Socially Responsible Investment Law: Regulating the Unseen Polluters

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Socially Responsible Investment Law shows how to improve the environmental behavior of corporate financiers, such as banks, pension plans, and mutual funds. Normally, we associate environmental harm with the front-line companies that extract, consume, and pollute, but not the financiers that sponsor and profit from these activities. Corporate financiers are the economy's "unseen polluters, " and they should adopt policies and practices to avoid environmental harm that may result from their loans and capital financing investments. Benjamin Richardson proposes governance reforms to encourage Socially Responsible Investment. These include: redefining the fiduciary responsibilities of institutional investors to include the environment (specifically the precautionary principle), enhancing the strategic role of national pension funds in sustainable finance, building new forms of international cooperation for transnational financial markets, democratizing and strengthening local financing through credit unions, and, for all financiers, providing a better mix of economic incentives and informational resources for SRI.