded that of the
S&P500 for more than five years as of May
2002 (see below).

Last 5 years
Last 10 years

DSI
7.25%
13.25%

S&P500
6.16%
12.10%

According to a survey as at the end of
December 2001, 63% of the SRI assets subject
to screening (29 out of 46 funds) are given highratings from investment trust rating agencies(Lipper or Morning Star), thanks to the good
performance during the recent three years.14
2

Trends in SRI in Europe

According to the Sustainable Investment Research International (SiRi) Group15, SRI assets(limited to SRI retail funds) in 13 European
countries amount to 250 funds with an outstanding value of 15.1 billion euro (about ¥1.6
trillion). The value of assets has been rising,despite share price fluctuations. The UK leads
other European countries both in the number offunds and in outstanding assets, largely due to
its relatively long experience in SRI (Figure
13
Typical SRI funds in the US adopt multiple criteria forsocial assessment in general.
14
More than 90% of investment trust fund sales in the US
are estimated to flow into funds given four or five stars by
Morning Star (fiscal 1997 survey by Morning Star).
15
A group designed to conduct a wide range of social
investment research, whose membership include 12 agencies noted for SRI research. With over 100 investigators, itcovers more than 4,000 companies in major markets
worldwide.

Number of funds
Hundred Million euro

%

80

3

Share in national market (right scale)
60

2

40

1
Number of funds

20

Outstanding assets

Austria

PolandFinland

NorwaySpain

SwedenGermany

FranceBelgium

Switzerland

Netherlands

Italy

-1
UK

0

0

Figure 2-1 Status of Retail SRI Retail Funds in Europe(as at the end of June 2001)
Source: Compiled by DBJ from SiRi Group, “Green, Social and Ethical Funds in Europe
2001.”

2-1).
In addition to this expansion in volume,
SRI and corporate social responsibility havebeen actively discussed at various levels in
Europe. For example, the European Union (EU)published a green paper entitled “Promoting a
European Framework for Corporate Social Responsibility” in July 2000 for public comment
to consider the role to be played by the EU in
CSR at the regional and global level. The green
paper refers to the growth of the European SRI
market in recent years and predicts that further
standardization, uniformity and transparency
will be required of the screening criteria usedby rating agencies. The paper also seeks tolaunch discussion on the necessity of a stockindex for SRI at the pan-European level.
At the national level, enabling conditionsfor SRI and CSR have been developed including legislative measures. In France, for example,
a provision for information disclosure on CSR
by companies requires environmental and social
reporting of listed companies. Information disclosure on SRI is also required. Furthermore,
the federations of SRI-related actors in fivecountries－France, Germany, Italy, the Netherlands and the UK－took the lead in establishing

the European Sustainable and Responsible Investment Forum (Eurosif) in 2001, as apan-European stakeholder network to promotesustainability16 and responsible investment.
3.
3.1

Trends in SRI in UK

Development and Trend of
Outstanding Assets

SRI in the UK, also known as ethical investment, has a history of at least 20 years. The
term “ethical investment” however implies abias toward negative screening, and its scope isoften limited to religious or ethical approaches.
For this reason, the UK Government and otherorganizations have been using the term “SRI,”
which has a wider meaning.
The history of SRI in the UK resembles
that of its US counterpart, in that it started with
16
There is no clear definition of this word, either. In awider sense, it refers to corporate efforts to identify thecompany’s objectives, consider the needs of all stakeholders and minimize the adverse effect of its own activities on society and the environment for creating (1) economic, (2) social and (3) environmental values (i.e. contribution), which are also known as “triple bottom lines.”

Development Bank of Japan Research Report/ No. 37

11

Table 2-4
1974
1981
1983
1984
1988
1991
1992
1997
2000
2001

Development of SRI in UK

First ethical bank is set up to lend to projects that have social benefit.
Ecology Building Society begins financing the purchase of properties with an ecological payback.
Ethical Investment Research Service (EIRIS) is established.

First ethical unit trust is started.
Green unit trusts are started.
UK Social Investment Forum (UKSIF) is established.
Co-operative Bank introduces ethical policy.
A group of university lecturers launches the Ethics for USS campaign for the ethical and environmental investment of their pension fund.
Pensions SRI Disclosure Regulation takes effect.
FTSE 4 Good indices are created. ABI guidelines are published.

Source: Compiled by DBJ from UK Social Investment Forum data.

the selection of stock on religious ethics andhas been linked with social issues and criticism
against businesses (Table 2-4). The first research agency for social rating of companies
was created in 1983. The year 1984 saw theadvent of the first SRI trust (unit trust) in theUK, followed by the creation of green investment retail funds for environment in the late1980s. Although some funds today are special-ized in the environment, etc., the majority ofthem combine a wide range of criteria.
At first, SRI retail funds were not well received by financial experts in general in termsof market scale. However, SRI expanded rapidly up to the late 1990s in terms of both valueof assets and number of products, reaching
about ₤4 billion and 60 funds respectively in2001 (Figure 2-2)17. Although SRI represents(₤ million)

%

5000

2.0

Total assets
1.6

4000
Market share(right scale)

3000

1.2
0.8

2000

0.4

1000
n/a

0.0

0
'89

90

91

92

Figure 2-2

93

94

95

96

97

98

99

00

01 year

Trend of SRI Retail Funds in UK

Note:
Data as of June (July for 1989, 1991 and 1994; May for 1992 and 1993).
Source: Compiled by DBJ from EIRIS, AUTIF and other data.

17
One of the reasons for the expansion of SRI funds isthat independent financial advisors (IFAs) affiliated to the
UKSIF or Ethical Investment Association recommended
SRI financial instruments to general investors as part oftheir sales strategy.

12

Development Bank of Japan Research Report/ No. 37

less than 1% of the UK investment trust market,
it is considered a promising product.
No data are available on the total amountof SRI in the UK, comprising the three approaches of screening, shareholder advocacy
and community investment. However, an estimate of outstanding assets subjected to screening was published as of October 2001.18 The
data indicate that screening assets in the UK
increased from ₤52 billion in December 1999 to₤120 billion (about ¥21 trillion) in October
2001, thus more than doubling in only 10
months. This spectacular growth is largely attributable to the rapidly increasing introductionof SRI in pension funds (up from ₤25 billion in
December 1999 to ₤85 billion in October2001).
Shareholder advocacy is also gaining attention. Traditional UK shareholders are generally reluctant to exercise their voting rights andprefer dialogue with management.19 Also in thecontext of shareholder advocacy, most shareholders communicate necessary improvementsfrom the viewpoint of corporate social responsibility through direct dialogue with company
managers prior to exercising their voting right,
and monitor subsequent implementation of theirrecommendations. This approach is called “engagement.” In this case, their voting rights
serves to increase the effectiveness of “engagement,” as the last resort to make their
voices heard. Investors actively adopting the“engagement” approach include the Local Authority Pension Fund Forum and the Universities Superannuation Scheme20. Backed by the
influence of the sheer weight of their financial
resources, some financial institutions have beenmarketing investment trust products that incorporate “engagement.”
18

Source: Russell Sparkes, October 2001.
According to Tamura (2002), “institutional investors in
the UK have an even larger share in total stockholding
than in the US, but they tend to exert influence throughunder-the-surface consultations with managers, rather than
through open confrontation with them.”
20
The fund’s assets amount to ₤18.6 billion (about ¥3.7
trillion), of which about ₤14 billion is invested in corporate stock. With the launch of “Ethics for USS” (a campaign by university lecturers, etc. to demand ethical andenvironmental investments from pension funds), the fundintroduced SRI, hired two SRI advisors and has been actively involved in shareholder advocacy.
19

3.2

Trends in Adoption of SRI by Institutional Investors

The UK stock market is one of the most institutionalized in the world (Figure 2-3). As mentioned above, SRI has been adopted by an increasing number of institutional investors including pension funds and insurance companies,
attracting attention as a major development thatwill have a considerable bearing on corporate
management.

