Comparing "socially responsible" and "sustainable" commercial property investment

Purpose – The purpose of this paper is to set out to explore the similarities and differences between jargon used to describe future-focussed commercial building product. This is not so much an exercise in semantics as an attempt to demonstrate that responses to challenges facing the construction and property sectors may have more to do with language than is generally appreciated. Design/methodology/approach – This is a conceptual analysis which draws upon relevant literature. Findings – Social responsibility and sustainability are often held to be much the same thing, with each term presupposing the existence of the other. Clearly, however, there are incidences where sustainable commercial property investment (SCPI) may not be particularly socially responsible, despite being understood as an environmentally friendly initiative. By contrast, socially responsible assets, at least in theory, should always be more sustainable than mainstream non-ethically based investment. Put simply, the expression of social responsibility in the built environment may evoke, and thereby deliver, a more sustainable product, as defined by wider socially inclusive parameters. Practical implications – The findings show that promoting an ethic of social responsibility may well result in more SCPI. Thus, the further articulation and celebration of social responsibility concepts may well help to further advance a sustainable property investment agenda, which is arguably more concerned about demonstrability of efficiency than wider public good outcomes. Originality/value – The idea that jargon affects outcomes is not new. However, this idea has rarely, if ever, been applied to the distinctions between social responsibility and sustainability. Even a moderate re-emphasis on social responsibility in preference to sustainability may well provide significant future benefits with respect to the investment, building and refurbishment of commercial property.

Econometric analysis of stuctural systems with permanent and transitory shocks

This paper considers the implications of the permanent/transitory decomposition of shocks for identification of structural models in the general case where the model might contain more than one permanent structural shock. It provides a simple and intuitive generalization of the influential work of Blanchard and Quah [1989. The dynamic effects of aggregate demand and supply disturbances. The American Economic Review 79, 655–673], and shows that structural equations with known permanent shocks cannot contain error correction terms, thereby freeing up the latter to be used as instruments in estimating their parameters. The approach is illustrated by a re-examination of the identification schemes used by Wickens and Motto [2001. Estimating shocks and impulse response functions. Journal of Applied Econometrics 16, 371–387], Shapiro and Watson [1988. Sources of business cycle fluctuations. NBER Macroeconomics Annual 3, 111–148], King et al. [1991. Stochastic trends and economic fluctuations. American Economic Review 81, 819–840], Gali [1992. How well does the ISLM model fit postwar US data? Quarterly Journal of Economics 107, 709–735; 1999. Technology, employment, and the business cycle: Do technology shocks explain aggregate fluctuations? American Economic Review 89, 249–271] and Fisher [2006. The dynamic effects of neutral and investment-specific technology shocks. Journal of Political Economy 114, 413–451].

The appropriateness of default investment options in defined contribution plans : Australian evidence

For participants in defined contribution (DC) plans who refrain from exercising investment choice, plan contributions are invested following the default investment option of their respective plans. Since default investment options of different plans vary widely in terms of their benchmark asset allocation, the most important determinant of investment performance, participants enrolled in these options face significantly different wealth outcomes at retirement. This paper simulates the terminal wealth outcomes under different static asset allocation strategies to evaluate their relative appeal as default investment choice in DC plans. We find that strategies with low or moderate allocation to stocks are consistently outperformed in terms of upside potential of exceeding the participant’s wealth accumulation target at retirement as well as downside risk of falling below that target outcome by aggressive strategies whose allocation to stocks approach 100%. The risk of extremely adverse wealth outcomes for plan participants also does not appear to be very sensitive to asset allocation. Our evidence suggests the appropriateness of strategies heavily tilted towards stocks to be nominated as default investment options in DC plans unless plan providers emphasize predictability of wealth outcomes over adequacy of retirement wealth.

Identifying aggregate demand and supply shocks in a small open economy

The standard Blanchard-Quah (BQ) decomposition forces aggregate demand and supply shocks to be orthogonal. However, this assumption is problematic for a nation with an inflation target. The very notion of inflation targeting means that monetary policy reacts to changes in aggregate supply. This paper employs a modification of the BQ procedure that allows for correlated shifts in aggregate supply and demand. It is found that shocks to Australian aggregate demand and supply are highly correlated. The estimated shifts in the aggregate demand and supply curves are then used to measure the effects of inflation targeting on the Australian inflation rate and level of GDP.

