With the UK economy now officially and indisputably in recession, and with the large part of the UK banking sector on the road to nationalisation, a pertinent, if provocative, question is to ask whether responsible investing could have prevented the current crisis.

Responsible investing is a term for what was called socially responsible investing (SRI), also known as ethical, or green, investing, but it also has broader connotations.

As a result, it is replacing SRI as the favoured approach for local authorities, public sector bodies, trade unions and other investors who are concerned with environmental, social and governance (ESG) issues.

Responsible investment advocates that investors take a range of ESG criteria into account when assessing any possible investments.

The United Nations has backed a set of principles for responsible investments (see www.unpri.org) aimed at aligning the interests of long-term investors with society as a whole.

Its supporters believe that ESG issues at corporate institutions can affect shareholder value and therefore investors such as pension fund trustees or fund managers have a fiduciary duty to consider these issues when making investment decisions.

At present, an increasing number of large institutional investors are signing up to the principles of responsible investment and a recent joint report from Robeco and Booz & Company predicted that responsible investment will be a mainstream activity by 2015, with 15% to 20% of global assets under management.

So it is perhaps worth asking if wider use of responsible investing would have prevented the credit crunch.

It could be argued that if investors had looked harder at the sustainability of sub-prime lending by certain banks and at their bonus structures and corporate governance arrangements, then the size and dangers of iceberg created by loose lending practices might have been appreciated earlier.

On the other hand, the forces driving the credit bubble were so powerful that unless shareholder power was far stronger than it is now, it may have been impossible to prevent the market crash we have seen just through the actions of investors.

But for pension funds and others facing major write-downs in their asset values, the case for responsible investing is likely to have been strengthened by the recent excesses of the banking sector.

It could also be the case that responsible investing becomes a useful way for pension funds and other investors to show their members that they deserve to be trusted as a prudent investor.