Investment
trusts2%
Unit trusts
2%

Banks
1%

Others8%
Overseas
32%

Individuals
16%

Pensionfunds
18%

Insurancecompanies
21%

Figure 2-3 Shareholding Structure in UK(2000, market price basis)
Source: Compiled by DBJ from National Statistics, “ShareOwnership.”

Trends in Pension Funds
Occupational pension funds, a major categoryof pension fund, have expanded their asset
volume thanks partly to tax relief measures in
the 1990s (to ₤800-850 billion). However, they
were traditionally reluctant to introduce SRI
despite the huge amount of investment in thestock market.
Under these circumstances, the amendment
to the Pensions Act 1995, which took effect inJuly 2000, was a landmark event in the historyof SRI in the UK. The amendment is known as
the SRI information disclosure regulation.
The amendment helped trigger the introduction of SRI by pension funds. The regula-

Development Bank of Japan Research Report/ No. 37

13

tion requires the trustees21 of occupational pension funds to describe in the Statement of Investment Principles (SIP), (1) the extent (if atall) to which social, environmental or ethicalconsiderations are taken into account in the selection, retention, and realization of investments,and (2) their policy (if any) in relation to theexercise of the rights (including voting rights)
attaching to investment.
Although this provision only concerns thedisclosure of SRI information, its significanceis that it has legally enabled pension holders toknow whether their pension funds are involvedin SRI. Moreover, pension fund trustees could
be held accountable not only for investment
performance but also for their ethical policy.
Thus, they are now virtually required to consider SRI in an appropriate and serious manner.
(Table 2-5)
Table 2-5 Text of amendments to
the Pensions Act 1995
◆ Pension trustees shall describe the following in thestatement of investment principles.
1. The extent (if at all) to which social, environmental or ethical considerations are taken into
account in the selection, retention, and realization of investments; and2. Their policy (if any) in relation to the exercise of
the rights (including voting rights) attaching toinvestments.
Source: Compiled by DBJ.

In this regard, it is useful briefly to describe the relationship between trustees andpension holders in occupational pension funds
in the UK. The relationship changed dramatically throughout the 1990s, partially triggeredby the illicit diversion of reserve funds uncovered in 1992 (Maxwell Affair)22. Following the21
The premium paid to pension funds is transferred fromthe employer (company) to the trustee, who invest assets
and provide benefits. Some major pension funds hire outsiders (chartered accountants, university professors, etc.)
as trustees. The trustee appoints a fund manager and oversees his/her activities.
22
The late newspaper baron Robert Maxwell illicitly diverted over ₤400 million of assets from the pension funds(entrusted to a child of the president) of Maxwell Communications and Mirror Group Newspaper, both virtually

14

Development Bank of Japan Research Report/ No. 37

establishment of a deliberative committee on
the Pension Law (Goode Commission) in thesame year and the publication of a White Paper
on Corporate Pension Reform, the 1995 Pension Law, designed to protect pensioners (security of job area pensions), was enacted in 1995
to enhance the supervision of pension fundtrustees.
As a result of a series of reforms, the relationship between trustees and trusters has beenclarified in cases where UK occupational pension funds conduct investment activities on behalf of pension holders. Under fiduciary duty23,
pension fund trustees are strictly required by thesupervisory regime to ensure safe investments
over the long term.
While assuming those heavy responsibilities, pension funds have introduced SRI, as
more pension holders have come to embrace theconcept of SRI due to various factors such as
the transformation of SRI from the traditional
ethical investment to contemporary SRI and thegood performance shown by SRI, as well asprior enlightenment activities by organizations
specialized in SRI and non-governmental organizations. Indeed, an opinion survey of pension holders conducted by an organization specialized in SRI indicates that, as of 1997 (coverage: 700 adults), 73% supported the “adoption of an ethical policy by pension funds.”
Their acceptance of SRI in general was reconfirmed in 1999 (coverage: 493 adults), with77% replying, “their pension scheme should
operate an ethical policy whenever it can do so
without reducing financial return” (Figure 2-4).
After this amendment, how many of thepension funds actually moved toward introducing SRI? According to the result of a questionnaire survey published in October 2000 by the
UK Social Investment Forum24, a federation of
SRI organizations in the UK, as many as 60%of the respondent pension funds were favorable
toward introducing some sort of SRI.
owned by him. Payment of benefits to over 5,000 retirees
came to a halt.
23
Pension fund trustees have a duty to concentrate on thefinancial benefit of pension holders in good faith. They
also have professional obligations, as they are trusted fortheir expertise.
24
A membership network designed to promote SRI in theUK, established in 1991.

Their pension scheme should operate an ethical policy whenever it
can do so without reducing financial return.
Strongly
agree
26%

Others(disagree,
no reply)
23%

Agree
51%

N=493

Figure 2-4 Opinion Survey of Pension Holders (1999)
Note:
Survey conducted in June 1999.
Source: ERIS/NOP survey.

The survey, covering 508 pension funds
including the top 500 occupational pension
funds in terms of outstanding assets, also gave
the following results based on 171 SIPs obtained (reply rate: 34%).
• 59% of funds, representing 78% of assets, areincorporating SRI principles into their investment process.
• 48% of funds, representing 69% of assets,
have requested that their fund managers takeaccount of the financial implications of social,environmental and ethical issues.
• Larger pension funds are more likely to take
SRI considerations into account than smaller
funds.
• 39% of funds mentioned the approach of engagement in their Statement.
However, some NGOs found that the introduction of SRI in pension funds was not sufficient.25
Trends in Insurance Companies
The UK insurance industry invests in corporate
stock and other assets on behalf of millions ofsavers inside and outside the country. The
volume of investment totals some ₤1.1 trillion,of which 90% is life insurance and annuity
premiums for long-term investment.
UK insurance companies have their own
SRI strategies. For example, Morley FundManagement, which invests some ¥20 trillion
worldwide as the asset investment company ofthe largest UK insurance group CGNU, considers SRI as one of its core businesses and has
established a special team to market multiple
SRI funds. The company aims to select, from awide range of potential investment targets,
those companies that will provide long-term
returns while contributing to sustainable development. The company also actively engages in
dialogue with management as shareholder.26
In response to this development of SRI, theAssociation of British Insurers (ABI: the tradeassociation for the UK's insurance industry)
published in October 2001 guidelines requiring
companies to disclose information regarding
social, environmental and ethical risks (and26

25

For example, an original survey conducted by a NGO,
Friends of the Earth UK, entitled “How ethical are they?”found that among the top 100 job area pension funds interms of assets, 10 made “good” reference to SRI policy intheir SIPs, 18 made “active” reference, 33 made “poor”
reference, 4 had “no policy,” and 35 provided “no comment or reply.”

