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SRI: Socially Responsible Investing

SRI: Socially Responsible Investing

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SRI: Socially Responsible Investing

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  1. 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)

  2. Domini Social Investments The Way You Invest Matters Be part of the solution

  3. 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

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

  5. 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.

  6. CalPERS provides pension fund, healthcare and other retirement services for approximately 1.5 million California public employees California Public Employees’ Retirement System

  7. 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

  8. 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

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

  10. Eurosif A non-profit organization

  11. 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

  12. Eurosif • Assets totaling over 1.665 trillion euros as of December 31, 2007 • Equally 17.5% of Europe's assets

  13. 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.

  14. 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.

  15. PAX World High Yield Fund Korie Lebeda

  16. 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”

  17. 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

  18. 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

  19. 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

  20. 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.

  21. 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.

  22. Negative screens • Nuclear weapons and nuclear energy • Tobacco • Fossil fuel • Animal testing (for non-medical purposes) • Factory farming • Genetically modified organisms ("GMOs") • Agricultural pesticides

  23. Positive screens • Alternative energy • Eco-friendly products • Green technology • Organic / natural food supply • Water solutions • Sustainable development • Community investment

  24. Companies engaged

  25. Location: Vancouver, British Columbia CEO – Kerry Ho Net Assets: $143.75 million

  26. 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.

  27. Mottos and Slogans • “We listen to what a company says, then we analyze what it does.” • We call it return on responsibility.”

  28. Social Screens • Employee relations • Diversity • Environmental commitments • Community relations • Corporate governance and citizenship • Human rights • Sustainable products.

  29. Partners

  30. ChikyuOndankaBoushiKanrenkabu Fund By: Ty Johnston

  31. 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.

  32. 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

  33. 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

  34. 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.

  35. KLD RESEARCH & ANALYTICS, INC “the leading authority on social research and indexes for institutional investors.”

  36. 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.

  37. Socially Responsible Charitable giving Innovative giving Non-US charitable Support for education Support for housing Volunteer programs Labor rights Retirement benefits Health & safety

  38. ControversialBusiness Decisions Companies Involved With & Owned By: Abortion Adult Entertainment Alcohol Contraceptives Firearms Gambling Military Nuclear Power Tobacco

  39. Reasoning Economic Outcome Making Unethical Companies, Ethical Helping Society

  40. 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

  41. 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

  42. 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

  43. 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

  44. 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.

  45. The Epiphany Faith and Family Values 100 Fund. Are you ready for an Epiphany

  46. 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.

  47. 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.

  48. Top 5 holdings. Exxon Mobil (wait what?) Lowe’s McGraw Hill Linear Technology Sysco

  49. From 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

  50. Size and Yield 74 billion average market cap 2.09% average yield.