Ethical Performance
inside intelligence for responsible business


new SRI tack for Dexia

November 2004

A new socially responsible investment approach concentrating only on labour standards has been established by the Belgian insurance group Dexia.

The approach, named Portfolio 21, will screen out equities and bonds whose issuers fail to respect core labour standards as defined by the International Labour Organization – but will not consider other common SRI issues such as environmental performance and community involvement.

ILO core conventions include the right to organize workers through trade unions and to pursue collective bargaining, and the banning of forced and child labour and discrimination.

Dexia is adopting the approach for funds run by ten of its companies. It is also offering other institutional investors and pension funds a licence to apply the methodology in a universe of 350 bonds and equities, mainly of European companies.

Positioned at the ‘ethics lite’ end of the SRI spectrum, the fund will use the Brussels-based research agency Stock at Stake to screen stock and bond issuers.

Companies deemed not to be respecting ILO standards will be placed on a ‘watch list’ and then approached for discussions over a nine-month period in an attempt to persuade them to improve their performance. If this does not happen, they will be dropped from portfolios.

Bonds issued by governments that have not signed up to all eight ILO core conventions will be excluded, along with bonds issued by local authorities in those countries. A technical committee containing outside experts on labour standards will have the final say on whether to exclude companies and will publish a short report each time.

Generally companies will be screened on labour standards within their workforces, and Stock at Stake will adopt a ‘benefit of the doubt’ approach, assuming that the absence of negative information on an organization’s respect for labour standards means it is in accord with the conventions.

Stock at Stake admits that Portfolio 21 is a blunt instrument and will not necessarily suit deeper green investors. ‘It’s a limited approach to sustainable development because we’re only looking at respect for ILO conventions,’ it says, ‘and of course it’s possible that companies that don’t perform on the environment, for instance, will get in.’

Further Information

3BL Media News
Sign up for Free e-news
Report Alerts
Job Vacancies
Events Updates
Best Practice Newsletter