In December 2001, five UK asset investment companies including Morley Fund and Henderson Asset Management as well as three pension funds in the UK, theNetherlands and Switzerland (total assets of ₤4 billion)
sent a joint statement to their investment target companies
operating in Myanmar, demanding the latter to review
their activities in the country with a bad human rights
record (Nikkei Kinyu Shimbun, December 11, 2001).
Development Bank of Japan Research Report/ No. 37

15

Figure 2-5 Background and Concept behind ABI Guideline
Source: Compiled by DBJ from ABI data.

opportunities). The members of ABI, some 400
insurance companies in total, account for morethan 20% of the market capitalization on the
London Stock Exchange.
Figure 2-5 provides an overview of ABI’s
stance toward SRI. The guidelines were published as public interest in CSR grew in the UK
and further transparency in corporate activities
was demanded. Also, insurance managers are
beginning to consider SRI in investment policies to satisfy the needs of their customers.
More importantly, CSR is beginning to be
regarded as an important part of risk management as well as business opportunity. Indeed,
the guidelines encourage the disclosure of CSR
information based on the idea that by appropriately responding to CSR risk, companies canincrease their medium- to long-term shareholder value. In light of its institutional position
and the technicality of this issue, the ABI limits
its focus on providing a basic benchmark.
The ABI guidelines require listed companies to manage and report all the material risks(and opportunities) facing their businesses toprotect their shareholder value (Figure 2-6).
Specifically, it requires companies to define theresponsibility of the board of directors and todescribe explicitly in their annual report each of

16

Development Bank of Japan Research Report/ No. 37

the risks affecting shareholder value, the policies or procedures to manage the risks, theevaluation of such policies or procedures, andthe method of information disclosure, among
others.27
Thus, increased focus on CSR in the UK
drastically changed the relationship between
money providers and institutional investors aswell as between investors (shareholders) andcompanies, in terms of the increased transparency (reduction of information gap) required ofmanagement entities by governance entities28.
Thus, institutional investors are systematicallyrequired to disclose SRI-related information tomoney providers, while companies are required
to disclose CSR-related information to stakeholders including investors. This implies theincreasingly compelling nature of CSR also
from the viewpoint of corporate governance.
27

In line with this ABI guideline, Trinity Mirror (thelargest newspaper company in the UK) and Securicor (asecurity company) have disclosed social, environmental
and ethical risks in their annual report.
28
In addition to (1) the relationship between investors(shareholders) and managers, this report also includes (2)the relationship between money providers (those who
deposit money with institutional investors) and institutional investors (e.g., pension funds), in dealing with therelationship between governance entities and management
entities.

Clear indication in annual report(1) Responsibilities of board of directors(2) Policies, procedures and evaluation

 The Board regularly takes into account the significance ofsocial, environmental and ethical (SEE) matters for thebusiness of the company.
 The Board has identified and assessed the significant risks tothe company’s short- and long-term value arising from SEE
matters, as well as the opportunities to enhance value that
may arise from an appropriate response.
 The Board has received adequate information to make thisassessment and that account is taken of SEE matters in the
training of directors.
 The Board has ensured that the company has in place
effective systems for managing significant risks, which,where relevant, incorporate performance management
systems and appropriate remuneration incentives.

 Include information on SEE-related risks and opportunities
that may significantly affect the company’s short- andlong-term value, and how they might impact on the business.
 Describe the company’s policies and procedures for managing
risks to short- and long-term value arising from SEE matters.
If the annual report and accounts state that the company has
no such policies and procedures, the Board should provide
reasons for their absence.
 Include information about the extent to which the company
has complied with its policies and procedures for managing
risks arising from SEE matters.
 Describe the procedures for verification of SEE disclosures.
The verification procedures should be such as to achieve areasonable level of credibility.

Figure 2-6 Outline of ABI Guideline
Source: ABI data summarized by DBJ.

3.3

Advent of SRI Stock Index

In addition to the amendment to the Pensions
Act 1995 and the promotion of SRI policy byinstitutional investors, the advent of stock indices for SRI has raised the consciousness of
CSR on the part of listed companies. One of thetypical SRI indices is the Dow Jones Sustainability Index (DJSI), created in 1999 by Dow
Jones and SAM Research. FTSE, ajoint-venture stock index calculating company(established in 1995 as independent company)
between the Financial Times and London Stock
Exchange, followed suit in July 2001 bylaunching the first SRI stock index service inthe UK, “FTSE 4 Good™.”
Figure 2-7 shows the selection procedureof FTSE 4 Good. It partially follows the traditional concept of ethical investment, excluding
tobacco producers, nuclear weapons and arms
manufacturers as well as the owners or operators of nuclear power stations29. However, italso selects companies from the viewpoint of29
Nuclear power generation is excluded from the investment universe because a substantial number of people areclearly against it.

best practice by setting specific criteria in threefocus areas: Working towards environmental
sustainability, Upholding and supporting universal human rights and Positive relations withstakeholders.
FTSE 4 Good comprise four indices.30 For
example, the FTSE 4 Good Global Index (coverage: 526 companies) excludes about
two-thirds of the companies comprising thebase index (FTSE Developed Index). With renowned top-rated companies such as Microsoft(software & computer services), AIG (insurance), BP (oil & gas), Johnson & Johnson(pharmaceuticals)
andGlaxo-SmithKline(pharmaceuticals), the FTSE 4 Good Global
Index has been outperforming the FTSE Developed Index since its inception.

30

Benchmark indices include the Global Index, US Index,
Europe Index and UK Index.
Development Bank of Japan Research Report/ No. 37

17

Figure 2-7

Selection Procedure of FTSE 4 Good

Source: FTSE data compiled by DBJ with some additions.

4.

