Can the UK Experience Provide Lessons for the Evolution of SRI in Japan?



In this paper we review the growth of socially responsible investment (SRI) in the UK and in Japan. We consider the various factors which have given rise to the growth of SRI in both countries. As SRI is currently more mature in the UK than in Japan, we consider ways in which the UK experience may provide some lessons for the growth of SRI in Japan. Significantly, we consider that the use of corporate governance mechanisms such as engagement and dialogue by large shareholders, to solve social, ethical and environmental (SEE) problems in companies, is a realistic route for the development of SRI in Japan. However, these mechanisms need to be designed so that they may operate more efficiently. Pension funds and other investment institutions need to appreciate the value of engagement over screening as an SRI stra-tegy. Further, the disclosure of SRI strategies by pension funds in Japan may contribute to enhancing consciousness about the responsibility of shareholders for the SEE outcomes of corporate activities that they invest in indirectly. We acknowledge, however, that this suggestion may be difficult to implement in the near future.