Page 4: The contribution of SRI to promoting sustainable growth
Henderson Global Investors believes that it is in a good position to influence how companies conduct their business. This is because:
- Companies need sources of investment funds in order to survive
- Companies need a healthy share price to attract further investment funds. If institutional investors stop holding a particular company’s shares, that company’s stock market valuation is likely to slump
- Leading companies know that Henderson Global Investors does not practise ‘naming and shaming’ but will invest in the best and encourage the rest
- Henderson Global Investors believes that working from within the system and also discreetly ‘behind the scenes’ is the most effective way of bringing about change. Such an approach may not be headline grabbing, but it is highly pragmatic and recognises business realities. Some companies that still have to be ‘won over’ have annual budgets greater than some countries’ total annual output and feel that they do not, as yet, have to concern themselves with the prospect of being brought down by international law, governments or street demonstrations
- Henderson Global Investors, with its worldwide connections, knows some of the best ways to influence how companies conduct their business. It has experience, for example, of joint initiatives with pressure groups such as Greenpeace. One initiative involved buying shares in a leading company and then using a shareholder’s right to table a resolution at the company’s Annual General Meeting to improve that company’s environmental performance
- Companies are becoming keen to see their shares being held within SRI portfolios. It is rather like receiving a seal of approval.
As SRI becomes even better known, the importance to companies of achieving acceptability with SRI fund managers is likely to increase.