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SRI: Socially Responsible Investing. This is a collection of the presentations on SRI funds and forums from the 11:00 class in Fall 2008 for Business 356 (Business Ethics). Domini Social Investments. The Way You Invest Matters Be part of the solution. domini.com. Domini. 1980- Stockbroker

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sri socially responsible investing

SRI: Socially Responsible Investing

This is a collection of the presentations on SRI funds and forums from the 11:00 class in Fall 2008 for Business 356 (Business Ethics)

domini social investments

Domini Social Investments

The Way You Invest Matters

Be part of the solution

domini.com

domini
Domini
  • 1980- Stockbroker
  • 1989- Begins work with Peter Kinder and Steve Lydenber on Domini 400 Social Index
  • 1990- Launches Domini 400
  • 1991- Created Domini Social Equity Fund

domini.com

domini4
Domini
  • Engaging companies on global warming, sweatshop labor, and product safety
  • Bringing new voices to the table.
  • Redefining corporate America’s bottom line.

domini.com

domini5
Domini
  • Each of Domini’s stock funds is actively managed according to an innovative strategy of strengths of Domini Social Investments
  • Responsible for the development and application of the Funds’ social and environmental standards.
calpers

CalPERS

provides pension fund, healthcare and other retirement services for approximately 1.5 million California public employees

California Public Employees’ Retirement System

Calpers.ca.gov

calpers7
CalPERS
  • $235.9 billion worth of stock, bonds, funds, private equity and real estate as of August 2008
  • Largest pension fund in the United States
  • Provides benefits to all state government employees and, by contract, to local agency and school employees.
  • 3rd Largest purchaser of employee health benefits in the United States

Wikipedia.org

calpers8
CalPERS
  • Calls for reform in executive compensation, especially Golden Parachutes
  • Sued the NYSE over allegations that their specialists (floor workers) engage in practices which hurt investors
  • Banned investment of its funds in nine companies that do business in Sudan until the government of that country halts ongoing genocide

Wikipedia.org

calpers9
CalPERS
  • Accused of being politically motivated due to the fact Democrats control the board
  • Removal of President
  • Investment in CDOs
  • Other Shareholder Activism

Wikipedia.org

eurosif

Eurosif

A non-profit organization

eurosif11
Eurosif
  • A member affiliates in 14 different countries
  • Affiliates include pension funds, financial service providers, academic institutes, research associations and NGO's
  • Started in 1901
  • Executive board made up of 5 members lead by Matt Christensen
eurosif12
Eurosif
  • Assets totaling over 1.665 trillion euros as of December 31, 2007
  • Equally 17.5% of Europe's assets
eurosif13
Eurosif
  • They have noticed what Europe’s growth is driven by:
    • there’s an increasing demand from institutional investors.
    • there’s a further mainstreaming of ESG considerations into traditional financial services.
    • External pressures and finally a rising interest from individuals and specifically wealthy individuals.
eurosif14
Eurosif
  • They segment the SRI into 2 different tangents Broad SRI and Core SRI
  • Broad SRI is an estimated worth of 2.154 trillion euro's and Core SRI is worth an estimated 5.12 trillion euro's
    • Broad SRI - represents the more mainstreaming of SRI and emphasizes the growing interest
    • Core SRI - consists of extensive screening strategies systematically impacting portfolio construction and often implying a values-based approach.
pax world high yield fund16
PAX World High Yield Fund
  • Description:
    • Inception: Oct. 8, 1999
    • CEO is Joe Keefe, Lead Manager is Mary V. Austin
    • Account Min. = $250
    • Reinvestment Min. = $50
    • “Seeks high current income and capital appreciation”
pax world high yield fund17
PAX World High Yield Fund
  • Social Screens
    • Tobacco= No investment
    • Gambling, defense & weapons, alcohol, and animal testing= Restrictive investments
    • Products & services, the environment, human rights, labor relations, employment & equity, and community= Positive investments
pax world high yield fund18
PAX World High Yield Fund
  • Do’s (would do business with)
    • Companies with similar social missions:
      • Promote quality of life (environment & community)
      • Encourage diversity
      • Policies/practices with employees & human rights
      • Examples: Levis Strauss, Blockbuster
  • Don’ts (would not do business with)
    • Marketers of irresponsible alcohol consumption
    • Major manufacturers of weapons
    • Casinos
    • Companies that use animal testing
      • Examples: Certain make-up and hair products
pax world high yield fund19
PAX World High Yield Fund
  • Recommendation
    • Based solely on Social Responsibility & Benefit
      • Recommend to self: Yes
      • Recommend to others: Yes
        • $500,000 settlement with SEC-cleared name of charges of violating investment guidelines
        • Social Responsibility = big priority
green century fund

