The information accuracy of SRI markets : A comparative study between SRI-screening firms and Auditing firms

• Main Author: Ricard-Bourget, Catherine
• Format: Others
• Language: English
• Published: Stockholms universitet, Stockholm Resilience Centre 2010
• Subjects: Social Responsible Investment (SRI); information accuracy; SRI-screening; financial audit; evidence; Social Sciences Interdisciplinary; Tvärvetenskapliga studier inom samhällsvetenskap
• Online Access: http://urn.kb.se/resolve?urn=urn:nbn:se:su:diva-45729

The sustainability of Social Responsible Investments (SRI) markets is highly dependent on the accuracy of social and environmental information. Surprisingly, and in contrast to financial information, there exists no methodological standard for gathering social and environmental information in SRI markets. This work is a first contribution to the understanding of how SRI-analysts verify the accuracy of social and environmental information. A second aim of this thesis is to evaluate if SRI-analysts can produce an accurate output with their respective methodologies. To do so, a case study was performed comparing the assessment of social and environmental information at SRI-screening firms to the more regulated financial auditing process, using legal a categorization of evidence strengths as a model. The findings of this study suggest that practices are not standardized amongst SRI-analysts. Therefore, investors are unlikely to receive an equal degree of information accuracy from one analyst to the next. Moreover, when comparing SRI-screening and financial auditing using the legal categorization of evidence, it was found that screening firms tend to produce outputs that are less carefully verified than seen in their financial counterparts. Nevertheless, the findings also reveal that SRI-analysts generally acknowledge the importance of assessing sources of evidence when controlling information accuracy. In conclusion, a standardized methodology should be welcomed by SRI-analysts, and the legal categorization of evidence strengths could be a good starting point to manage information accuracy in their screening process.