In an article on alrroya.com today, author Ron Robins (Founder & Analyst – Investing for the Soul) puts the spotlight on a socially responsible fund that makes stakeholder engagement their primary concern. The Australian Climate Advocacy Fund (the Fund) specifically engages companies around their climate change issues. What makes this fund unique is that they don’t employ sustainability or ESG screens.

The Fund seeks to engage and invest in all of Australia’s top 200 companies in the hopes of enhancing their climate change and ESG activities. The Fund believes that by helping these companies perform better on their climate change issues, their share value will increase and in turn increase the value of the Fund.

Not employing sustainability screens is antithetical to traditional socially responsible funds. Further, it would against their nature to invest in companies they don’t plan to own. There are some historical precedents, such as religious-affiliated funds or funds that seek to support specific causes. In the U.S. a large portion of all proxy initiatives are sponsored by religious organizations – leading these initiatives is the Interfaith Centre on Corporate Responsibility (ICCR). In 2010 ICCR members filed 282 shareholder resolutions on ESG issues.

Other successes socially responsible funds have had is in engaging companies and regulatory authorities regarding ‘say on pay’; where stockholders vote on executive compensation. Further, together with the public outcry, socically responsible funds have moved the government and the SEC to act on ‘say on pay’.

These funds are also looking to take another issue to the US Chamber of Commerce – corporate political donations. According to alrroya.com, A press release dated November 4 states, “investors today announced the filing of shareholder resolutions at several corporations that sit on the Board of the US Chamber of Commerce, challenging their corporate boards to review their policies and oversight of political expenditures, especially through trade associations. The first four companies to receive this resolution are Accenture, IBM, Pepsi and Pfizer.”

This article certainly shows great strides for socially responsible funds and investors. Do you think this is a sign of the times? Are we on the road to this being a societal norm, that SR funds will hold much weight in the regulatory environment? Discuss!