Socially Responsible Investing What It Is, Where Is It Going? The follomng interview provides a look at socially responsible investing (SRI) from the perspective of three of its best known practitioners. The McKenzie River Gathering Foundation, based in Eugene, Oregon, sponsored the 1986 Socially Responsible Investors Conference. Rob Baird had the opportunity to interview: Joan Bavaria, founding president of the Social Investment Forum, the field's trade association, and president of Franklin Research and Development Corporation (Franklin), an investment management firm in Boston; Amy Domini, author of Ethical Investing and an investment counselor and vice president of Franklin; and Chuck Matthei, director of the Institute for Community Economics (ICE), which operates the largest community-based revolving loan fund in the country. CUE: 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 in South Africa. At latest count, $80 billion 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 millions—and growing quite rapidly. Social investing ranges from the application of social screens to conventional stocks and bonds to, at the other end of the spectrum, loans for investments in community development. CUE: 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 Tm getting dividends from General Electric. This doesn't make sense. If I looked at your checkbook, Td know you pay $110 for a pair of shoes and give $10 to the Girl Scouts. I'd have an idea of your priorities. If I looked at your stock portfolio, you would be a rare person if I could get any idea of what you cared about. Money is very personal. The last thing you will tell anyone is how much money you make or how much is in your stock portfolio. It's that intimate, yet you haven't integrated it into your life. CUE: Rather than SRI, why not make as much money as possible and then decide where to give charitable donations? BAVARIA: We are a total system. In the end there is no way to divorce the ethical decisions from your investment portfolio. At some level people are making decisions on a social basis anyway. It becomes a question of whether you can have the same results in an ethically integrated portfolio. We think that question will be resolved irrefutably with a resounding yes. You can definitely have the same performance, so why not integrate your social values? MATTHEI: Many people are skeptical of the results. What is happening now is that all the funds of all different types are building a track record that will overcome that skepticism. The fact is that the Franklins, the Calverts, and the Working Assets are posting returns comparable to unscreened portfolios. CUE: In your experience, are you seeing that companies that have a more progressive approach outperform others? You can definitely have the same performance, so why not integrate your social values? BAVARIA: It would be presumptuous to draw that correlation. What you can say is that they are smart companies. They aren't ignoring the bottom line, but they are sensitive to what's going on around them and sometimes they are survivors because of that. CUE: It is often difficult to cite relationships of cause and effect. Can you cite instances where a company has been motivated by the SRI movement to change some of its policies? BAVARIA: One of the more recent and most outstanding is that AT&T has divested from South Africa and is offering its employees a South-AfricaPage 4
RkJQdWJsaXNoZXIy NTc4NTAz