Adoption of Socially Responsible Investment Practices in the Chinese Investment Sector: A Cost-Benefit Approach
In 2003, ten of the world’s largest private banks, in cooperation with the International Finance Corporation, voluntarily committed themselves to adopting social and environmental investment-standards. Since then, 54 institutions from 21 states, active in over a 100 countries have adopted these standards. Although the implementation of Socially Responsible Investment (SRI) demands sweeping reforms, the established part of the private investment sector considers SRI to play a significant role. Recently though, this process appears to be threatened to be undermined by the appearance of new, powerful investors from countries that derived financial benefits from their outstanding economic development.
As the most significant example of this trend, the article focuses on Chinese investors emerging on the global investment scene. China’s “Go-Out” Strategy, a nationally concerted effort to promote international expansion of the Chinese corporate sector, was launched in its 10th 5-year plan in 2001. By 2005, Chinese companies’ overseas direct investment amounted to a staggering $ 200 billion (USD) and Chinese banks are now the leading lenders on the African continent.2 However, examination of the international agreements shows that Chinese investors are acting without the social and environmental restraints of SRI. In the following section, we have identified the various pressures which have an impact on the decision of whether an investor incorporates SRI into its corporate identity.