Socially Responsible Investing and the Church Dr. Darrell Reeck, C.F.A., is northwest branch manager for Franklin Companies, investment counsel specializing in socially responsible portfolio management. He teaches ethics at the University of Puget Sound in Tacoma, Washington. He was interviewed for CUE by Rob Baird. CUE: How has the church been involved in socially responsible investing (SRI)? REECK: Socially responsible investing goes back an awfully long way with the church. It's interesting that capitalism got started in the Reformation. The first capitalist stock company started in Holland in the Dutch Reformation and Jacob Amrunius, Netherlands' Reformation figure, happened to invest in it. But somehow capitalism got loose from its moorings and it took the church a long time to begin to react. In the 1880s and '90s there was great concern about child labor and the ability of labor to organize. The Pope's 1898 encyclical. Rerum Novarum, had to do with the right of labor to organize and was important in that movement. Interestingly, one of the founders of the social gospel movement, Walter Rauschenbusch, was concerned about social investing. He wrote in the 1910s about concerned shareholders in cotton mills that were spinning off dust that got in workers' lungs. Then everything went underground as far as church involvement in social investing until the late 1960s and '70s when the Vietnam War came along. That's when social investing started to mature. At that point it was more universities and foundations, and then churches. University students were concerned about companies that were making products for the armed forces to spray herbicides and napalm. CUE: What issues are socially responsible investors concerned with now? Reeck: Now there is a whole spectrum of concerns. We are moving from issue by issue concerns to an integrated approach to financial and social concerns. Society has separated the values that pertain to people's private lives from those of finance and economics. There is a gulf between them. Social investors are trying to bridge that gulf. We're trying to say that we are human beings first and that should have an impact on our finances. We are trying to unify the two sides of our lives that our culture split. The problem is inventing an investing discipline that really optimizes the financial and social concerns. CUE: At the national level, is it standard practice for the church denominations to invest pensions and other investments using SRI? REECK: It is standard. In the case of the Catholic Church, the real action is at the local level: orders and dioceses. Every major Protestant denomination has a social investing program of some sort. The approaches vary, even within particular churches. One of the best is the American Baptist Church, Valley Forge, Pennsylvania. The United Presbyterian Church has a committee of the General Assembly. They are leaders in developing the theory of social investing for churches. CUE: Are local churches involved in SRI? REECK: Generally speaking you will find a few local churches with a substantial portfolio, upwards from $250,000. These churches usually split responsibility so there is a committee on church and society that is very interested in social investing, and a committee on finance or investment that runs the portfolio and is very interested in traditional investing Dr. Darrell Reeck Page 22
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