Green Century Fund

Environmentally responsible mutual funds founded by nonprofit advocacy organizations. The Balanced Fund invests in the stocks and bonds of companies with clean environmental records.

origen philosophy
Origen + Philosophy
  • Founded 1991
  • provide two mutual funds for those who wish to align their investments with their environmental values
  • use shareholder advocacy to seek to place direct pressure on corporations to change their practices to protect the environment
  • dedicate GCCM's profits to advocacy organizations who work for public policies that help create a sustainable economy.
negative screens
Negative screens
  • Nuclear weapons and nuclear energy
  • Tobacco
  • Fossil fuel
  • Animal testing (for non-medical purposes)
  • Factory farming
  • Genetically modified organisms ("GMOs")
  • Agricultural pesticides
positive screens
Positive screens
  • Alternative energy
  • Eco-friendly products
  • Green technology
  • Organic / natural food supply
  • Water solutions
  • Sustainable development
  • Community investment
location vancouver british columbia ceo kerry ho net assets 143 75 million
Location: Vancouver, British Columbia

CEO – Kerry Ho

Net Assets: $143.75 million

company mission
Company Mission
  • To help Canadian investors build wealth through enhanced investment returns.
  • Before they invest, Inhance Investment listens to company management, researches economic trends, and crunches the numbers.
  • The thing that separates them from other businesses is that they incorporate environmental, social, and governance criteria into their analysis.
    • They look at how companies behave, and solely invest in those that have compelling growth prospects, and progressive and sustainable business practices needing to keep growing in the future.
mottos and slogans
Mottos and Slogans
  • “We listen to what a company says, then we analyze what it does.”
  • We call it return on responsibility.”
social screens
Social Screens
  • Employee relations
  • Diversity
  • Environmental commitments
  • Community relations
  • Corporate governance and citizenship
  • Human rights
  • Sustainable products.
ownership
Ownership

Nicknamed “Chikyuryoku” is started by Shinko ITM and teamed with KLD Research and Analytics to create an index fund for socially responsible investors in Japan.

Chikyuryoku fund is translated as “Global Warming Prevention Equity Fund”

The fund is associated with the GC100 Index started by KLD.

origin
Origin

The Chikyuryoku Fund began on June 5, 2006 with its launch coming on June 30, 2006.

Saw a promising market with the rise of the GC100 Index

Original investors in Japan are very environmentally concerned and wanted to prepare for new energy systems

the market
The Market

Investors saw a very profitable market available through the GC100 Index and the Chikyuryoku Fund.

More stable market to invest in than other volatile markets like the renewable energies.

Fund has become successful due to equal-weighted strategies to accommodate big and small companies to have an level playing field in the market.

10 million invested over the next three decades

social benefit
Social Benefit

Growing group of Japanese Investors concerned with environmental issues and global warming

Clean energy market to depend less on fossil fuels.

The index has a diverse group of companies leading the way in today’s technology

Profitable Fund with a conscious effort on cleaning up the environment and protecting global warming efforts.

kld research analytics inc

KLD RESEARCH & ANALYTICS, INC

“the leading authority on

social research and indexes

for institutional investors.”

mission
Mission

Provide global research and index products to facilitate the integration of environmental, social and governance factors into the investment process.

Define by services, accountability standards that enable investors, managers and fiduciaries to influence corporate behavior through their investment decisions and share ownership.

