Clinton St. Quarterly, Vol. 6 No. 1 | Spring 1984 (Portland) /// Issue 21 of 41 /// Master# 21 of 73

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 th� 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 1 982 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 ·Kate Gawf is a Eugene cartoonist. a $1 2 mi l l ion 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 bi l l ion in assets represent the largest single source of investment capital in the U.S. I f he pul ls i t off, i t wi l l 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 1 980, Cal ifornia's Publ ic 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 mi l itary, they became the fi rst publ ic pension fund to co-sponsor a shareholder resolution. Sheep on Vacal iol'\ 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, �owever, 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 DOWNEY I NSURANCE AGENCY, I NC. 520 S.W. SIXTH AVENUE PORTLAND, OREGON 97204 BRIDGET I . DOWNEY 228-8327 AUTO MEDICAL HOMEOWNERS BUSINESS LIABILITY BONDS • • ., • ., ., ., ., .. ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., ., • ., ., • ., P A S T R I E S • L U N CH • L I G H T D I N N E R S · PAlt.AHAYDM 5829 S.E. MILWAUKIE • 232-9440 • CLOSED SUN-MON 70I N.W. 23rd • 228-73 I 7 • CLOSED SUN ., ., ., ., • ., ., ., ., ., ., ., ., • ., ., ,, • . . . ., ., • • ., • ., • .. • • • ., ., ., ., ., "Y .. ., ., . ., • • • 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 wi l l think about walking away from Wal l 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:· He may be working lo, 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 mi l l ion to several billion dollars in the past fifteen years, social i nvesting is not yet a movement with great economic clout. If one totes up all of this nation's socially screened assets - all the dol lars funneled 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 i n 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 1 981 . will probably double again by 1 985, 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 wou l d be Arnold Mitchell, author of The Nine American Lifestyies (Macmillan, 1 983) 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 Mitchel l . "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 1 0 percent of the population, about 1 8 million people. They're the most rapidly growing lifestyle group in the country." And there, in cold statistical terms, the l ingua 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 ' i l lusory profits, ' and they're no longer willing to put their money into things that are ruining their l ives. ' 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 qual ity of service and devotion to real human need. " Given the bizarre nature of these economic times. that 1s 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). 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