Socially Responsible Investors(SRI)

Why engage with SRI’s?

“Socially Responsible Investors” (SRI’s) have smaller shareholdings, but broad influence. Strengthening relationships with them improves the company’s reputation and reduces risk but requires coordination between groups. Listening is key – both internally and externally. If investor concerns escalate, resolution is more complex and expensive for the company.

SRI’s typically have smaller shareholdings than large financial institutions do. If investor relations teams don’t prioritize these smaller investors, SRIs have difficulty getting the time or attention they desire. They resort to filing shareholder resolutions if their concerns aren’t resolved through engagement.


SRIs care passionately about one or more aspects of sustainability. Their focus can be on social issues, human rights, or community support. They may have concerns about environmental performance and progress related to climate change, water use, or biodiversity and land use. If these concerns become more significant or “material”, larger shareholders such as pension funds also become concerned. The aggregated shareholder concern can be sizeable, as seen in several companies “losing the vote” on issues such as climate change reporting recently.

Ideally, executive teams and investor relations leaders listen well and are prepared to speak about sustainability in the language that SRI’s expect. In my experience, the most successful path is to keep sustainability leaders engaged throughout the annual investor engagement cycle, and to provide talking points to investor relations, the corporate secretary and others within the organization. As questions become more detailed and complex, it may be beneficial for sustainability-focused investors to meet directly with the sustainability team. SRI’s and sustainability teams within major investment organizations often want to talk about the company’s sustainability risks, goals, and actions in great detail.

Once a company has become the target of shareholder resolutions, internal time and costs increase for communication, legal (inside and/or outside counsel), and investor relations - even if the company's sustainability performance is quite strong. A company may be performing well in the area of interest but needs to directly engage with SRIs by listening and effectively presenting information. A sustainability report may not be enough to address shareholder concerns which can be very detailed, both technically and experientially.


To move from reacting to these issues to a proactive strategic solution, I suggest several actions. This includes working with the executive team, corporate secretary’s office, investor relations leader, and sustainability leader to tighten the linkage between them to prevent, engage, and respond to shareholder concerns. I also recommend investing time in listening, building and deepening relationships with key SRIs.

There is also a benefit to systematizing the SRI engagement process. Knowing when, how, and with whom to engage can dramatically reduce the negative attention created by these shareholders and related stakeholders. Effective and strategic engagement can foster learning by both the company and the investors, and better align stakeholder expectations with company strategy.

Questions or Comments?