Relations between CSR and SRI in UK
4.1

Outline of CSR in UK

As described above, the interest of UK consumers and investors in CSR has been growing
rapidly in recent years, leading to the expansionof SRI. In other words, the expansion of SRI,
including the introduction of SRI by institutional investors, serves to increase further theimportance of CSR. Thus, SRI and CSR have amutually reinforcing effect.
The growing interest in CSR is observed
among stakeholders including consumers, investors, employees and NGOs. For instance, apublic opinion survey of UK adults (in 2001,
coverage: 1,055 adults in the UK) indicates that
89% of the people replied that “CSR is important” in forming a decision about a product orservice, up from 77% in 1998. Above all, theshare of the response “CSR is very important”
rose from 28% to 46% over the same period.
Thus, consumers are increasingly interested in
CSR, as well as in goods and services that meet
18

Development Bank of Japan Research Report/ No. 37

their purposes and budgets. This implies that
CSR cannot be ignored in marketing (Figure
2-8).
Figure 2-9 shows the fields in which large
companies in the UK are supposed to play theso-called “philanthropic responsibility” (survey
conducted in 1999: covering 2,042 UK adults).
The data indicates that education comes top
with 61%, followed by reemployment support
for the unemployed (55%), support for the disabled (49%) and the environment (49%). As far
as education is concerned, emphasis is placed
on “upgrading the bottom,” including basic
adult literacy and arithmetic skills.
With the growth of interest in CSR, companies have taken concrete initiatives. In thecase of the UK, it has been pointed out thatcompanies should consider, among others,
equal treatment of employees, ethics and goodfaith, respect for basic human rights, environmental conservation for future generations andcare for communities.31
31

Business Impact Task Force, “Winning with Integrity.”

(Q) When forming a decision about a product or service from a particular company or organization, how important is it to you that it shows a high degree of social responsibility?
3
28

98

49

14

6
2

41

99

41

11

5
1

00

41

01

46

0%

44

11
43

20%

40%

Figure 2-8

860%

Very important
Not very important
Do not know

3
2 1

80%

100%

Fairly important
Not important at all

Interest of UK Consumers in CSR

Note:
N=1,055 adults. Survey conducted in July-August 2001.
Source: UK DTI data.

(Q) Which areas do you feel it is extremely important that large companies contribute to or support?

Education

61
55

Help unemployed get back to work

49
49

Environment
Help people with disabilities

45
45
43
41
41
38

Support small business
Regeneration
Help for the elderly
Health/NHS
Local community projects
Crime prevention

32

Support for carers

0

Figure 2-9

20

40

60

80 %

Examples of Philanthropic Responsibility Expectedfrom Big Businesses in UK (by Sector)

Note:
N=2,042 adults. Survey conducted in July-August 1999.
Source: Same as in Figure 2-8.

Development Bank of Japan Research Report/ No. 37

19

Information disclosure to stakeholders is
progressing. Indeed, 80% of the FTSE-100
companies disclose some kind of informationon their social or environmental policies. Furthermore, CSR has come to be considered seriously by small- and medium-sized enterprises(SMEs), as well as by large companies.
4.2

Government Role in CSR

Public concern about CSR, which emerged in
the late 1990s, has prompted the government totake appropriate measures. As described above,
the UK Government enacted a provision for thedisclosure of SRI information. In March 2000,
the first minister in Europe in charge of CSR32
was appointed, supported by the Department ofTrade and Industry (DTI). The DTI has beendeveloping CSR policy, publishing the first
CSR report of the UK Government in March
2001, which was entitled “Business and Society– Developing Corporate Social Responsibility
in the UK.” The report outlines the Government’s plans and business cases related to CSR,
among others.
Based on the position that CSR should not
be subjected to normative regulation, the UK
Government limits its functions to the collection of business cases and the recognition ofachievements; support for “good” corporate
behavior; the development of an effective
framework for CSR reports and labeling; thecoordination of government services and agencies in charge of similar policies; and the promotion of international CSR. The Governmentis also positive about extending CSR to SMEs.

32

20

Dr. Kim Howells was appointed as the first minister.
Development Bank of Japan Research Report/ No. 37

So far, this report has reviewed the statusof SRI in the US and Europe, referring to theoutline of CSR in the UK. Actual forms of SRI
may vary according to the vision of investors or
financial intermediaries and agencies concerned.
Although the objective of this report is not toprovide a comprehensive list of SRI, the following inferences may be drawn.
(1) Traditionally, the prevailing method of SRI
was negative screening, which excludes
those companies belonging to certain sectors from the investment universe. In recent years however, it has developed into abrand-new approach designed to invest in“good” companies, assessing companies
from various points of view, rather than the
single viewpoint of financial performance.
(2) The expansion of SRI in the UK, interacting with the growing social interest in CSR,
demands an appropriate response from
corporate management, and doing so provides an opportunity to improve social
reputation and competitiveness, as well asa tool for risk management.
(3) Assuming the separation of governanceentities and management entities, the lattermust improve transparency to the former
regarding CSR and SRI. In this context,
pioneering initiatives have been launched,including legislative provisions and guidelines concerning information disclosure.

covery of share prices following the introduction of the “zero-interest” policy.
Nine retail funds (without consideration ofhedging for foreign exchange) have been marketed since, mainly by major financial institutions. Although their outstanding assets exceeded ¥200 billion at one time, investment
performance turned negative in fiscal 2001, affected by the slump in share prices. Total outstanding assets currently stand at ¥120 billion(Table 3-1).
Figure 3-1 shows an example of thescreening process applied by an SRI fund inJapan. In this case, about 300 companies are
selected through social assessment concerning
four areas (following the selection of some 700
top companies based on market capitalization).
The fund manager then establishes an actual
portfolio from these companies. Some funds
first select companies on financial criteria, followed by a social assessment.

III Development of SRI in Japanand Pending Issues
SRI has been introduced in Japan only recently,
led by the advent of SRI funds. This chapter
describes the current status of SRI in Japan andpending issues for businesses.
1.
1.1

Development of SRI in Japan

Current Status of SRI Retail Funds

In Japan, a unit trust product that considers
corporate environmental behavior – theso-called eco-fund – was launched in August
1999. The eco-fund attracted much more money
than had been expected, drawing the attentionof people who had been little involved in equity
investment (most of them reported to be individuals, especially women).33 Growing awareness of environmental issues among citizens
helped this development, coupled with the reTable 3-1

List of SRI funds in Japan(Unit: ¥100 million, %)Name of fund (nickname)Sales/investment agency

Assessment agency

Classification

Date ofcreationNet
assetsTotal
return(last 12months)RatingNikko Asset Management

Good Banker

Domestic(general)

08/99

638

-22.1

2

Yasuda Fire and Marine
Global Investment Trust &Investment Management
Kogin-Daiichi Life AssetManagement

Yasuda Fire and Marine
G Environmental Analysis Team

Domestic(general)

09/99

93

-14.4

4

UBS Japanese Stock Eco-Fund(Eco Hakase)

UBS Asset Management

Japan Research Institute

Eco Partners (Midori no Tsubasa)

Nikko Eco-Fund
Green Open (Buna no Mori)

10/99

89

-21.3

2

10/99

52

-21.6

2

UFJ Partners Investment
Trust

SRIC (collaboration)

Domestic(general)Domestic(general)Domestic(general)

01/00

42

-20.5

2

SRI Social Contribution Fund
(Asu no Hane)*

Asahi Life Asset Management

Mitsubishi Research
Domestic
Institute, Public Resource(General)Center

09/00

68

-15.3

4

Eco Balance (Umi to Sora)

