Once it gets the SRI label, an SRI fund has to respect its commitments. There are several ways to make sure of it.
– Regular evaluations
The organization who awarded the SRI label conducts audits on an annual basis. They regularly control the fund in order to determine if the management is consistent to SRI standards. If the account auditor notices irregularities, corrective measures will be applied and the organization will proceed to further evaluations. If the shortcomings continue the fund will have the right to exclude the the company “in fault”. The SRI label is therefore never taken for granted.
– The fund has to give reports on its management
When awarded the SRI label the fund has to follow strict transparency. Labelled funds have to clearly communicate about their strategies and objectives to the shareholders. For instance, this information can be issued through management reports. Moreover SRI labelled funds commit to providing follow-up reports on the companies they invest in. They do so in order to measure the environmental, social and management results they obtained. And every year they issue indicators revealing their environmental, social and management evolution. It is a way to make sure human rights were respected for instance.
This duty of strict transparency which was defined in the executive order of January 8th 2016 makes of the SRI label an unprecedented innovative tool for investors.