Keywords: investment analysis, multicriteria decision analysis, MCDA, real options, socially responsible investments, SRIs, corporate social responsibility, CSR, exploratory study, investment appraisals, uncertainty, modelling, decision making
Prerequisites for decision aid in socially responsible investment appraisals
This paper explores investment appraisals restrained by various sources of uncertainty and influenced by socially responsible investment (SRI) thinking. Of particular interest in this paper is to assess the additional aspects of investment appraisals that derive from SRI thinking together with the multiple sources of uncertainty arising in such decision problems. We assess characteristics of how managers' try to account for corporate social responsibility, how they cope with evaluating upon objectives beyond monetary return on investment and how they manage uncertainty and the source of the uncertainties they emphasise. We conclude that organisations are generally exposed to and also consider both aleatory and epistemic uncertainty. There is a mix of macro and micro variables creating a diversified environment where valuation methods such as real options in combination with decision analysis modelling could help in structuring the problem and provide informed decision making.