Socially responsible investment in market downturns : implications for the fiduciary responsibilities of investment fund trustees

This paper investigates whether Socially Responsible Investment (SRI) is more or less sensitive to market downturns than conventional investment, and examines the legal implications for fund managers and trustees. Using a market model methodology, we find that over the past 15 years, the beta risk of SRI, both in Australia and internationally, increased more than that of conventional investment during economic downturns. This implies that companies acting as fund trustees, managed investment schemes and traditional institutional fund managers risk breaching their fiduciary or statutory duties if they go long - or remain long - in SRI funds during market downturns, unless perhaps relevant legislation is reformed. If reform is viewed as desirable, possible reforms could include explicitly overriding the common law to allow all traditional funds to invest in SRI; granting immunity to directors of trustee companies from potential personal liability under sections 197 or 588G et seq of the Corporations Act; allowing companies acting as trustees, managed investment schemes and traditional institutional fund managers and trustees to invest in SRI without triggering a substantial capital gains tax liability through trust resettlement; tax concessions for SRI (eg. introducing a 150% tax deduction or investment allowance for SRI); and allowing SRI sub-funds to obtain “deductible gift recipient” status or the equivalent from relevant taxation authorities. The research is important and original insofar as the assessment of risk in SRIs during market downturns is an area which has hitherto not been subjected to rigorous empirical investigation, despite its serious legal implications.

Don’t judge a superannuation default investment option by its name

With the massive decline in savings arising from the Global Financial Crisis (GFC), it is timely to review superannuation fund investment and disclosure strategies in the lead-up to the crisis. Accordingly, this study examines differences among superannuation funds’ default investment options in terms of naming and framing over three years from 2005 to 2007, as presented in product disclosure statements (PDSs). The findings indicate that default options are becoming more alike regardless of their name, and consequently, members may face increasing difficulties in distinguishing between balanced and growth-named default options when comparing them across superannuation funds. Comparability is also likely to be constrained by variations in the framing of default options presented in investment option menus in PDSs. These findings highlight the need for standardisation of default option definitions and disclosures to ensure descriptive accuracy, transparency and comparability.

Informational city

Many cities worldwide face the prospect of major transformation as the world moves towards a global information order. In this new era, urban economies are being radically altered by dynamic processes of economic and spatial restructuring. The result is the creation of ‘informational cities’ or its new and more popular name, ‘knowledge cities’. For the last two centuries, social production had been primarily understood and shaped by neo-classical economic thought that recognized only three factors of production: land, labor and capital. Knowledge, education, and intellectual capacity were secondary, if not incidental, factors. Human capital was assumed to be either embedded in labor or just one of numerous categories of capital. In the last decades, it has become apparent that knowledge is sufficiently important to deserve recognition as a fourth factor of production. Knowledge and information and the social and technological settings for their production and communication are now seen as keys to development and economic prosperity. The rise of knowledge-based opportunity has, in many cases, been accompanied by a concomitant decline in traditional industrial activity. The replacement of physical commodity production by more abstract forms of production (e.g. information, ideas, and knowledge) has, however paradoxically, reinforced the importance of central places and led to the formation of knowledge cities. Knowledge is produced, marketed and exchanged mainly in cities. Therefore, knowledge cities aim to assist decision-makers in making their cities compatible with the knowledge economy and thus able to compete with other cities. Knowledge cities enable their citizens to foster knowledge creation, knowledge exchange and innovation. They also encourage the continuous creation, sharing, evaluation, renewal and update of knowledge. To compete nationally and internationally, cities need knowledge infrastructures (e.g. universities, research and development institutes); a concentration of well-educated people; technological, mainly electronic, infrastructure; and connections to the global economy (e.g. international companies and finance institutions for trade and investment). Moreover, they must possess the people and things necessary for the production of knowledge and, as importantly, function as breeding grounds for talent and innovation. The economy of a knowledge city creates high value-added products using research, technology, and brainpower. Private and the public sectors value knowledge, spend money on its discovery and dissemination and, ultimately, harness it to create goods and services. Although many cities call themselves knowledge cities, currently, only a few cities around the world (e.g., Barcelona, Delft, Dublin, Montreal, Munich, and Stockholm) have earned that label. Many other cities aspire to the status of knowledge city through urban development programs that target knowledge-based urban development. Examples include Copenhagen, Dubai, Manchester, Melbourne, Monterrey, Singapore, and Shanghai. Knowledge-Based Urban Development To date, the development of most knowledge cities has proceeded organically as a dependent and derivative effect of global market forces. Urban and regional planning has responded slowly, and sometimes not at all, to the challenges and the opportunities of the knowledge city. That is changing, however. Knowledge-based urban development potentially brings both economic prosperity and a sustainable socio-spatial order. Its goal is to produce and circulate abstract work. The globalization of the world in the last decades of the twentieth century was a dialectical process. On one hand, as the tyranny of distance was eroded, economic networks of production and consumption were constituted at a global scale. At the same time, spatial proximity remained as important as ever, if not more so, for knowledge-based urban development. Mediated by information and communication technology, personal contact, and the medium of tacit knowledge, organizational and institutional interactions are still closely associated with spatial proximity. The clustering of knowledge production is essential for fostering innovation and wealth creation. The social benefits of knowledge-based urban development extend beyond aggregate economic growth. On the one hand is the possibility of a particularly resilient form of urban development secured in a network of connections anchored at local, national, and global coordinates. On the other hand, quality of place and life, defined by the level of public service (e.g. health and education) and by the conservation and development of the cultural, aesthetic and ecological values give cities their character and attract or repel the creative class of knowledge workers, is a prerequisite for successful knowledge-based urban development. The goal is a secure economy in a human setting: in short, smart growth or sustainable urban development.

