Does socially responsible investment influence employment relations?

In this paper we investigate whether socially responsible investment - investment seeking both financial and social returns - influences the management of employment relations within corporations. Many SRI funds use investment criteria that expressly incorporate employment relations indicia; meaning that they either look to invest in companies with good reputations for employment relations or exclude companies with poor workplace practices. A further and increasingly popular approach is to try to influence corporate policy on issues of importance to the SRI fund through engagement. Given these objectives, it is relevant to ask whether SRI actually does influence employment relations and to what degree? Drawing on an analysis of SRI funds criteria and interviews with Australian SRI funds managers and consultants, we argue that although SRI has the potential to influence the management of employment relations it has not yet reached the stage of exercising significant influence.