Changing industry
There are, in fact, many examples of businesses that have changed as a result of investor pressure. The shareholders alliance that includes Domini persuaded Coca Cola and Pepsi Cola to use recycled raw materials to manufacture their plastic bottles. Another shareholders' group persuaded Proctor and Gamble to sell coffee with a fair trade certification. Domini has also focused on the topic of global labor and has urged McDonald's and Disney to increase oversight of their suppliers.
Aside from its ability to oversee businesses and pressure them to "mend their ways," SRI more importantly creates an incentive mechanism. Professor Kang Jung-pao of the Department of Accounting at National Chengchi University says that with SRI, the better a corporation meets its social responsibilities, the more investors and investment dollars it will attract. This "reward" naturally leads corporations to actively reform their practices. Moreover, in the hope of being listed in SRI indexes, businesses will "voluntarily" make relevant information available to specialized companies for drawing up classifications.
"The SRI market mechanism is extremely important," explains Professor Kang. Although the regulatory authorities in Taiwan have in place a certain number of review standards for listed and OTC companies with regard to environmental pollution and labor/capital disputes, these do not constitute a "market mechanism." It is only SRI that is able to elicit the full attention of investors and induce corporations to exchange good acts for company profits, to move forward to high standards "on their own initiative" and not just to achieve the basic minimum by being "forced" to do so by laws and regulations.
SRI has gradually matured in Europe and the US. How is it that today in Taiwan there are neither SRI instruments nor any related investor indexes?
"The basic problem is with those participating in the market--whether it's the financial sector, investors, businesses--none has a full concept of 'corporate social responsibility,'" says Daniel Chu. Only with the development of a CSR culture plus a coordinated body of laws can this concept be pushed forward. Otherwise even if financial authorities encourage the financial sector to develop the related financial instruments, it's like trying to clap with one hand
"Shareholder activism" has taken Europe and the US by storm and together with consumer, environmental and labor groups, has led to the formation of an enormous force demanding corporations "do good." Consumer power and environmental consciousness in Taiwan have become an important part of the landscape, but investor consciousness is still in a deep sleep. If shareholders and investors are able to wake up and realize that they hold all the chips needed to change industry behavior, just as was true for Domini and other champions of SRI in the past, making SRI into a groundswell in Taiwan will be the final tip of the scales that will lead major Taiwanese industrialists to think seriously about corporate social responsibility.