Mitsui Marine Asset Management

Interrisk

10/00

Eco-FundGlobal Sustainability F (globe)*
Ditto (with no hedge for foreignexchange)
Global Eco Growth F (Mrs.
Green)
Ditto (with no hedge for foreignexchange)

Good Banker

Balance

Nikko Asset Management

SAM (Switzerland)International(general)

11/00

Daiwa-Sumigin Investment
Trust & Investment Management

Innovest (US)Domestic(general)

06/01
Total

13

-20.5

2

18

-16.8

3

33

-10.4

3

49

−

−

77

−

−

1,172

Note:

*: Funds subjected to social assessment other than the environment.
Ratings are according to Morning Star (on a scale of 5, the larger the number the better).
Total assets and ratings are as of 6/6/02. Total return for last 12 months is measured as of 4/30/02.
Source: Compiled by DBJ from Morning Star HP.
33

Nikkei Sangyo Shimbun, August 24, 1999, p.4, etc.
Development Bank of Japan Research Report/ No. 37

21

All listed and OTC stocks in Japan
About 3,400 companies (100%)(Selection criteria)

・Top companies in market capitalization
Stocks subjected to social contribution survey
About 700 companies (21%)○ Screening for social contribution
・ Preparation of survey report and ratings based on public
information, questionnaires and hearings as necessary.

Social contribution universe
About 300 companies (9%)

・ Judgment from social contribution,
attractiveness to investors and risk control.
Portfolio
About 50-100 companies (1-3%)

Figure 3-1

Example of Screening Process

Source: Compiled by DBJ from Asahi Life Asset Management data.

In conducting the social assessment, somefunds adopt positive screening without excluding any business sectors, while others select thebest companies in individual sectors to ensure
portfolio diversification.
Most assessment criteria concern the environment. Only a few funds have other criteria,
including Asu no Hane (Wings for Tomorrow),which was launched in September 2000. Unlikein the US and Europe, SRI funds in Japan
mostly adopt positive screening, rather than the
traditional negative screening based on the
ethical standpoint. The details of social assessment adopted by individual companies mayvary, including the definition of assessment
criteria, assessment standard and the weightingof each assessment item.
In general, environmental criteria concern(1) regime and management (environmental
policy, environmental management, EMS,
ISO14001, etc.), (2) performance and its
evaluation (environmentally sound products,
energy conservation, CO2 reduction, green
purchasing, environmental accounting, life cycle assessment, PRTR, etc.), and (3) disclosure(environmental reporting, etc.).
Other criteria adopted include those con-cerning employment (employment of women,
the elderly and the disabled, response to humanrights and sexual harassment issues, etc.), consumer affairs (incorporation of consumers’
opinions, response to producer’s liability, etc.)
and contribution to civil society (volunteering,interaction with local communities, etc.).
It has been almost three years since thefirst SRI fund was launched. Several issues inherent to SRI have already been pointed out.34
Financial intermediaries are expected to carryout fiduciary duties including information disclosure to investors and the timely review of,and the retention of rationality in, assessment
criteria.
As explained above, the development of
SRI in Japan has centered on SRI funds. The
advent of eco-funds in Japan provided investors
with an opportunity to incorporate environmental considerations into their investment activities, and encouraged businesses to improvetheir awareness of “environmental management.” On the contrary, there are only a few
cases concerning the adoption of SRI policies
by institutional investors, shareholder advocacy
and community investment.
34

22

Development Bank of Japan Research Report/ No. 37

Takehara (2001), etc.

1.2

in SRI as a comprehensive framework for independent rating agencies to assess individualcompanies’ efforts toward ethics and compliance. Indeed, an independent corporate researchcompany has already been conducted using thisstandard, and its commercialization is slated for2002 as a retail fund.
As an ethics compliance standard for assessing individual companies (to be used forboth independent assessment and self-assessment), R-BEC001 emphasizes the measurementof “corporate integrity,” the observation ofself-regulatory capacity as an organization, andthe examination of the internal management
regime to ensure such capacity. Thus, a featureof the standard is that it focuses on processes
that form the basis of corporate behavior (Figure 3-2).

Future Development

In the US and Europe the viewpoint of CSR ismulti-faceted, and SRI with comprehensive assessment tends to focus on the integrated risk
management capacity of companies regarding
CSR. An eco-fund does not necessarily takeaccount of risks arising in non-environmental
areas, such as respect for human rights, even if
it is designed to consider risks as well as thegrowth opportunities of companies under environmentally sound management.
In this regard, attempts to incorporate aspects other than the environment into the social
assessment of companies are being made in Japan. For example, the ethics compliance standard for companies (R-BEC00135) publishedand proposed by an expert group in July 2001.
It is envisaged that this standard would be used

Rating agencies andinvestment trust companies
conduct assessment basedon their original standards.

Socialcontribution,
environmental
protection,legal risk, etc.

Integrity screening
Ｒ -BEC001

Checking “good faith inmanagement”

・ Eco-funds
・ Social contribution
・ Social responsibility funds
・ Screening based on stakeholder model・ Other thematic fundse.g., labor rRelations, information
control risk management, numberof female managers, philanthropic
activities, etc.
Checking
・ Commitment of CEO
・ Structure of corporate governance・ Regime for respecting ethics
and compliance・ Risk identification
・ Corporate ethics program・ Compliance regime

Fundamentals
Analysis on economic performance

Figure 3-2 Basic Structure of Screening in R-BEC001
Source: R-BEC001 data.

35

R-BEC stands for Reitaku University, Business Ethics
and Compliance Research Center.
Development Bank of Japan Research Report/ No. 37

23

2.

Pending Issues for Companies

Finally, this section looks at efforts toward CSR
in corporate management in Japan.
2.1

Orientation of CSR in Japan

As explained earlier in this report, the conceptof SRI in the US and Europe has been steadily
becoming multifaceted, incorporating social,environmental and ethical viewpoints, while
retaining to some extent the tradition of negative screening against religious “sins” such as
tobacco, gambling, alcohol and weapons. With
the participation of a wider range of investors,
the standard of SRI as a whole has become lessstringent. Meanwhile, the increase in theamount of funds available and the institutionalization of fiduciary duty have strengthened
the demand for further disclosure from companies.
Through the discussion of CSR in Europe,
it was suggested that corporate management
and the provision of goods and services basedon social values effectively improve social
reputation and competitiveness in a market
economy. The development of SRI and changes
in consumer behavior, both discussed in thisreport, are considered to amplify this aspect of
CSR. Therefore, there are opportunities forJapanese companies to gain new value by using
CSR as a competitive advantage, as SRI andCSR are still at the initial stage.
In this respect, the Questionnaire Survey
on Citizen’s Perception of Businesses – conducted every year by the Japan Institute for Social and Economic Affairs since 1997 – provides an insight into the needs for CSR in Japan.
According to the fifth survey in January 2001
(3,417 respondents with a reply rate of 70.3%),
0.5% of the respondents consider that the socialrole and responsibility actually carried out bybusinesses are “sufficient” and 37.8% considered it “acceptable,” while 55.7% regarded it“unsatisfactory” and 1.5% deemed it“non-existent.” The results indicate that 60% of
the population is not satisfied by the social roleand responsibility assumed by companies, andthe result has been deteriorating year after year.

