Corporate watchdogs

Consumer

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

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.

Social Change Nonprofits

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.

Educational Institutions / Academic Researchers

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

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 invested in.

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.

Individual Investors

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.

[Note:

• this listing is not comprehensive; the organizations mentioned are just good examples
  
• links here are to explanatory quotations taken directly from the organizations' web pages, and in those documents the links are live to their respective web sites]

Maintained by Rory O'Brien robrien@web.net
Last update of this page May 9, 1998