Effect through this influence, greater corporate accountability and, ultimately, a more just and sustainable world.

socially responsible
Socially Responsible

Charitable giving

Innovative giving

Non-US charitable

Support for education

Support for housing

Volunteer programs

Labor rights

Retirement benefits

Health & safety

controversial business decisions
ControversialBusiness Decisions

Companies Involved With &

Owned By:

Abortion

Adult Entertainment

Alcohol

Contraceptives

Firearms

Gambling

Military

Nuclear Power

Tobacco

reasoning
Reasoning

Economic Outcome

Making Unethical Companies, Ethical

Helping Society

slide40

Background Information

  • Teachers Insurance and Annuity Association – College Retirement Equities Fund
  • Founded: 1918, lead by Henry S. Pritchett
  • Headquarters: New York City
  • Current CEO: Roger W. Ferguson, Jr.
  • Targets those in the academic, medical, cultural and research fields
slide41

Additional Information

  • Minimum Account: $2,500 initial; $50 automatic investment
  • Minimum IRA: $2,000 initial; $50 automatic investment
  • 86th Largest corporation according to Forbes top 500.
  • $420 Billion in assets as of June 30, 2008
  • Meets the needs of nearly 3.4 million individuals and 15,000 institutions
  • Operates on a nonprofit basis
  • Does outside screening through an independent social investment research firm
slide42

Restricted Investments

Alcohol Restricted investment (by fund policy and by practice). Considers retailers that derive less than 15% of revenue from alcoholic beverages.

Military/Weapons Restricted investment (by fund policy and by practice). Considers firm with less than 2% in sales, less than $50M in contracts, less than $10M nuclear arms.

Environment Proactive investment (by fund policy and by practice). Clean energy, beneficial management systems, pollution prevention and recycling.

Gambling Restricted investment (by fund policy and by practice). Excludes firms whose primary business is providing gambling products or casino management services.

Nuclear Restricted investment (by fund policy and by practice). No investment in utility companies that own interests in nuclear power plants.

Other Restricted investment (by fund policy and by practice). Excludes firms with revenue from the manufacture of firearms, ammunition or more than 15% in sales.

Pornography Restricted investment (by fund policy and by practice). No investment in firms that derive vast majority of revenue from distribution or sale of pornography

Tobacco Restricted investment (by fund policy and by practice). Considers retailers that derive less than 15% of revenue from tobacco products.

Information from Social Investment Forum

slide43

Positive Investments

Community Relations Proactive investment (by fund policy and by practice). Charitable giving, innovative giving, support for education, housing and employee volunteering.

Employment/Equity Proactive investment (by fund policy and by practice). Employee & executive diversity, health & safety, retirement benefits, and work/life benefits.

Environment Proactive investment (by fund policy and by practice). Clean energy, beneficial management systems, pollution prevention and recycling.

Human Rights Proactive investment (by fund policy and by practice). Considered in social screens.

Labor Relations Proactive investment (by fund policy and by practice). U.S. workforce labor rights and relations with indigenous peoples.

Other Proactive investment (by fund policy and by practice). Corporate governance considered with executive pay, transparency, and accountability.

Products/Services Proactive investment (by fund policy and by practice). R&D, innovation, quality and products that benefit the economically disadvantaged.

Information from Social Investment Forum

slide44

Concluding Points

  • TIAA-CREF offers it’s clients only positive investments.
  • Does not profit from customers and surplus is returned to it’s participants
  • Conducts social screening before looking at financial benefit
  • Screening process consist of three stages
    • Stage One: Automatically eliminates companies that fall under restricted
    • investments.
    • Stage Two: compares companies in the categories of positive investments
    • Stage Three: Takes the top performers and takes a final look.
slide46

The Epiphany Faith and Family Values 100 Fund is comprised of the top 100 companies that meet their stringent guidelines based on the teachings of the Catholic Church. This philosophy is based on the U.S. Conference of Catholic Bishops and its sound investment guidelines.

slide47

Their factors for investments are; they will not invest in any company that gives money to planned parenthood or embryonic stem cell research. Any company that manufactures contraceptives are also off the list. A corp. that produces pornographic material or has significant human rights or environmental abuses are out too.

top 5 holdings
Top 5 holdings.

Exxon Mobil (wait what?)

