•I · . 7 Finaricing Awareness ofsocially responsible investing (SRI}-the application ofsocial as well asfinancial criteria to investin~s on the rise.· Major financial publications and 1V news programs have carried stories on the subject, stockbrokers andfinancial planners at least recognize the concept, and press coverage ofdivestment surrounding the South Africa crisis has brought tlie issue to the attention of the general public. Media attention hasfocused on screening stocks and bonds to exclude companies considered objectionable. A recent report by the Social Investment Forum states that over $100 billion was socially screened in 1985' up from $40 billion in 1984. Increasing numbers ofindividuals and institutions are deciding that if they would vote against more nuclear power plants or more weapons systems, why should they profit from the companies that make them? · 'The "Guide to Socially Responsible Investment Funds," which follows the interview below, provides an overview of the social criteria andfinancial performance ofthe screened money market and mutualfunds which most invest<?rs would use. A second type ofinvestment opportunity is.community investing. This is a newer area that has the potentialfor a more direct impact on society. Revolving loan funds borrow from investors andfinance projects that generally cannot get The f oNowing interview provides a'look at the .SRI "movement" from the perspective ofsome ofits best known practitioners. The McKenzie River Gathering Foundation, based in E~gene, Oregon, recently sponsored the 1986 Socially Responsible Investors Conference. RAIN had the opportunity to interview some ofthe conference speakers including: . Joan Bavaria: Founder of the Social Investors Forum, the field's trade association, and President ofFranklin Research and Development Corporation (Franklin), an im;estment management firm in Boston; · Amy Domini: Author of Ethical Investing (see RAIN, X/:3) and an investment counselor and Vice President of · Franklin; , · Chuck Matthei: Director of the Institute for Community Economics, which operates the largest revolving loan fund in. the country; Da"ell Reeck: Chair, Department of Religion, University ofPuget Sound in Tacoma, Washington; and fice President of Franklin. Summer 1986 RAIN Page 15 loans from -traditional sources, such as housing rehabilitation or small business development in low-income areas. The track record so far indicates that they are safe, but thefinancial returns are generally (but not always) less than the usual returns on investrrzents. Community investing raises questions about who controls capital and how it is used. In .the article on "Socially Responsive Banking" (page 21), we tali'e a look at how traditional lending institutions .direct their (our) money. The South Shore Bank ofChicago is a rare example ofhow a bank can have a powerful positive impact in the community in.which it operates. , The underlying theme of the SRI movement is that we have the right ·to expect that our money, wherever we put it, is used in a way consistent with our values. Baby boomers, whose values wer;e crystalized in the 1960s and early 1970s; are now advancing in their professions and have money to invest: As people ofthis generation, as well as those in other age groups, look at how their money is invested, including , their pension, college, and church endowmentfunds, there will be the potentialfor a.dramatic change in the way capital is used in the U.S. economy. -Rob Baird Rob Baird, a former RAIN staffer, is now an account executive with the Anderson Financial Group in Portland, ' ,.~ Trends ti( RAIN: What is socially responsible investing (SRI)? Matthei: The most basic definition is the application of social as well as financial criteria in making an investment decision. In practice it means different things to different investors. Social values and priorities differ from case to case. The one issue that has clearly drawn the greatest attention and investor response is divestment ih South Africa. At latest count, 80 billion dollars has been ordered divested from companies doing business in South Africa. The volume of capital managed with more extensive social screens is much smaller, but still significant-in the hundreds of millionsand growing quite rapidly. Social investing ranges from the application of social screens to conventional stocks and bonds t0 the other end of the spectrum of loans for inve~tments in community development. RAIN: Why is there a growing interest in SRI? Domini: What usually gets people interested is this kind. of realization: I work three afternoons a week for Physicians for Social Responsibility and I'm getting dividends from General Electric. This doesn't make sense. If I looked at
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