Exploring Sustainable and Responsible Investment:Stakeholders’ value exchangeSlim Turki, Marija Bjeković-Obradović, Corentin Vermeulen

17th IBIMA Conference

Milan, Italy 14-15 November 2011

Sustainable and Responsible Investment (SRI)

“Type of investment which aims to achieve financial returns while performing in terms of extra-financial aspects, such as social, environmental, governance, and ethical objectives”

(Vermeulen & Mention, 2011)

Context

Growing market for SRI funds• Global SRI market has grown by more than 200% between 2006 and 2010

to reach $11 trillion (EUROSIF)

• European SRI market share (AuM) has grown by more than 500% between 2006 and 2010 to reach € 5 trillion (EUROSIF)

• SRI market is still expected to grow in the coming years

New SRI-specific actors and roles have emerged • new activities remain unregulated

• profusion of labels and funds claiming to be responsible and sustainable

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2002 (EU-8) 2005 (EU-9) 2007 (EU-13)2009 (EU-14)

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Size of the European SRI market (AuM)

Core SRI Broad SRI

Objectives

Contribute to achieving better understanding of the specificity of SRI industry and involved stakeholders

Formalize and enable clear distinction of roles and responsibilities of different stakeholders within the SRI- specific value chain

Contribute to establishing regulative framework enabling better control of SRI-related activities

Methodology

1- Analysis & Modelling• identify and structure stakeholders

• analyse dependencies and existing/possible value exchanges between actors, to develop models, combining goal and value models

• relying on the academic and professional literature

2- Validation / update• to be executed

• will comprise validation of models through interviews with a representative sample of stakeholders identified at European level

Goal Modelling with i*

Philosophy• Actors don’t merely interact with each other through actions or

information flows but relate to each other at an intentional level

• Strategic actors: depend on each other for goals to be achieved, tasks to be performed, resources to be provided

• Strategic goals are achieved through a network of intentional dependencies.

• Strategic Rationale (SR) model

i* - main concepts

Goal Condition or state of affairs to be achieved

Soft goal Goal without a clear-cut criterion for achievement

Task Way of contributing to the accomplishment of a goal

Resource Physical or informational entity needed to achieve goal or to perform task

Means-ends particular way to achieve a goal

Decomposition how an intentional element is decomposed into sub-elements

Contribution how the achievement or fulfillment of one goal or task contributes positively or negatively to the achievement of another task or goal

Actor Active entity that carries out actions to achieve goals.

Role Abstract characterization of the behavior of a social actor within some specialized context

Classical investment chain – actors’ rationale

+ Promoter+ Asset manager+ Distributor

SRI chain – actors’ rationale

Version 1.0

Value modelling

• intended to model network of enterprises creating, distributing, and consuming things of economic value

• explore innovative e-business idea

Main Concepts• Actor: Independent economic entity. Makes profit or increases its utility.

• Value object: service, good, money, or experience, which is of economic value to at least one actor. Actors exchange value objects.

• Value exchange: one or more potential trades of value objects.

Business model drawing toolboardofinnovation.com

SRI value network proposition

Conclusion & Perspectives

Identify stakeholders participating to the SRI-specific value network & analyse their mutual exchanges

Models as formalized tools to: • identify stakeholders participating to the SRI-specific value network

• analyse their (potential) mutual exchanges

• identify the risks of SRI deviations that may occur

• detect possible conflicts of interest

• discuss and structure the critics of SRI

• explore the ways in which better social impact of SRI can be guaranteed

• i.e. establishing alternative value networks

Intended cycle of validation through interviews • clear definition of responsibilities among value network

• contribution to clarify the SRI offer

Exploring Sustainable and Responsible Investment:Stakeholders’ value exchangeSlim Turki, Marija Bjeković-Obradović, Corentin Vermeulen

17th IBIMA Conference

Milan, Italy 14-15 November 2011

slim.turki@tudor.lu@sl_tu

Models and Hypotheses to be completed / validated

Possible conflicts of interest and deviations• SR Investment vehicle are subject to “administrative” fees for obtaining the

SRI labels > independency of the labelling agencies.

• Rating agencies not directly financed by investee, but have the great impact on the investee’s attractivity > investee may be lead to influence in one or the other way the rating evaluation process.

• Investor has no other options than to trust the claims on SRI character of the assets held by SR investment vehicle, since the rules are not clearly established

Hypotheses resulting from the analysis to be validated

validation of the models will serve us to propose a clear definition of the responsibilities among the value network and a contribution to the clarification of the SRI offer.