Eric Fernald KLD Director of Research Eric Fernald manages the general operations of KLD's research department and supervises KLD research analysts. In addition, Eric sits on the company's index committees and participates in the review of KLD's ratings and product development. Prior to joining KLD Eric was a PhD candidate in Political Science at MIT, taught Political Science at MIT, and was involved in the labor movement. Eric holds a B.A. in Political Science from Williams College.

Elizabeth Horan Edgerly KLD Senior Research Analyst Elizabeth Horan Edgerly researches companies in the consumer durables, hotels, retailing, and apparel industries, and specializes in community relations and diversity issues. She is a member of the Index Committees, and oversees review of KLD's social ratings. Previously, Elizabeth was a copyeditor/freelance writer for publications in the US and abroad. Elizabeth received a B.A. in English and Philosophy from Vassar College, MAT in English from Harvard University, and MBA from Simmons Graduate School of Management.

1. How has the practice of SRI research evolved since you began at KLD?

Eric Fernald: I began at KLD as a part-time employee back in December 1995.  Since that time, the market has evolved, and so have KLD’s practices. Client demand for non-U.S. research has soared.  The availability of good corporate social responsibility (CSR) data has increased dramatically, while the associated costs of gathering, analyzing, and rating this data has fallen dramatically.  The concepts of CSR and sustainability have gathered momentum in the face of growing environmental and ethical challenges for global corporations and society.

Elizabeth Horan Edgerly: Most significantly, our data sources have gone from hard copy to electronic and the quantity of data has grown from very little to sometimes overwhelming amounts. Also, when KLD began, there was little consistency in how companies reported their activities, or in how SRI researchers measured and analyzed their data. Since then, organizations like the Global Reporting Initiative and Ceres have helped generate better reporting standards, but there’s still a way to go.

2. Which of your projects at KLD have been especially significant or rewarding?

EHE: Looking at KLD’s own social/environmental performance and starting the process of alignment with the criteria by which we judge other companies; bringing a public health/women’s health perspective to coverage of the pharmaceutical/healthcare industries; working with ICCR (Interfaith Center on Corporate Responsibility) and learning from them.

EF: Research at KLD is such a collective effort that it would be hard to call any project just mine.  But of the many projects I have been involved in, the most challenging and rewarding are the work with our various index committees. At these committee meetings, we bring together all of our collective experience to make decisions concerning company worthiness for an SRI benchmark index. 

3. SRI seems to have joined the mainstream - or at least, it’s now common for corporations to acknowledge SRI concerns. What drove this gradual acceptance? KLD products? Products from others? World events, consumer preferences, and/or changes in the financial services industry?

EHE: SRI has always been customer driven.  One research decision KLD made early on was to track a number of performance criteria besides investment in South Africa, or involvement in alcohol/gambling/tobacco/nuclear energy/military weapons.  These other criteria, which were later categorized as environmental/social/governance (ESG) factors, cover how employees and customers are treated, product quality and safety, and environmental management.  This meant that when apartheid ended in South Africa, SRI continued because social investors were concerned about ESG issues, not just about ending apartheid, although that was a huge impetus at the beginning.

World events still play a huge role in motivating socially responsible investment. For example, Hurricane Katrina and other natural disasters have made global warming seem like a more urgent problem, and oil prices highlight the need for alternative energy.

EF: SRI has indeed snuck into some of the offerings of our mainstream financial brethren. Interest in SRI has been driven (until recently) in the U.S. by the concerns of the retail investment market.  Values- or mission-driven investors avoid industries such as gambling and tobacco, and prefer to invest in more responsible companies.  Our DS400 defined that strategy for years. 

More recently, the SRI market has taken off in response to institutional investors’ demands.  The need to define best-of-class players in every industry has driven new index and engagement strategies.

CSR has evolved in response to a world made smaller by the internet and global media trends.  Companies need to protect their reputations, their brands.  Some companies have taken this to the next level and begun to make the business case for CSR.  In this regard, KLD’s creation of the Business Ethics Top 100 Corporate Citizen list was probably one of our most influential products within the corporate community. 

4. On what issues do you believe social investors have had the greatest impact? Are there issues that haven’t received enough attention, in your opinion?

EF: The largest impact of social investors – through direct shareholder activism, mission-based investment decisions, and the creation of SRI benchmarks and related financial products – has been to bring ethical issues to corporate management/boardrooms and to show that these issues have potential material impact for the company.

There is still not enough attention paid to key environmental issues and human rights catastrophes, and the political influence of large corporations and their ability to influence the rules of the game continues to be both well-known and under-reported.

EHE: Corporations have become comfortable with eco-efficiency, after complaining loudly when environmental regulations initially were passed, because it has helped them reduce costs.  They are less interested in wrestling with human rights and labor concerns and many still deny responsibility/influence over abuses that occur.

Social investors can push for change, but some problems can only be addressed by government. For example, I think the aggressive marketing of infant formula has done public health harm in developed and developing countries, but it will not end through voluntary compliance with SRI-type codes.  Only regulation will end it.