The evolution of environmentally responsible investment: An Adam Smith perspective

This paper demonstrates that Adam Smith has common ground with contemporary social scientists who study the management of the common pool resources from an evolutionary perspective. Contrary to the caricature of Smith, presented by neoliberals, as a promoter of self-interest, he recognized the value of other-regarding behavior. Specifically focus is given to how such behavior can contribute to constructing institutional arrangements that can help to avoid damaging market excesses. A study of the development of a process to encourage investment behavior that is environmentally responsible, establishes that Smith's work has relevance for addressing environmental issues in our contemporary complex market system.

► Adam Smith's ideas have similarities with evolutionary social scientists. ► Smith believed that endogeneous institutions would evolve to try to contain market excesses. ► The movement to achieve environmentally responsible investment is a contemporary example of this. ► Smith's work has relevance for addressing environmental problems in our contemporary complex market system.