The Role of Socially Responsible Investment in Global Environmental Governance: A Critical Discourse Analysis

1. Purpose:/nThe role of SRI as a private regime is under-studied, and the significance of its structural and discursive effect on global environmental governance is under-theorized. This dissertation aims to theorize the practical and political impact of socially responsible investment (SRI) in global environmental governance. The research assumes that SRI is becoming a powerful transnational institution that influences corporate activities and public discourse on sustainability while creating social and ecological value and knowledge within the conventional financial paradigm. The research hypothesizes that SRI would not only directly impact corporate and environmental practice and behavior (i.e., practical influence) but also implicitly define and disseminate how global financial markets measure ecological and social value and possibly construct an informal regime that shapes the norms and standards of sustainability (i.e., political/discursive influence)./n2. Methods:/nThe research engages in process tracing to unpack a complex interaction in the causal mechanism of the regime impact. The study frames SRI as an emerging private regime in global environmental governance (GEG). It defines the regime’s ‘site’ (area of governance) and ‘mode’ (enforcement mechanism) to analyze how SRI institution functions to regulate globalized environmental problems and how they evolved over the past decades. Critical discourse analysis is used to evaluate the emerging sustainability value among the standard setters and practitioners and to present the causal linkage between the change in the financial market landscape and sustainability value. The analysis utilizes primary sources (e.g., company reports, industrial journals, marketing materials, accounting documents, journalistic articles) and academic papers in the field of business and finance (e.g., business ethics and sustainable finance) to evaluate how norms and values are constructed and reflected in the regime practices./n3. Findings:/nThe research finds that the rise of the fiduciary institution in the 1990s (fiduciary capitalism) and the associated norm and rules on fiduciaries shaped the ‘site’ of the modern SRI. Along with site change, the regime mode (the norm, value, and practice) shifted its focus from the ecological and moral value to the financial outcome, reflecting the interest of fiduciary institutions. It creates incoherency between the sustainability rhetoric and enforcement practice within the regime, which produces systemic constraints in the enforcement mechanism and ultimately impacts the regime’s net results./n4. Implications/Contributions:/nThe research contributes a case study to understand why market mechanisms have been far less successful than their proponents argue yet persist as influential governance institutions. Using the case of SRI, this research provides a theory to explain the systemic constraints in the current dominant GEG paradigm. It also offers a redefinition of “responsibility” as in “socially responsible investment” to prevent the terms from becoming an empty source of justification.

Advisor: O’Neill, Katherine