Abstract: Environmental harm is commonly associated with the front-line companies that most visibly consume and pollute our shared natural resources. Rarely are the “unseen polluters”, the financial institutions that fund and profit from eco-damaging corporations put at the forefront of the environmental debate. By focusing on these unseen polluters, this book provides a comprehensive examination of the response of the movement for socially responsible investment (SRI) and its current regulation worldwide. It finds that in recent years SRI has shifted away from its traditions of ethical investment to a business case approach, whereby social and environmental issues are addressed largely only if they are perceived as “financial material” to investors. Further, the contemporary SRI movement lacks sufficient influence in financial markets to provide a viable framework of governance to offset the deficiencies and gaps in official regulation. In offering a guide to possible reform to ensure that the financial sector prioritizes ethically-based investments, this book proposes greater regulatory supervision of SRI. It suggests that new governmental reforms should provide financiers with a better mix of economic incentives and informational resources. More importantly, it also argues for redefining the fiduciary responsibilities of institutional investors to incorporate environmental concern. Through these and other measures, the book posits that corporate financiers, including banks, mutual funds and pension plans, will be more accountable to the goals of achieving environmentally sustainable development.

Keywords: environmental law, financial markets, investment, ethics, sustainable development