As regards the importance of the socialrole and responsibility assumed by companies
in individual areas of activity, the share of the
reply “very important” is largest in business(71.1%), i.e. corporate economic responsibility,
followed by the environment with 53.6%, corporate ethics with 47.1%, risk managementwith 44.2%, information disclosure with 42.1%
and employment (maintenance and creation)with 41.8%. The results reflect the high expectations of the public in these areas (Figure 3-3).
However, this result only shows an overall
picture. Individual companies have different
priorities and standards according to what andhow much is expected by which stakeholders.
2.2

Consideration of CSR Management

How should individual companies translate
CSR into corporate behavior? This sectionseeks to draw some implications by presenting
a management model for CSR. Figure 3-4 describes the CSR management model preparedby the Ashridge Center for Business and Society (ACBAS) in the UK.36
It is one of the so-called continued improvement models. The first steps include (1)securing commitment (allocating managerial
resources with the commitment of senior management), (2) identifying external concerns andrelating them to business interests (identifying
issues to be addressed at the level of individualcompanies), and (3) reviewing any current policies, processes and performance (gap with actual situation, how to measure results in implementation).
Those initial steps are then followed by (4)define strategy, plans and targets, and allocate
resources (necessarily accompanied by the reconciliation of profit with stakeholder concerns),(5) put into practice, (6) measure performance(no effect to be expected without result measurement and improvement), (7) report andcommunicate, and (8) dialogue with external
parties to review progress. Then, the procedure
returns to Step (4), which is the definition ofstrategies, plans and targets.
36

Source: Business Impact Task Force, “Winning with
Integrity.”

24

Development Bank of Japan Research Report/ No. 37

Do not No
know reply

Not important
Very important

ImportantBusinessof good technologies,
Business (supplyof(supply
good technologies,
goods
goodands andservices
services at
at lower
lowerprices)
prices)0.6

71.1

technology
andstandards,
R&D
Global technologyGlobal
and R&D(global(global standardglobals, globalpatents,
patents, etc.)
etc.)

25.9

59.5

24.4

0.4 3.5

6.6

3.3 4.7

Maintenanceandcreationofof jobs
jobs
Maintenanceandcreation

41.8

49.3

2.9

1.5 4.5

Transparency
in management
andTransparency
in management
anddisclosure
disclosure

42.1

48.1

3.1

2.2 4.5

For listedcompanies,
risingshare
share prices
prices and
For listedcompanies,
risingandstabledividends
to shareholders
stabledividends
to shareholders

18.5

Profitability
paymentstotonational
national andProfitability
andandtaxtaxpayments
andlocal governments
local governments

24.3

Efforts for environmental
protection,
Efforts for environmental
protection,
resource
resosaving,urce saving,energyconservation, etc.
etc.
energyconservation,

62.1

53.6

Interaction
withlocalcommunities
communities
Interaction
with
local

8.9

7.6 4.9

4.4

3.4 5.8

60.1

40.6

24.1

63.4

Efforts
for mécénat(support
forculture
sports,andcultureEfforts
for mécénat(support
for sports,arts),
and arts),
philanthropy
contribution),
etc. 8.0
philanthropy(social(social
contribution),
etc.

0.7

5.3

59.3

0.4 4.7
2.4 4.8

8.6 4.9

19.2

Establishmentof,andandcompliancecorporate
Establishment of,compliancewith,with,corporateethicsbased oethics
n socialbased
logic on social logic

47.1

40.9

2.1

5.2 4.7

Riskmanagement
management
Risk

44.2

45.2

1.9

3.5 5.2

0%Figure 3-3

20%

40%

60%

80%

100%

Importance of Social Role and Responsibility of Companies in Japan

Source: Japan Institute for Social and Economic Affairs, “Questionnaire Survey on Citizen’s Perception ofBusinesses” (fifth survey).

Development Bank of Japan Research Report/ No. 37

25

(4) Define strategy,plans and targets, andallocate resources(1) Securecommitment(8) Dialogue
with external
parties toreview
progress(2) Identify external
concerns and relatethem to businessinterests(3) Review any current
policies, processes andperformance(5) Put into
practice(7) Report andcommunicate(6) Measureperformance

Figure 3-4 CSR Management Model
Source: Ashridge Center for Business and Society.

It is important to repeat a series of cycles
based on confirmation of the current position atwhich each company stands. Thus, the CSR
strategy of the company will become increasingly sophisticated, allowing more efficient andeffective progress.
In Japan, 400-500 companies are reportedly preparing and publishing environmental
reports as a medium of communication withstakeholders, providing information on theirenvironmental activities. Although comparability and credibility need to be improved, thesereports will function as a useful business tool
when utilized strategically in the context of theabove-mentioned cycle.
In order that CSR management takes root
and functions properly in Japan, corporate efforts need to be complemented by positive
evaluation of such efforts by stakeholders including investors and consumers, thus providing an incentive for management. This is one of
the key functions of contemporary SRI.
In relation with the CSR management regime, but independent of voluntary efforts ofcompanies, a movement has emerged at the international level in recent years to standardize
the social and ethical responsibilities of businesses. The publication of an international labor
26

Development Bank of Japan Research Report/ No. 37

standard (SA8000) in the US in 1997 and acorporate accountability standard (AA1000) in
the UK in 1999 are two examples. A standard
for ethical law compliance management system(ECS2000) was also created in Japan in 1998.
Furthermore, the standardization of CRI
has been considered by the International Organization for Standardization (ISO). In May
2001, , the ISO Council directed the Committee
on Consumer Policy (COPOLCO) to consider
the introduction of a social accountability standard and submit a report thereon. The
COPOLCO general assembly, held in June
2002, discussed the necessity of a CSR standard,
and the same issue will also be discussed in the
ISO Council meeting, to be held this autumn.
The scope of the standard and stakeholders
concerned will take shape through the consultation process. Once it becomes an international
standard under the TBT Agreement, individual
countries may have no room to fine-tune theprovisions, as WTO member countries are required to comply with the international standards adopted under the Agreement. Close attention should be paid to the direction of futurenegotiations.

3.

Conclusion

As described in this report, the US and Europe
have experienced significant development in
SRI, which is now poised to function as an
economic system in market-economy societies
based on self-responsibility. In contrast, SRI in
Japan is still at an initial stage. Many issues arestill pending for financial intermediaries andagencies, rating agencies and investors to ensure sound development of the SRI market.
Nonetheless, efforts toward CSR in corporate management will spread in Japan in orderto establish social reputation, increase competi-

tiveness and manage risks, in light of current
and expected developments such as further
globalization of corporate activities, active SRI
by foreign investors and the negotiation on a
CSR standard in the ISO. Attention will be focused on corporate processes and management,
as well as final products and services provided.
In addition to satisfying the various needsof investors, the contemporary role of SRI is toserve as a rational economic system that encourages businesses to meet the challenge ofsustainable development. Further progress inthis direction is expected in Japan.

