Impact of Social Movements on Financial Institutions

Diane-Laure Arjaliès, Professor of Accounting and Management Control - October 15th, 2010
people with coin slots for hearts - social and financial reponsiblity

Socially Responsible Investments (SRI) have been carving out a niche in French financial markets since the early 2000s. What role have social movements played in the development of such investments? Diane-Laure Arjaliès examined the issue over a ten year period and found out how such movements have changed financial institutions from the inside. 

Diane-Laure Arjaliès ©HEC Paris

Diane-Laure Arjaliès was professor at the accounting and management control department between 2010 and 2015. She previously spent two years working for Macif Insurance as social (...)

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In the past several decades, social movements aimed at forcing the economic players to behave more responsibly have emerged in many areas of the world. Bred from within economic institutions themselves, the movements all present four fundamental characteristics: a collective identity, sharing of individual resources for the common good, a desire to change existing institutions, and a search for a new general orientation for society. Such movements are referred to as Corporate Social Responsibility (CSR), and among them, Socially Responsible Investment (SRI) promotes greater consideration of non-financial issues within the specific field of asset management. To find out what the real impact of SRI movements on financial institutions has been, Diane-Laure Arjaliès has studied the major stages in the evolution of the French SRI movement since the late 1990s. 


The June 1997 creation of Arese, the French social and environmental rating agency1, set the stage for the SRI movement in France. Arese immediately confirmed its legitimacy by designing financial products according to established asset management logic, meaning products conceived to offer greater ROI than others. As of 2000, the following French government initiatives gave SRI a boost and enhanced its notoriety among a broader public. • Enforcement of theNRE2 law, which obliges listed companies to report on their social and environmental impact. • Creation of the FRR, a public pension fund specifically geared toward the SRI market. This political progress marked the start of a fundamental trend and enabled new organizations like the Social Responsibility Observatory and the Forum for Responsible Investment (created to facilitate company adoption of CSR standards) to consolidate the legitimacy of the SRI movement. 


From 2004 on, the SRI market shifted “from an offer market to an—institutional—demand market,” says Arjaliès. Indeed, not only public institutions but also the private sector became increasingly interested in socially responsible assets. For example, in 2005, the AGIRC3-ARRCO4 invested 100million euros in SRI funds. At the same time, the SRI movement took hold in a range of organizations, and major financial institutions like the CIC and Société Générale created SRI departments. By the end of 2005, the SRI movement was no longer a mere project promoted by marginal activists. Arjaliès explains, “SRI worked according to financial market logic, and financial institutions adopted SRI logic.” 


Nowadays, Arjaliès says there are two main trends. On one hand, SRI is continuing to penetrate and merge with the market, and on the other, more radical SRI approaches are emerging. Contrary to the first wave of movements, they advocate placing the social responsibility component of investment above financial reasoning. “These movements tend to focus on specific issues like human resources, shareholder activism, and emerging countries, and they push to favor non-financial matters over financial issues.” They respond to demands of institutional investors who would like to diversify their positions while also boosting their image and protecting themselves from social (i.e., child labor) or environmental scandals. As a result, in early 2010, nearly 70 “ethical funds” (term used by Novethic) had been created in France. 


The SRI movement has profoundly changed the French asset management landscape. According to a late 2009 Novethic report, 90% of “conventional” French funds included at least one SRI criterion, compared to 61%at the end of 2008 and 3% in late 2007. Arjaliès also shows that, contrary to popular belief, the effectiveness of social movements does not necessarily depend on strong action from people outside of the system. In the case of French SRI, changes were driven by insiders in the asset management sector. This is why their initiatives do not strive to radically oppose traditional ideas of financial profitability, and this compromise between profitable and responsible investments is the primary reason behind their success. Arjaliès  also explains that despite frequent criticism of CSR assets (i.e., fair trade), the SRI movement does not stem from commercial concerns but from a few people’s desire to bring radical change to financial institutions. She supports this hypothesis saying, “Defenders of SRI have gotten personally involved in making the movement a success even when they have had nothing to gain financially by doing so.” Indeed, it took several years for SRI to attract the interest of the financial community. But the situation has changed, and the growth potential now associated with developing SRI is so huge, that no bank would risk not proposing this type of fund to its customers.

1. Now Vigeo, since 2002.

2. Law on New Economic Regulations.

3. Association of Institutions for Complementary Executive Pension Funds.

4. Association for Complementary Employee Pension Plans.

Based on an interview with Diane-Laure Arjaliès and on her article, “A Social Movement Perspective on Finance: How Socially Responsible Investment Mattered” (Journal of Business Ethics , spring 2010).


• Arjaliès’ study of the evolution of the SRI movement since the late 1990s and its impact on the financial sector shows how social movements can influence economic institutions and highlights key conditions for success.

• Arjaliès also provides unprecedented insight on the dynamics of SRI offer and demand. This issue is particularly significant, as the Financial Market Authority is currently considering establishing specific regulations for this type of fund.


The first phase of Diane-Laure Arjaliès’ research was based on participative observation and was conducted from within the French SRI movement from 2006 to 2007. During this time, Arjaliès identified approximately 30 key players in the SRI movement and then questioned them in semi-directive interviews. The information gather was compared with quantitative data on the development of SRI on the French financial market.