Institutional Investors Pursuing an SRI Strategy
While pursuing an SRI strategy by the institutional investors, the company applies the six basic steps in the implementation of the SRI strategy. The first step is based on identifying the current financial situation of a company. Assessing the financial situation would reveal that the company has the potential to make investments in different companies or institutes. The second step involves getting SRI on the agenda of a company. The company consults with the endowment committee to identify the prospect investment opportunities. The third step involves identifying the prospect investment opportunities which are both viable for the company, carries good financial returns, and is beneficial for the environment. This step normally takes a huge amount of time because it requires close interaction with investors and the corporate governance of the company. The fourth step involves short listing of prospect investment companies upon which the investment will be made. As huge amount of investment is required in the particular process, the company develops a feasibility report for each of the prospect companies or institutes (Dexia, 2011).
According to the fifth step, the company chooses the potential investment company with mutual collaboration of endowment committee, the company’s corporate governance and the institutional investors. The last step involves developing the strategies for investments and to implement the particular strategy. Pursuing an SRI strategy takes time and effort, while it requires thorough analysis of the financial returns. The SRI strategy is linked to the long term planning developed by the organization. Therefore, the future of the company much depends on the SRI strategy. The base of developing the SRI strategy requires a thorough financial analysis, which may reveal the current financial strength and the key assumptions of the financial returns after a certain years.
Social and Environmental Risks Facing the Company
There are many environmental risks faced by a company involves the global economy crisis, pollution risks which are caused by the operations from manufacturing companies. The economic crisis is the major environmental issue in which the economic condition of a country is not stable. The other risk factor is pollution risk. Due to global warming, strict regulations have been implemented by governments to reduce the effect of chlorofluorocarbon which depletes the ozone layer. The depletion causes harmful gases to enter the earth, which increases global warming. Therefore, governments are trying to create awareness amongst different production houses to adopt green manufacturing, which reduces the effect of pollution and are environmental friendly. Pollution could be of different types which include water pollution, and waste pollution. Disposing the waste has become a global issue amongst the corporate world as it is directly dependent on achieving customer satisfaction. The other environmental risks include the excessive use of natural resources which ultimately results in an environmental risk. The cutting of trees can be considered as a relative example (Mesham & Rockie, 2012).
Poor relationship with the community, risks that are caused by the environmentalists and socialist in the protection of social rights of the community, education rate, and mortality risks are some of the social risks faced by the company. These risks are measured by the company as it affects both the institutional investors and the organization. The risk is higher in the case of having poor relations with the community because the purchase rate for consumers per item decreases, whereas, the satisfaction rate also tends to decrease. Community services and socially responsible for community is also a factor that contributes towards the goodwill of the company.
Responding to the Concerns of Students and Stakeholders
A significant procedure to respond to the concerns of students and stakeholders include the developing of the endowment committee that performs its main function of identifying corporations that are strict about the social and environmental norms and practices. The Stanford University developed a policy that it would make investments on those companies whose practices and policies does not reflect any social injury. Therefore, the policy of the university shall also be based on selecting those corporations whose policies and practices does not reflect social and environmental issues. The endowment committee shall focus on the similar projects which may focus on renewable energy sources or alternative energy sources projects which may tend to lower the concerns of students and stakeholders.
The University must develop an endowment committee which would be based on expert individuals that have full understanding of financial practices and future investments. The University then assess its financial situation and develop a long term strategy of investing in corporations for financial return and most importantly to become socially responsible..................................
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