The Kyoto Treaty on climate change, the international war against terror, the Enron disaster. Recent events will have left few of us in any doubt about the relationship between environmental and social stability, robust corporate governance and sustained economic performance. SRI fund management teams assess companies held in SRI and mainstream funds to identify the business impacts of social and environmental activities. Where impacts pose a risk, the teams engage with the company to manage the risk and so protect shareholders' interests. Positive engagement by the SRI industry has helped companies respond appropriately to environmental and social issues and so, in improving quality of life, avert irreparable damage to corporate reputation or to share price. Recent examples include:
GSK, as one of the world's largest pharmaceutical companies, has faced intense and very public criticism over access to affordable medicines in developing countries. In May 2001 the issue came to a head when 42 pharmaceutical companies took the South African government, represented by Nelson Mandela and Thabo Mbeki, to court over breach of drug patents. Pressure from campaigning organisations and positive engagement from the SRI community contributed to the companies’ decision to settle the case out of court and to agree to offer essential Aids drugs to South Africa at affordable prices.
November 2001 saw Balfour Beatty pull out of the controversial Ilisu dam project in Turkey. The project threatened the livelihood and land of large numbers of Kurdish people and has been linked to ethnic cleansing. Shareholder pressure and positive SRI engagement from institutional investors factored significantly in the companies’ decision not to risk heavy costs in time, money and reputation.
SRI engagement efforts contributed to a hopeful resolution to the distressing issue of enforced labour in the production of chocolate situation. Last November, major chocolate manufacturers and industry bodies agreed to take responsibility for the supply chain conditions.

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