Lowe’s

McGraw Hill

Linear Technology

Sysco

from socialinvest org
From SocialInvest.org

Alcohol Restricted investment

Abortion Specific Products No investment

Animal Testing Investments NOT SCREENED for this concern

Community Relations Investments NOT SCREENED for this concern

Military/Weapons Restricted investment

Employment/Equity Proactive investment

Environment Proactive investment

Gambling Restricted investment

Human Rights Proactive investment

Labor Relations Proactive investment

Tobacco Restricted investment

size and yield
Size and Yield

74 billion average market cap

2.09% average yield.

lkcm aquinas

LKCM Aquinas

Founded 1979

Based in Fort Worth, Texas

Luther King Capital Management

lkcm aquinas52
LKCM Aquinas

Named after St. Thomas Aquinas.

Provides investment management services to religious organizations, employee-benefit plans, endowments, foundations, common trust funds, investment companies and high net-worth individuals.

LKCM is committed to selecting securities based on sound fundamental investing principles and most importantly, Catholic values.

investment philosophy
Investment Philosophy

The investment guidelines set forth by the United States Conference of Catholic Bishops in 2003 serve as a guide in the selection of securities.

Funds are managed with the philosophy that investors should not sacrifice investment performance for their Catholic values.

LKCM utilizes screening services such as the Interfaith Center on Corporate Responsibilities and the Investor Responsibility Research Center.

size and worth
Size and Worth

Category: Equity Large Cap Fund

Minimum Account: $5,000

Minimum IRA: $5,000

Assets: $10 Million

Fund Return: 6.04% year to date

socially responsible investing
Socially Responsible Investing

Based on Catholic stances for controversial issues.

Use screening criteria for the following:

- Shareholder Activism

- Community Investment

- Environment

- Human Rights

- Employment

- Products and Services

citizens income sentinel government securities fund
Citizens Income/Sentinel Government Securities Fund

Merged together on April 4th, 2008

Sentinel Government Securities Fund Inception date: 9-2-1986

Citizens Income inception date: June, 1992

Category: Fixed Income Bond

Min Account=$2,500(acc to Citizens Income)

Min IRA=$1,000(acc to Citizens Income)

slide58
Sentinel’s Philosophy:

Consistency- investment-centric culture in everything they do

Vision- pursuit of investment excellence and dedicated to research teams for investment strategies

Insight- united by the common belief that well defined, repeatable investment processes grounded in fundamental research have the potential to deliver solid, consistent results over time.

social responsible investing according to citizens income
Social Responsible Investing(according to Citizens Income)

No Investment

Alcohol

Gambling

Tobacco

Positive Investment

Product/Services

Environment

Employment/Equality

Labor Relations

Human Rights

Restricted Investment

Defense/Weapon

Animal Testing

citizens income sentinel government securities fund61
Citizens Income/Sentinel Government Securities Fund

Merged together on April 4th, 2008

Sentinel Government Securities Fund Inception date: 9-2-1986

Citizens Income inception date: June, 1992

Category: Fixed Income Bond

Min Account=$2,500(acc to Citizens Income)

Min IRA=$1,000(acc to Citizens Income)

slide62
Sentinel’s Philosophy:

Consistency- investment-centric culture in everything they do

Vision- pursuit of investment excellence and dedicated to research teams for investment strategies

Insight- united by the common belief that well defined, repeatable investment processes grounded in fundamental research have the potential to deliver solid, consistent results over time.

social responsible investing according to citizens income63
Social Responsible Investing(according to Citizens Income)

