Ethical Performance
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CSR guru tells SRI funds: ‘heal thyself’

December 2004

A leading CSR proponent has accused socially responsible investment specialists in the US of failing to practise in their own organizations what they preach.

Paul Hawken, executive director and founder of the Natural Capital Institute, a California-based CSR think-tank, argues in an institute report that ‘if the SRI industry were a corporation, it wouldn’t qualify in a rigorously screened portfolio’ because its record on diversity, transparency and other issues is poor.

‘The SRI industry needs to change,’ he says. ‘While SRI investors call for corporate transparency, the industry is closed, proprietary and secret, and while SRI calls for workplace diversity, it is an almost entirely white industry. It needs to [take on] the behaviour it purportedly demands in other companies.’

Hawken, author of The ecology of commerce, also accuses SRI funds of adopting such lax screening criteria that they are virtually meaningless.

Tim Smith, president of the Social Investment Forum, the national trade association for the social investment industry in the US, told EP: ‘I would agree that the SRI community has a lot of important work to do to improve its record in the hiring and promotion of people of colour, but I would say it has a pretty strong record on women in leadership, with female heads of a number of funds. And I wholeheartedly disagree with him on transparency. I think we do rather well on that front.’

Smith added that the lack of rigid standards applicable to all SRI funds ‘is a strength, as it offers a wide range of options for investors’.

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