How we changed corporate behavior

Socially responsible investing encourages organizations to avoid buying stock in companies that fall short of certain ethical standards. But investors can use their clout to improve the behavior of companies in their portfolios that might not be included in the socially responsible category. This approach differs from strategies of disengagement, like divestment, but can make a big difference.

My own firm, Christian Brothers Investment Services, manages over $5 billion in assets, and our experience demonstrates how a philosophy of "active ownership" can have a significant, positive impact on the way companies do business.

Consider our work in the environmental sphere. As Pope Francis wrote in his recent encyclical, the Earth "cries out to us because of the harm we have inflicted on her."

Man lifting hands toward sun.
ImagineGolf | Getty Images

The only way to answer that cry is to push for action on climate change across many channels.

Earlier this year, our firm co-filed shareholder resolutions with BP and Royal Dutch Shell (our funds owned nearly $10 million in combined assets as of September 30, 2015). The proposals required each company to report their plans for transitioning to a low-carbon economy. In particular, the resolutions sought information on research into low-carbon energy sources, company public-policy positions regarding climate change, as well as executive incentive schemes. Thanks to the combined efforts of CBIS and other co-filers, both BP's and Royal Dutch Shell's leadership eventually endorsed the resolutions and passed them with near-unanimous votes.

CBIS's calls for transparency also champion human dignity. As our work with Target (our funds owned investments of $8.6 million as of September 30, 2015) exemplifies, the first step in finding solutions is identifying the problem.

Thanks in part to the power of investors, human rights organizations, the U.S. State Department and other stakeholders, Target is working with vendors and the International Labor Organization to closely audit its seafood processing in Thailand. Target is actively working to ensure that seafood suppliers are taking measures and documenting steps to eliminate human rights abuses, and working to engage the Thai government on viable solutions.

Engagement with corporations is part of an ongoing effort to ensure that these companies are working to uphold the environmental beliefs of our clients. And they represent precisely the kind of progress that can only come by working with an organization to influence its business practices.

In many cases, such an active ownership approach begins by identifying the major ethical challenges facing a given industry. Case in point: CBIS is currently engaged in a dialogue with mining companies to understand how corporate behavior affects local communities in Africa.

In July, a representative from our firm, along with a group of concerned investors and faith leaders, visited Newmont Mining's Ahafo gold mine in Ghana. The trip allowed CBIS to assess how the firm's operations impacted nearby families and workers.

In Ghana, for example, we learned that while many households have seen significant improvements in their quality of life since being displaced by the mine in 2006, several still lack access to sufficient farmland. That leaves them at risk of impoverishment, despite a contribution by Newmont of over $23 million dollars to a foundation run by the local communities.

Through our engagement, we were able to make the plight of these resettled families a priority for the firm, and bolster programs that allow them to thrive and prosper.

To be sure, this is only one step on a long journey. Fortunately, the active ownership approach provides for a sustained long-term commitment to social responsibility.

For instance, CBIS's progress on human trafficking is the result of years of continuous engagement with corporations in our funds.

Human trafficking -- either as forced labor or commercial sex -- is particularly common within the hospitality industry. For seven years, CBIS has been working with Wyndham Worldwide -- the world's largest hospitality firm -- to address this problem.

Our dialogue has yielded encouraging results. In 2011, Wyndham signed the Code of Conduct for the Protection of Children from Sexual Exploitation in Travel and Tourism -- a pledge to implement anti-trafficking policies and train employees to identify the signs of child sex commerce.

Last year, the firm redoubled its commitment to eradicating human trafficking. It pledged to develop comprehensive training and educational tools for staff, hotel owners, and franchisees at 7,500 properties in 70 countries to recognize all forms of human trafficking.

To tackle trafficking across all sectors, we also encouraged JPMorgan Chase to explicitly prohibit any transactions where there is evidence of the use of forced or child labor. This policy will have far-reaching effects on the bank's loans and investments.

Of course, efforts to change a company's practices are sometimes met with roadblocks. We pushed Tyco International to reduce its toxic emissions for three years with no success. But

when Tyco brought in a new management team, CBIS saw an opportunity to get involved again. After a series of negotiations between our teams, Tyco agreed to develop a firm-wide environmental management system to scale back its pollution.

Socially responsible investing, in other words, encompasses both screening out companies that clash with investors' beliefs and also working directly with companies to change their behavior. By helping to create corporate cultures that speak to essential ethical and social concerns, investors can play an active role in ensuring that more companies fulfill their responsibilities to investors and the common good.

Commentary by Francis G. Coleman, who is the executive vice president for Christian Brothers Investment Services, overseeing its Catholic Responsible Investing team.

For more insight from CNBC contributors, follow @CNBCopinion onTwitter.