No Investment

Alcohol

Gambling

Tobacco

Positive Investment

Product/Services

Environment

Employment/Equality

Labor Relations

Human Rights

Restricted Investment

Defense/Weapon

Animal Testing

meritas sri fund

Meritas SRI Fund

http://www.meritas.ca/Asset/iu_images/Meritas_English_Colour.jpg

history of meritas
History of Meritas
  • Owned and managed by Gary Hawton, CFA
  • Based in Cambridge, Ontario, Canada
    • Founded in 2000 by Hawton
  • Specializes in SRI funds
    • Focuses on Screening, Shareholder Advocacy, & Community Investments
screening
Screening
  • Negatively Screens for:
    • Military & weapons contracting
    • Alcohol & Tobacco manufacturing
    • Pornography & Gambling
    • Nuclear power
  • Positively Screens for:
    • International labor standards
    • Environmental impact
    • Employee relations
    • Gender and cultural equity policies
what meritas is looking for
What Meritas is Looking For…
  • Respect the dignity and value of all people.
  • Build a world at peace and free from violence.
  • Internalize a concern for justice in a global society.
  • Exhibit responsible management practices.
  • Support and involve communities.
  • Practice environmental stewardship.
shareholder advocacy
Shareholder Advocacy
  • Guarantees shareholders strong involvement in picking socially conscious funds
  • Posts voting criteria on-line for each firm up for investing
    • Allows both investors and company being invested in ability to see what will happen
    • Gives investors ability to provide input, suggestions
community investing
Community Investing
  • Meritas takes 2% of assets in each portfolio and donates to community
    • Domestic and international donations
  • Meritas feels impact on investors’ portfolios is small, but impact on social responsibility and communities affected is extremely large
the ethical funds company
The Ethical Funds Company

http://www.newcommunitycu.com/assets/img/Ethical%20Funds%20Logo.JPG

history of ethical funds
History of Ethical Funds
  • The Ethical Growth Fund founded in 1986
  • In 1992, the Ethical Funds Company was created and took over the Ethical Growth Fund and created other funds
  • Shared ownership: 50% Provincial Credit Union and 50% Desjardins Group
  • Ethical Funds is a Canadian Investment Company
    • A majority of investments are made to Canadian based companies
screening72
Screening
  • Negatively Screens for:
    • Military and weapons
    • Tobacco
    • Nuclear power facilities
    • Uranium mining
    • Countries supporting racial inequality
  • Positively Screens for:
    • Environment
      • Regulation of emissions, sustainability
    • Stakeholder relations
    • Human rights and security
    • Good labor practices
what ethical funds is looking for
What Ethical Funds is looking for…
  • Companies that are financially sound
  • A concern for sustainability and the environment, having little “adverse impact”
  • Contribution to the local community in positive manner through ethics, governance, and accountability
  • Respect for human rights
    • Fair labor practices, reducing poverty, safe work environment, peaceful conflict resolution
shareholder relations
Shareholder Relations
  • Many funds to choose from
    • Growth, year goal, index, equity, dividend
  • Evaluation through financial analysis
  • High standard of investment in terms of companies that fit the screens
  • Choose sustainable companies resulting in less risk
  • Low $500 minimum
  • Philanthropy and donates to charitable funds
calvert sri funds

Calvert SRI Funds

http://www.unificompanies.com/images/Calvert_color_tag.gif

history of calvert
History of Calvert

Formed in 1976 by D. Wayne Silby and John G. Guffery, Jr

Started SRI in 1982

Based in in Washington D.C.

Specializes in SRI funds

Focuses on Screening, Shareholder Advocacy

Manages over $14 billion in assets

Wide range of funds (i.e. Alternative Energy)

screening77
Screening

Negatively Screens for:

Military & weapons contracting

Alcohol & Tobacco manufacturing

Pornography & Gambling

Positively Screens for:

International labor standards

Human rights

Treatment of indigenous people

Environmental impact/ Energy Conservation and Alternative energy

Employee relations

Gender and cultural equity policies

calvert in action
Calvert in Action

Original board member Muhammad Yunus won 2006 Nobel Peace Prize

First out of South Africa First back in (1982 and 1994)

As of 2006, had donated $25.4 million to community investments

Sudan partnership with Save Darfur and Sudan Divestment taskforce

The Calvert Social Index

Market index of 468 of the largest socially responsible companies

Commonly used by other funds as a benchmark for their performance

socially responsible investment funds

Socially Responsible Investment Funds

By: Seth Sinovic, Maurice Brewer, Tess Reddin

aha facts
AHA Facts
  • Started:

October 1988 for internal use

Went public in 2004

  • Account Minimums:

Individual: $1,000

Institutions: $1,000,000

  • Typically holds 40-60 stocks in a fund
  • Standardized Returns for 1 year: 11% on investments for N shares and I shares (since inception +3%), 14% for Domini 400 (since inception +1.7%)
aha wants to improve
AHA Wants to Improve:
  • Environmental sustainability
  • Corporate governance
  • Human rights
  • Product safety
  • Community relations
  • Employee relations
aha is against
AHA is Against:
  • Tobacco
  • Gambling
  • Weaponry
  • Alcohol
  • Abortion
  • Nuclear power
portfolio 21

Portfolio 21

Portfolio 21 companies seek to prosper in the 21st Century by recognizing environmental sustainability as a fundamental human challenge and a tremendous business opportunity.

portfolio 2185
Portfolio 21

Philosophy

Climate Destabilization=

Economic and Investment Destabilization

Inception Date

Retail Shares September 30, 1999

Institutional Shares March 30, 2007

Account Minimums for Global Equity Mutual Fund

Individual $5000

IRAs $1000

Portfolio 21’s institutional shares

$1,000,000 minimum

investment criteria
Investment Criteria

Uses “The Natural Step” and “Global Footprint Network” to help set evaluation criteria

3 areas of evaluation

- Biotechnology

Rejects companies that engage in biopiracy, non-transparency (no

labeling), human genetic engineering, and agricultural genetic

engineering

- Nuclear

Will not invest in companies that generate a significant proportion (more than 5%) of revenues from nuclear energy business

- Globalization, Human Rights & Social Justice

No investments in companies that have significant business in countries that are state sponsors of terrorism and/or where significant human rights violations or significant labor rights violations occur in company-owned facilities

rejected companies
Rejected Companies

Oracle

Has not enforced sustainability measures in the companies that it has acquired.

Misses market opportunities by not promoting the potential environmental benefits of its products

Deere & Company

Does not direct any funds to the development of non agricultural biofuels

UPS

Less than 1% of fleet vehicles powered by alternative fuels

Others include Bank of America, Lehman Brothers, Goldman Sachs, Wachovia

what is a sovereign wealth fund
What is a Sovereign Wealth Fund ?
  • A Sovereign Wealth Fund (SWF) is a state-owned investment fund composed of financial assets such as stocks, bonds, real estate, or other financial instruments funded by foreign exchange assets.
  • SWFs are typically created when governments have budgetary surpluses and have little or no international debt.
the government pension fund of norway
The Government Pension Fund of Norway

The Petroleum Fund was established in 1990 after a decision by the legislature assembly to counter the effects of the forthcoming decline in income and to smooth out the disrupting effects of highly fluctuating oil prices.

The fund changed name in January 2006 from its previous name The Petroleum Fund of Norway.

It is the largest pension fund in Europe and the second largest in the world with a value of NOK 2.019 billion

the government pension fund of norway90
The Government Pension Fund of Norway
  • Investments have to be in line with the ethical guidelines based on sector and company behavior. The companies that the Fund invests in are closely monitored by a Council of Ethics. If companies are operating in conflict with the guidelines the Fund will consider withdrawal.
  • Several Companies have already been excluded including:
    • Singapore Technologies, Singapore
    • BAE Systems, UK
    • Boeing, US
    • Honeywell, US
    • Wal-Mart Stores Inc, US
    • L-3 Communications, US
ethical guidelines
Ethical Guidelines

The Council of Ethics was established in 2004.

The role of the Council on Ethics is to provide evaluation on whether or not investment in specified companies is inconsistent with the established ethical guidelines.

ethical guidelines and screens
Ethical Guidelines and Screens
  • The Government Pension Fund – Global is an instrument for ensuring that a reasonable portion of the country’s petroleum wealth benefits future generations
  • The Government Pension Fund – Global  should not make investments which constitute an unacceptable risk that the Fund may contribute to unethical acts or omissions, such as violations of fundamental humanitarian principles, serious violations of human rights, gross corruption or severe environmental damages.
  • Investment Screens:
    • Serious or systematic human rights violations, such as murder, torture, deprivation of liberty, forced labour, the worst forms of child labour and other child exploitation
    • Serious violations of individuals’ rights in situations of war or conflict
    • Severe environmental damages
    • Gross corruption
    • Other particularly serious violations of fundamental ethical norms
    • companies from the investment universe that either themselves, or through entities they control, produce weapons that through normal use may violate fundamental humanitarian principles