Leveraging R&D investment for the Australian built environment

This paper discusses a current research project building new understandings and knowledge relevant to R&D funding strategies in Australia. Building on a retrospective analysis of R&D trends and industry outcomes, an industry roadmap will be developed to inform R&D policies more attuned to future industry needs to improve research investment effectiveness. The project will also include analysis of research team formation and management (involving end users from public and private sectors together with research and knowledge institutions), and dissemination of outcomes and uptake in the Australian building and construction industry. The project will build on previous research extending open innovation system theory and network analysis and procurement, focused on R&D. Through the application of dynamic capabilities and strategic foresighting theory, an industry roadmap for future research investment will be developed, providing a stronger foundation for more targeted policy recommendations. This research will contribute to more effective construction processes in the future through more targeted research funding and more effective research partnerships between industry and researchers.

Social Impact of Mining Survey : Aggregate Results Queensland Communities

This is the final report from a study into the social impact of mining in Queensland.

Ethics and Socially Responsible Investment : A Philosophical Approach

This volume breaks new ground by approaching Socially Responsible Investment (SRI) as an explicitly ethical practice in financial markets. The work explains the philosophical and practical shortcomings of ‘long term shareholder value’ and the origins and conceptual structure of SRI, and links its pursuit to both its deeper philosophical foundations and the broader, multi-dimensional global movement towards greater social responsibility in global markets. Interviews with fund managers in the Australian SRI sector generate recommendations for better integrating ethics into SRI practice via ethically informed engagement with invested companies, and an in-depth discussion of the central practical SRI issue of fiduciary responsibility strengthens the case in favour of SRI. The practical and ethical theoretical perspectives are then brought together to sketch out an achievable ideal for SRI worldwide, in which those who are involved in investment and business decisions become part of an ‘ethical chain’ of decision makers linking the ultimate owners of capital with the business executives who frame, advocate and implement business strategies. In between there are investment advisors, fund managers, business analysts and boards. The problem lies in the fact that the ultimate owners are discouraged from considering their own values, or even their own long term interests, whilst the others often look only to short term interests. The solution lies in the latter recognising themselves as links in the ethical chain.

Framework for assessing financial literacy and superannuation investment choice decisions

There is a worldwide trend towards rapidly growing defined contribution pension funds in terms of assets and membership, and the choices available to individuals. This has shifted the decisionmaking responsibility to fund members for managing the investment of their retirement savings. This change has given rise to a phenomenon where most superannuation fund members are responsible for either actively choosing or passively relying on their funds’ default investment options. Prior research identifies that deficiencies in financial literacy is one of the causes of inertia in financial decision-making and findings from international and Australian studies show that financial illiteracy is wide-spread. Given the potential significant economic and social consequences of poor financial decision-making in superannuation matters, this paper proposes a framework by which the various demographic, social and contextual factors that influence fund members’ financial literacy and its association with investment choice decisions are explored. Enhanced theoretical and empirical understanding of the factors that are associated with active/passive investment choice decisions would enable development of well-targeted financial education programs.