Page 18 RAIN June/July 1983 Choosing the Future: Social Investing The Creative Chlen/Abstract The Receptive K’un/Concrete The Treading Lu Applying ethical concerns to investing is not new. From the nineteenth century German Amana Colonists in Iowa, who mixed capitalism with Christian Socialism, to churches that sought to invest in companies uninvolved in the Vietnam War, responsible investing has grown steadily. The new development, however, is the appearance of social investment funds within brokerage companies themselves. In 1972, the Dreyfus Corporation created the Dreyfus Third Century Fund to channel investments to companies with environmentally sound, safe, and just practices. Others followed (see access). Even large pension funds, the most abundant source ofU.S. development capital, have established social standards to direct their investments. Like Dreyfus Corporation, the Calvert Group of Funds manages several investment plans, only one of which uses social guidelines to determine where the buck lands. By investment standards, both firms' social investment funds are small. The Calvert Social Investment Fund, nonetheless, is young and growing. I asked Grace Parker, formerly employed with the American Friends Service Committee and now Calvert's Assistant Vice President, to tell us more about it and the broadening interest in doing good while doing well. Which raises some interesting questions. As social investing "catches on,” is it a way for investment firms to cash in on people's good intentions, or are they truly acting with sociall environmental responsibility? Or, from a more prmincial point ofview, why not just invest in local economic enterprise, for example the local food co-op? RAIN: Why are social investment funds more desirable than conventional investment funds? PARKER: From the investor's point of view, it's more desirable because it gives the opportunity to take more responsibility for your money. Not only are you responsible for the fact that you want your money to be where it's safe, but also the consequences of what you're doing are more predictable with social investment funds. You can take more responsibility for directing the investment of money toward companies and their products and services considering the way they're doing business. RAIN: What role can social investment play in terms of creating a better future? PARKER: One of the things money is about is creating or predicting the future. Money is a storehouse of energy which you use to make choices. Every day of our lives, by the way we use money, we're communicating choices. The choices we make in the present create the future over the course of time. It's not only what you spend your money on that has consequences but also how you use your money as an investment. The flow of money is like the flow of water through an irrigation system. In all the places in the system that you direct water, it causes plants to grow. It's the same with money; you need to identify what you want to grow and direct money towards that. RAIN: What has been the response to Calvert's Social Investment Fund? PARKER: As one of Clavert's sbc funds, the Social Investment Fund only started last October. It's all been increase; of all our funds, it's the one that gets the most mail inquiries. Right now, the Fund's Managed Growth Portfolio (a list of potential business investments) has $3 million, and the Money Market Portfolio has $16 million. Together they represent about 2,000 investors. To break even, the Fund must have $40-$50 million. A fund like this isn't considered big, but it's growing. It wouldn't be practical for us to have a social investment fund by itself, because it will be quite awhile before it can support itself, so the Calvert Group is providing a place for the Social Investment Fund to grow. RAIN: What is attracting people to Calvert's Social Investment Fund? What criteria are used to guide investments? PARKER: One thing is that our economic performance is good. We're doing our best to combine social responsibility and positive investment performance. In addition, the fact that we're attempting to not only screen investments so that people's money doesn't go towards something negative or harmful, but also that we're trying to channel money towards positive goals, such as worker participation, management and ownership, equal opportunity, environmentally positive methods of manufacturing, or production of solar technologies. RAIN: What business investments does the Fund specifically avoid? PARKER: We don't invest in manufacturers of nuclear power, weapons systems, or companies active in South Africa. We don't invest in companies that have been cited for pollution, or violated occupational health and safety standards. RAIN: Social investments are often considered high risk and yield low returns. What has been your experience? PARKER: We look for fields that are likely to do well given the market. Many of our social criteria are interactive with high economic performance. For example, if workers have a say in the process of the workplace it's possible that higher productivity will be the result. That's one of the myths we're working against, the
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