two dozen Blue Diamond miners, the Sisters of Loretto, an order of nuns, went to Schwartz for help in organizing a campaign to drive the Blue Diamond shareholder total above the 500 mark. With Schwartz acting as broker, they persuaded 300 individuals to buy one share of Blue Diamond stock (then about $200 a share) and to hold onto it. Blue Diamond refused to register the new shareholders, arguing that shares could be purchased only with the intent to make a profit, not to change the company’s public accountability. However, in a 1982 landmark decision, the state court of Delaware ruled against Blue Diamond, stating that “shareholders have the inherent right to assert their individual interests within the company, however bizarre, unpopular, or unusual they may be,” and a few months later a stockholders meeting established that there were 565 Blue Diamond stockholders. Shortly thereafter, Blue Diamond made a $12 million settlement with the widows of the slain miners. The case was a triumph for Schwartz and set an important legal precedent for the idea of social investing, but it was just one example of what Schwartz does. Indeed, if all goes as planned, by the time you read this, Schwartz will have launched what is probably the biggest experiment in social investing ever attempted. His proposed Trust for Balanced Investments will be an ethically based mutual fund intended for institutional investors, particularly pension funds, whose $800 billion in assets represent the largest single source of investment capital in the U.S. If he pulls it off, it will be no small coup. Pension funds are strictly regulated to ensure financial security and are therefore very conservative in their investment policies. They have been particularly reluctant to investigate social investing, but the situation is beginning to change. Several states now have laws preventing public monies from being invested in businesses working in South Africa. What is even more significant is that in 1980, California’s Public Investment Task Force, founded by then-governor Jerry Brown, formulated an ambitious social investment policy for the state’s $30 billion in public employee pension funds. Last year, when two of the funds aligned their one million Xerox shares with a coalition of Christian churches attempting to influence Xerox to break off trade with the South African police and military, they became the first public pension fund to co-sponsor a shareholder resolution. Private pension funds — unions, universities, corporations — have moved into social investing more quickly than have the public funds. Recently, giants like the AFL-CIO, the United Mine Workers, and the United Auto Workers have begun to evaluate their investments with an eye toward promoting employment for union members and support of union goals. One problem facing many pension funds, however, is the legal requirement that the “vehicle” — i.e., the organization entrusted with investing the money — show a record of “ prudent” investment, and it is here that Schwartz can have an impact. Over more than a decade of social investing, Schwartz has consistently outperformed the Dow Jones average, and he can convincingly dispel the myth that social investing implies great financial risk. If the Trust for Balanced Investments succeeds, it will mark the crown of Schwartz’s career. Then, perhaps, he will think about walking away from Wall Street. “ Long, long ago, I think, I should have retired,” he says. “The only people who stay in this business as long as I have are people who haven’t made enough to retire on. But I’ve done well enough to retire. It’s my social commitment that keeps me working.” u I e may be working for a while longer yet. Although social investing has grown mightily in the past two years, with more than a dozen mutual funds, money market funds, newsletters, management companies, and advising services appearing in the marketplace, and although socially invested funds have probably increased from several million to several billion dollars in the past fifteen years, social investing is not yet a movement with great economic clout. If one totes up all of this nation’s socially screened assets — all the dollars tunneled through churches, institutions, pension funds, and individuals who use some gauge of social impact to screen their investments — the entire sum probably comes to less than 1 percent of the country’s available investing capital. But social investing is a revolution in investment style, one that Wall Street is beginning to take seriously. Barron's and the Wall Street Journal have written about it; major financial institutions — Chemical Bank, Shearson-American Express, Franklin Management — have opened departments that specialize in it. As near as anyone can calculate, the net total of socially screened investments has doubled since 1981, will probably double again by 1985, and will continue to double in even shorter periods of time for years to come. Why? If anyone knows the answer to that question, it would be Arnold Mitchell, author of The Nine American Lifestyles (Macmillan, 1983) and until recently the director of the Values and Lifestyles program at the Stanford Research Institute, which studies social trends for major corporations. “Social investing has great appeal to what we call ‘inner-directed’ people,” says Mitchell. “They’re the avant-garde when it comes to social issues. They don’t yet have the economic impact of what we call the achievers, the management group, but they have a much wide range of concerns, and they’re just now coming into positions of influence. Their average age is about 30, they have an average household income of over $30,000, and they represent roughly 10 percent of the population, about 18 million people. They’re the most rapidly growing lifestyle group in the country.” And there, in cold statistical terms, the lingua franca of the think tank, you have as succinct a summary of the forces behind social investing as you could want. But that is a somewhat cold, impersonal analysis. Hazel Henderson offers a more down-to-earth picture. “Ten years ago,” she says, “when I talked about the ‘social costs’ of investments, it would take me half an hour to explain what that meant. No longer. All you have to do is say Three Mile Island, Times Beach, acid rain. Imagine your house just over the fence from a toxic dump, your kids covered with rashes, and your money invested in the company that built the dump. People now understand what’s meant by ‘illusory profits,’ and they’re no longer willing to put their money into things that are ruining their lives.” Paul Hawken’s analysis is equally straightforward. “What social investing represents,” he says, “ is simply that we’re learning to pay attention to the kind of work we do, to support quality of service and devotion to real human need." Given the bizarre nature of these economic times, that is a comforting thought indeed. • Joe Kane has written for Esquire, Rolling Stone and Outside. This article first appeared in New Age Journal (342 Western Ave., Brighton, Mass. 02135). FL A S H ! conference on Socially Responsible Investment will be held Saturday, April 7, from 9:30 a.m. to 3:30 p.m. at the Meeting Place in Pike Street Market. In addition to presentations by three experts in the field, the $30 registration fee includes lunch and a recently published book, Directory of Socially Responsible Investments, prepared by the Funding Exchange of New York City. The conference is being held to respond to the growing interest in this field by investors and the financial community. The event is being sponsored by the Common Wealth Fund, a Seattle-based philanthropic foundation funding community activism in Washington. For further information about the conference call CWF in Seattle (622-2267). Places are limited and reservations are encouraged. UMM NEW MUSIC — B IM u P y O RTS Sell Trade recards 4 5 4 8 University 6 3 W 4 a - y 1 7 N 7 .E 5 . 5301 ROOSEVELT THIS COUPON is worth $2.00 toward the purchase of any SPECIALTY PIZZA ALL WE DO IS PIZZA WAY N E. 522 8 8 2 8 I I I Now OPEN FOR Breakfast, Lunch and Dinner BELLTOWNCAFE 2 3 0 9 F IR S T A V E . ------------------------ 6 2 2 - 4 3 9 2 Clinton St. Quarterly
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