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August 16, 2002
Rio + 10 Series: SRI Contributions to the Earth Summits Blocked from Within and Without
    by William Baue

The fact that the global socially responsible investment community was denied a greater voice at the Rio Summit does not excuse its low participation in the Johannesburg Summit.

The 1992 Rio Earth Summit rallied the global socially responsible investment (SRI) community around the drafting of a resolution designed to expand social investing. In the decade following Rio, the global SRI community's actions have helped define sustainable development as achieving economic growth while considering environmental conservation and social justice. The voice of the SRI community remained in the background at the Rio Summit, a fact that could have incentivized SRI advocates to raise their collective voice higher at the Johannesburg Summit. However, it appears that SRI will remain in the background yet again.

The social investment trade organizations in the UK, the U.S., Canada, and Australia, as well as the Europe-based International Association of Investors in the Social Economy (INAISE), all signed a resolution in 1992 known as the Rio Resolution on Social Investment. The Resolution asked individuals, companies, financial institutions, governments, and nongovernmental organizations (NGOs) to link investment policy to the environmental and social goals of sustainable development.

"The Rio Resolution set a marker in the sand, explicitly stating the role of SRI in achieving sustainable development," said Tessa Tennant, executive chair of the Association for Sustainable & Responsible Investment in Asia (ASrIA). "We tried to get press coverage, but the media was simply not interested in this aspect of the debate and had not tuned into its significance."

In the decade after Rio, the global SRI community continued to increase investors' role in promoting the environmental and social components of sustainable development.

"Through the '90s, the SRI movement, combined with useful tools such as the Global Reporting Initiative (GRI) and initiatives such as the UN Global Compact, grew in stature," said Mark Campanale, associate director of SRI business development at Henderson Global Investors, a London-based investment firm. "The SRI community's actions helped define a framework around which excessive corporate behaviour could be curbed. This goes to show that investors can, and are, playing a useful role as corporate 'watchdogs'--with their voting powers and shareprice sale executions as their 'teeth' to punish bad corporate behaviour."

In the 1990s, the SRI community helped create a vocabulary to discuss corporate abuses, demanding better transparency and disclosure on the environmental, social, and financial issues that define sustainable development. The recent revelations of widespread corporate abuses of power validate the SRI community's concerns.

"Mainstream commentators in 2002 have been talking about a more 'ethical' form of capitalism, using very much the sort of language the SRI community has been using for 10 years or more!" Mr. Campanale told However, Mr. Campanale does not hold corporations solely accountable for the abuses. "I've tended to the view that the culture and behaviour of corporations is really a reflection of 'whatever investors allow corporations to be.' The failure of corporations to act responsibly is, in my view, actually a story of the failure of investors to act responsibly."

With the Johannesburg Summit approaching, one would expect the SRI community to be contributing substantially to preparations and negotiations.

"Sadly, the momentum in the social investment community seems to be focused in other directions," Ms. Tennant told "I believe we have missed a chance to put further markers in the sand."

Ms. Tennant presented a set of proposals, called the Rio + 10 Finance Commitments, to the International Working Group at last year's SRI in the Rockies conference, as well as to the UK-SIF. The commitments were very ambitious. For example, one proposal calls for universal adaptation of laws like the UK Pension Disclosure Regulation, which requires pension funds to disclose the degree to which they consider ethical, environmental, and social issues in investment decisions.

"There was not much enthusiasm for the proposal and I therefore dropped the idea," said Ms. Tennant.

Ms. Tennant suggested several other ways the SRI community could have contributed to the Johannesburg Summit.

"The social investment community could have used this event as a moment to set some targets for itself to achieve by the next major Earth Summit in 2012," Ms. Tennant said. "Such a focus is needed on two counts. First, because it helps the industry to have a collective sense of what it's trying to achieve, and it helps the public to understand us better. And second, because we have expectations of corporations setting targets and constantly striving for better social performance and we should lay similar expectations on ourselves to keep our integrity."

SRI will not be completely absent from the Johannesburg Summit. The London Principles, which the British government hopes will serve as a template for any financial sector resolutions emerging from the Summit, incorporate many facets of SRI. Also, many NGO representatives attending the Summit promote initiatives that are consistent with SRI principles. However, it seems that the SRI community as a whole will not be using the Rio + 10 Summit as an opportunity to vocalize its vision of using investor pressure to promote and achieve sustainable development.


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