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INTRODUCTION
Ethics and financial investment may seem like incompatible terms. The economy mainly is driven by financial profit; in a global market, low production costs and high turnover are often defined as the most important business objectives. Moral considerations seem to stand in contrast to economically efficient production. Nevertheless, ethical investment is becoming increasingly popular in financial markets; investors pave the way for ethics into business by supporting companies that meet investors' ethical values. But how do investors decide to invest ethically? This paper sheds light on investment decision processes by referring to the issue-contingent model of ethical decision making in organisations 1 and identifies sources for the development of marketing strategies for ethical investment.
ETHICAL INVESTMENT
Consensus on the definition of ethical investment does not exist.2 Ethical investment, also called socially responsible investment, sustainable investment, or green investment, stems originally from 19th-century religious groups in the United States. These groups wanted to invest according to their morals3 and did not allow shares of companies whose business conduct conflicted with their morals in their portfolio. Lewis et al.4 define ethical investment as deliberately not investing in companies and funds according to certain negative ethical criteria. On the other hand, ethical investment also means investing in companies or funds that guarantee compliance to investors' particular positive ethical criteria. Negative ethical criteria are, for example, the production and usage of nuclear power or child labour; 5 examples of positive ethical criteria are economising energy or fair trade with the Third World. In the present paper, we refer to ethical investment as defined by Lewis and colleagues.4
According to neoclassical economic assumptions, the relevant criteria of a certain investment for investors are expected return and risk. Investment decisions are made rationally and selfishly focusing on financial benefits. Moral considerations would introduce inefficiency by reducing the number of investment options. 6 In line with portfolio theory,7, 8 moral considerations would either increase risk or reduce profitability of the portfolio, making it less efficient than a conventional portfolio with the single aim to maximise profit. According to neoclassical economic theory, ethical investment should not prevail in financial markets. Nevertheless, the market for ethical investment is expanding in Europe, 9 and moral considerations are taken...