ABSTRACT
This chapter explores the extent of, and limits to, the role investors might play in addressing the harmful social and environmental impacts of the companies in which they invest. It considers the merits of the arguments against laissez-faire outlook. The chapter makes us to understand what opportunities investors have to take actions that are likely to be effective in modifying corporate behaviour on social and environmental issues. It draws on economic theories of market failure, agency problems and bounded rationality. The chapter also considers that the practical actions investors might take to modify or oppose the causes, and looks at the question of whether investors have an interest in taking these actions. It discusses what the analysis might lead us to expect investors to do in practice. The chapter identifies some important problems that arise when companies and markets work badly, we believe that companies and markets often work very well.
