A closely affiliated movement, one in which SRI is intimately
entwined, is that of corporate social responsibility (CSR). This
movement is designed to make corporations more responsible to
their customers, shareholders, employees, local citizenry and
society as a whole.
Proponents of CSR argue that responsible corporations will go
beyond the bottom line and consider the social and environmental
impacts of their activities. It is no longer acceptable for companies
to operate under economic principles that strive to internalize
benefits while externalizing costs. The global village now demands
that corporations be good citizens as well as money makers.
There are different types of CSR-related organizations. There
are those that are generally pro-business and that offer services
to help facilitate companies become more socially responsible.
On the other hand, there are those that are more critical of corporate
practices, and therefore act as watchdogs in this area, providing
research services designed to expose the worst kinds of social
In a similar vein to the above organizations active in the general
area of CSR, there are those that focus on corporate behaviour
toward the consumer. Research is coupled with action in that disregard
for consumer rights is not only brought to light, but such knowledge
often provokes public awareness campaigns and organized boycotts.
Good Money provides a good listing of information resources for
socially and environmentally concerned consumers.
Both the Ethical Consumer Research Association and INFACT are consumer rights bodies that work closely with SRI organizations.
Financial institutions exist that are more than just sympathetic
to the social investment movement - they help make it a reality.
For the most part, these 'progressive' banks and credit unions
foster community economic development by making credit available
to local housing groups and micro-enterprises. Such credit is
often deemed 'higher risk' and therefore more difficult to obtain
from regular banks.
Credit unions also exemplify one of the main tenets of corporate
social responsibility - they are owned by their customers and
are generally highly responsive to their needs.
Credit Union Central of Canada not only assists in meeting local economic needs, it is the national distributor of the family of Ethical Mutual Funds, through its subsidiary, Credential Asset Management Inc.. Citizens Bank of Canada is wholly owned by VanCity Credit Union, and Shorebank Corporation is a leading urban renewal force in Chicago.
SRI is part of a major shift in social consciousness that was
born in the anti-establishment counter-culture of the 1960s. The
quest for social, economic and ecological justice saw the birth
of the environmental movement, the women's movement, the anti-poverty
movement, gay pride and black power. The organizations that sprang
up to promote these causes were innovative networking organizations
staffed with idealistic, energetic activists eager for social
change. In the main, they incorporated as nonprofits, charities
and worker co-ops rather than necessarily following the traditional
business model. Essentially dynamic and anarchic, they nonetheless
support and cooperate with each other. They 'walk their talk'
by striving to promote their mutual ideals wherever possible.
Most of the screens that are applied by social investors have
come out of direct and indirect consultations with these kindred
organizations. Just as the field of social investment has been
imbued with the spirit of the other social change movements, so
too have the other movements been influenced by SRI.
Two good examples of this cross-fertilization are CERES (Coalition for Environmentally Responsible Economies) and Co-op America.
Another branch of research is the more traditional one based in
post-secondary educational institutions. There are many academics
who have made the fields of socially responsible investment and
corporate social responsibility one of their main concerns. There
are also Ph.D. students whose theses are pertinent to the field.
There do not appear to be any institutions that offer specific
courses in SRI, however there are a few that include SRI as part
of courses in business administration and ethics, finance and
investment, and sociology of corporate behaviour.
Universities and colleges are also players insofar as they are institutional investors. (For more information, see the Institutional Investor section of this paper.)
Institutional investors are those financial organizations that
have a fiduciary responsibility to manage money on behalf of other
people. They include mutual funds, banks, insurance companies,
pension funds, brokerages, endowments, foundations and charitable
trusts. In the past forty years, the asset growth of these institutions
has been phenomenal, rising from 15 percent to more than 50 percent
of publicly traded stocks in the United States. Pension funds
alone control 26 percent.
This growing concentration of stock means that institutional investors
are becoming increasingly unlikely to 'vote with their feet' and
divest from large corporations that are underperforming or not
acting as responsible 'citizens'. There are less available large
pools of stock to allow for this type of action than there were
a decade ago. The upshot of this is that institutional investors
are becoming more accepting of the need to use their shareholder
voting power to exercise control over the corporations they have
According to Peter Kinder, "the concentration of economic
-- and therefore political -- power in financial institutions
may prove as large an issue as trusts and monopolies did in the
first half of the century. It is far too early to predict how
institutional ownership will evolve or what the political response
to it will be. For now, it is being shaped by a battle over corporate
governance. It is a mistake to interpret this as simply a battle
over power at several large corporations. Rather, we are witnessing
a redefinition of the corporate form and the social contract between
corporations and society. Institutions will shape this change,
both in the positive sense of initiating change and in the negative
sense of being reacted to. And the institutions -- themselves
corporations of one form or another -- will be transformed too."
The largest pension fund in the world is the Teachers Insurance and Annuity Association - College Retirement Equities Fund (TIAA - CREF), and their Social Choice Account is the largest single SRI investment source. The Council for Institutional Investors is the umbrella organization for this type of investor, and Corporate Governance is an initiative to get institutions to promote more democratic control of corporations.
With regards to exercising control over corporate behaviour, individual
investors are increasingly being sidelined by the growing size
of the institutional portfolios. But they are still significant
players, albeit without much in the way of organization. Many
individuals are extremely wealthy and influential, owning large
blocks of voting shares in corporations, with controlling interests
in some cases, and use this interest to leverage seats on the
boards of directors for themselves and their friends.
The examples that spring to mind of this type of individual, however,
are the T. Boone Pickens, and Conrad Black corporate takeover
artists, more the antithesis of a conscientious social investor.
Ted Turner, now with Time-Warner, who has recently pledged to
donate $1 billion to the United Nations for humanitarian reasons,
may be considered as a good example. Certainly there are others.