Recently, on a radio show looking at oil company behavior and high gas prices, a senior economist at the American Petroleum Institute, an industry trade association, made the claim that oil companies are regulated not only by their customers, but also by those who hold stock in the companies. True.

The economist went a bit further to say that the federal government need not broaden oversight of oil company practices because those companies are already accountable to the American public, mostly because the American public are shareholders in oil companies. False.

While this oil industry economist’s opinion is a good reminder of the increasing role that sustainable investing and shareholder activism should play in the corporate accountability movement, it is also a reminder that a corporation needs to be accountable to all of its stakeholders, not just the ones who are fortunate enough to own shares of the company. This is particularly true when a business argument cannot be made for improved social responsibility.

Shareholder activism commonly pushes for change that satisfies both social and financial criteria, by making the business argument for change (proactively addressing climate change being the classic case). But when the argument for change pits social responsibility against the company’s financial interest, shareholder activism is less effective. In the absence of a business argument, most shareholder activism pushing for more consideration of social impact would be blocked in favor of the company’s financial welfare.

Shareholder activism is an important part of the movement towards a more socially responsible economy. However, because business arguments for corporate social responsibility are often difficult to make, companies must be accountable to all of their stakeholders, not just customers and shareholders.