Development Bank of Japan Research Report/ No. 37

27

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List of Back Numbers (Including JDB Research Report)
No. 37 Trends in Socially Responsible Investment: Corporate Social Responsibility in a New Phase(this issue)
No. 36 Recent Trends in the Japanese Economy: A Medium-term Scenario for the Sustainability of theJapanese Economy, February 2003
No. 35 Concerns for the Future and Generational Consumption Behavior, February 2003
No. 34 Prospects and Challenges Surrounding Japan’s Electrical Equipment Industry: General Electrical
Equipment Manufacturers’ Restructuring of Operations and Future Prospects, November 2002
No. 33 Survey on Planned Capital Spending for Fiscal Years 2001, 2002 and 2003, November 2002
No. 32 Behavior Trends of Japanese Banks toward the Corporate Sector and Their Impact on the Economy, October 2002
No. 31 Microstructure of Investment and Employment Dynamics: Stylized Facts of Factor Adjustment
Based on Listed Company Data, October 2002
No. 30 Recent Trends in the Japanese Economy: Globalization and the Japanese Economy, August 2002
No. 29 Corporate Financing Trends in Recent Years: Fund Shortages and Repayment Burden, August
2002
No. 28 Urban Renewal and Resource Recycling: For the Creation of a Resource Recycling Society, July
2002
No. 27 Labor’s Share and the Adjustment of Wages and Employment, June 2002
No. 26 Survey on Planned Capital Spending for Fiscal Years 2001 and 2002, May 2002
No. 25 Environmental Information Policy and Utilization of Information Technology: Toward a Shift inEnvironmental Policy Paradigm, March 2002
No. 24 The Changing Structure of Trade in Japan and Its Impact: With the Focus on Trade in Information Technology (IT) Goods, March 2002
No. 23 Microstructure of Persistent ROA Decline in the Japanese Corporate Sector: Inter-company
Disparties and Investment Strategies, March 2002
No. 22 Recent Trends in the Japanese Economy: The Japanese Economy under Deflation and Prospects
of Evolution, February 2002
No. 21 Survey on Planned Capital Spending for Fiscal Years 2000, 2001 and 2002, December 2001
No. 20 Current Situation and Challenges for Cable Television in the Broadband Era, October 2001
No. 19 Recent Trends in the Japanese Economy: The Japanese Economy under Deflation, August 2001
No. 18 Introduction of a Home Appliance Recycling System: Effects & Prospects: Progress towards
Utilisation of Recycling Infrastructure, June 2001
No. 17 Survey on Planned Capital Spending for Fiscal Years 2000 and 2001, June 2001
No. 16 Revitalization of Middle-aged and Elderly Workers in Japan’s Labor Markets: Requiring the
Expansion of the Vocational Training Functions, March 2001
No. 15 Risk-Averting Portfolio Trends of Japanese Households, March 2001
No. 14 Consumption Demand Trends and the Structure of Supply: Focus on Retail Industry Supply Behavior, March 2001
No. 13 Recent Trends in the Japanese Economy: Weakness of Current Economic Recovery and Its
Background, March 2001
No. 12 Empirical Reassessment of Japanese Corporate Investment Behavior: Features and Changes
since the 1980s, based on Micro-level Panel Data, March 2001

No. 11 Survey on Planned Capital Spending for Fiscal Years 1999, 2000 and 2001, October 2000
No. 10 Job Creation and Job Destruction in Japan, 1978-1998: An Empirical Analysis Based on Enterprise Data, September 2000
No. 9

Recent Trends in the Japanese Economy: Information Technology and the Economy, September
2000

No. 8

Trend of International Reorganization Affecting the Japanese Automobile and Auto Parts Industries, June 2000

No. 7

Survey on Planned Capital Spending for Fiscal Years 1999 and 2000, June 2000

No. 6

Current Status and Future Perspective of the Japanese Remediation Industry: Technology andMarket for Underground Remediation, May 2000

No. 5

Recent Trends in the Japanese Economy: The 1990s in Retrospect, March 2000

No. 4

Destabilized Consumption and the Post-bubble Consumer Environment, February 2000

No. 3

The Slump in Plant and Equipment Investment in the 1990s: Focusing on Lowered Expectations,the Debt Burden and Other Structural Factors, January 2000

No. 2

Survey on Planned Capital Spending for Fiscal Years 1998, 1999 and 2000, November 1999

No. 1

Corporate Strategies in Japan’s Semiconductor Industry: Implications of Development in Other
Asian Countries, November 1999

JDB Research Report
No. 96 Recent Trends in the Japanese Economy: Focused on Fixed Investment and Capital Stock, August 1999
No. 95 Efforts to Protect the Natural Environment in the United States and Germany: Environmental
Mitigation and Biotope Conservation, July 1999
No. 94 Survey on Planned Capital Spending for Fiscal Years 1998 and 1999, June 1999
No. 93 Towards the realization of ‘environmental partnership’: A survey of Japan’s environmental NPO
sector through comparison with Germany, June 1999
No. 92 The Impact of Demographic Changes on Consumption and Savings, March 1999
No. 91 Recent Research and Development Trends in Japanese Enterprises: Technology Fusion, March
1999
No. 90 Recent Trends in the Japanese Economy: Prolonged Balance Sheet Adjustment, January 1999
No. 89 Impact of Asset Price Fluctuations on Household and Corporate Behavior: A Comparison between Japan and the U.S., December 1998
No. 88 Survey on Planned Capital Spending for Fiscal Years 1997, 1998, and 1999, December 1998
No. 87 Foreign Exchange Rate Fluctuations and Changes in the Input-Output Structure, November 1998
No. 86 Structural Changes in Unemployment of Japan: An Approach from Labor Flow, November 1998
No. 85 Recent Trends in the Japanese Economy: Characteristics of the Current Recession, August 1998
No. 84 R&D Stock and Trade Structure in Japan, August 1998
No. 83 Survey on Planned Capital Spending for Fiscal Years 1997 and 1998, August 1998
No. 82 The Significance, Potential, and Problems of DNA Analysis Research: Establishing Public
Acceptance is Essential, May 1998
No. 81 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1996, 1997
and 1998 Conducted in August 1997, March 1998

