Abstract
The paper investigates socially responsible investment (SRI) when savers’ moral compass is direct consequentialism. It unveils the determinants of the (positive) green premium under laissez-faire and studies the ability of Pigouvian taxes to deliver the first-best outcome. It characterizes conditions under which, despite leakage, divestment increases social welfare. It describes when best-in-class strategies dominate exclusion. It further demonstrates that, whenever a polluting technology may be cleaned, shareholder activism in the polluting sector may be the morally right action. The paper then conducts the same analysis with two other moral criteria: "shared responsibility" and rule consequentialism, and compares their implications to the ones of direct consequentialism.
Keywords
socially responsible investment; consequentialism; impact investing; green premium; Pigou tax; divestment, shareholder activism;
JEL codes
- A13: Relation of Economics to Social Values
- D62: Externalities
- H23: Externalities • Redistributive Effects • Environmental Taxes and Subsidies
- Q59: Other
Reference
Paul-Henri Moisson, “Social Responsibility, Consequentialism and Public Policy”, TSE Working Paper, n. 24-1521, March 2024.
See also
Published in
TSE Working Paper, n. 24-1521, March 2024