No. 80 Recent Trends in the Japanese Economy: Growth Base of the Japanese Economy, January 1998
No. 79 Information Appliances: The Strength of Japanese Companies and Tasks for the Future, January
1998
No. 78 Challenges and Outlook for the Japanese Machinery Industries: Impact of ISO14000 Series andEnvironmental Cost, January 1998
No. 77 Current Conditions and Issues of Computerization in the Health Care Industry: For the Construction of a Health Care Information Network, January 1998
No. 76 Household Consumption and Saving in Japan, December 1997
No. 75 The Direction of Japanese Distribution System Reforms: Strengthening the Infrastructure to
Support Diverse Consumer Choices, November 1997
No. 74 Foreign Direct Investments by Japanese Manufacturing Industries and Their Effects on International Trade, October 1997
No. 73 The Impact of the Changing Trade Structure on the Japanese Economy: With Special Focus on
the Effects on Productivity and Employment, October 1997
No. 72 An Analysis of Foreign Direct Investment and Foreign Affiliates in Japan, August 1997
No. 71 Recent Trends in the Japanese Economy: Stock Replacement and New Demand as Aspects of
Economic Recovery, August 1997
No. 70 Corporate Fundraising: An International Comparison, June 1997
No. 69 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1996 and1997 Conducted in February 1997, May 1997
No. 68 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1996 and1997 Conducted in August 1996, August 1997
No. 67 An International Comparison of Corporate Investment Behavior: Empirical Analysis Using Firm
Data from Japan, France and the US, April 1997
No. 66 Housing in the National Capital: Analysis of the Market for Housing using Micro Data, March
1997
No. 65 The Environment for Locating Business Operations in Major East Asian Cities, January 1997
No. 64 Direction of Reconstruction of Business Strategy in the Chemical Industry, January 1997
No. 63 Reflection on Discussions Concerning Regulation of the Electric Power Industry: Deregulationof the Electric Power Industry in Japan and Implication of Experiences in the United States,
December 1996
No. 62 Current Status and Future Perspective of the Japanese Semiconductor Industry, November 1996
No. 61 A Breakthrough for the Japanese Software Industry?: Responsiveness to Users’ Needs is the key,
October 1996
No. 60 Recent Trends in the Japanese Economy Focusing on the Characteristics and Sustainability of
the Current Economic Recovery, September 1996
No. 59 Analysis of the Primary Causes and Economic Effects of Information: Related investment in the
United States and Trends in Japan, August 1996
No. 58 Selected Summaries of Research Reports: Published in FY1995, June 1996
No. 57 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1995 and1996 Conducted in February 1996, May 1996
No. 56 Recent Trends in the Japanese Economy, May 1996
No. 55 Issues Concerning the Competitiveness of the Japanese Steel Industry, February 1996

No. 54 Changes in the Financial Environment and the Real Economy, January 1996
No. 53 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1994, 1995
and 1996 Conducted in August 1995, October 1995
No. 52 Current Economic Trends: Focusing on the Appreciation of the Yen and its Effects, October
1995
No. 51 Problems Concerning the International Competitiveness of the Petrochemical Industry, October
1995
No. 50 An Economic Approach to International Competitiveness, October 1995
No. 49 Selected Summaries of Research Reports Published in FY1994, July 1995
No. 48 Strategies for Improving the Efficiency of the Japanese Physical Distribution System: Part 2,
July 1995
No. 47 Issues on International Competitive Strength of the Auto Industry, June 1995
No. 46 Problems Concerning the International Competitiveness of the Electronics and Electric Machinery Industry, June 1995
No. 45 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1994 and1995 Conducted in March 1995, June 1995
No. 44 Strategies for Improving the Efficiency of the Japanese Physical Distribution System, March
1995
No. 43 Capital Spending Recovery Scenario Cycle and Structure, August 1994
No. 42 Progress of International Joint Development between Industrialized Countries on the Private
Level, May 1994
No. 41 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1993, 1994
and 1995 Conducted in August 1994 , November 1994
No. 40 Selected Summaries of Research Reports Published in FY1993, June 1994
No. 39 Recent Trends in Japan’s Foreign Accounts, April 1994
No. 38 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1993 and1994 Conducted in March 1994, April 1994
No. 37 Economic Zones and East Asia Prospect for Economic Activity Oriented Market Integration,
December 1993
No. 36 Japanese Corporate Responses to Global Environmental Issues, December 1993
No. 35 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1992, 1993
and 1994 Conducted in August 1993, September 1993
No. 34 Structure of Profit to Capital in the Manufacturing Industry, September 1993
No. 33 Comparison of the Japanese and The U.S. Labor Markets, October 1992
No. 32 The Relative Competitiveness of U.S., German, and Japanese Manufacturing, March 1993
No. 31 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1992 and1993 Conducted in March 1993, April 1993
No. 30 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1991, 1992
and 1993 Conducted in August 1992, December 1992
No. 29 Flow of Funds in the 80s and Future Corporate Finance in Japan, November 1992
No. 28 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1991 and1992 Conducted in February 1992, April 1992
No. 27 An Analysis of Foreign Direct Investment in Japan, March 1992

No. 26 Projection of Japan's Trade Surplus in 1995: Analysis of Japan's Trade Structure in the 80s,
February 1992
No. 25 Intra-Industry Trade and Dynamic Development of The World Economy, November 1991
No. 24 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1990, 1991
and 1992 Conducted in August 1991, September 1991
No. 23 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1990 and1991 Conducted in February 1991, March 1991
No. 22 Trends of the Petrochemical Industry and its Marketplace in East Asia, March 1991
No. 21 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1989, 1990
and 1991 Conducted in August 1990, September 1990
No. 20 Deepening Economic Linkages in The Pacific Basin Region: Trade, Foreign Direct Investment
and Technology, September 1990
No. 19 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1989 and1990 Conducted in February 1990, March 1990
No. 18 Petrochemicals In Japan, The US, and Korea an Assessment of Economic Efficiency, February
1990
No. 17 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1988, 1989
and 1990 Conducted in August 1989, October 1989
No. 16 Impact of the EC Unification on Japan’s Automobile and Electronics Industries, August 1989
No. 15 Industrial and Trade Structures and the International Competitiveness of Asia’s Newly
Industrializing Economies, August 1989
No. 14 The Japan Development Bank Reports on Capital Investment Spending: Survey for Fiscal Years
1988 and 1989 Conducted in February 1989, March 1989
No. 13 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1987, 1988
and 1989 Conducted in August 1988, September 1988
No. 12 Growing Foreign Investors’ Activities and the Future of Internationalization, September 1988
No. 11 Futures Tasks and Prospects for the Japanese Machine-Tool Industry, July 1988
No. 10 International Division of Labor in the Machine Industries Among Japan, Asia’s NICs and
ASEAN Countries, June 1988
No. 9

Trends of the Petrochemical Industry and its Marketplace in East Asia around Japan, May 1988

No. 8

The International Competitiveness of Japan and U.S. in High Technology Industries, April 1988

No. 7

The Japan Development Bank Reports on Private Fixed Investment in Japan, March 1988

No. 6

Economic Projections of the Japan’s Economy to the Year 2000, February 1988

No. 5

The Japan Development Bank Reports on Private Fixed Investment in Japan, September 1987

No. 4

Current Trends in the Japanese Auto Parts Industry in Overseas Production, July 1987

No. 3

Current Moves for Foreign Direct Investment into Japan, May 1987

No. 2

Overseas Direct Investments by Japanese Corporations, May 1987

No. 1

Current U.S. Consumption Trends, May 1987