Brattleboro, VT - SRI World Group, Inc., the leading
objective authority on socially responsible investing, announced through its website
SocialFunds.com the top social investing stories of 2002. They were: (1) Substantial corporate
governance reforms; (2) SRI mutual funds matched non-SRI peer funds in performance; (3) Community
investments outperformed equity funds for the third year in a row; (4) A shareowner resolution on
equal employment opportunity policy got results after 10 years of corporate opposition; and (5)
Government mandates for transparency shaped international momentum for SRI.
welcomed measures to improve corporate governance, such as the Sarbanes-Oxley Act and the new
listing standards imposed by the New York Stock Exchange (NYSE). The measures aim to enhance
auditor independence, corporate responsibility, financial disclosure, and corporate accountability
while guarding against conflicts of interest.
"Out of tragedy sometimes comes good, as
the corporate governance debacles finally inspired legislators and regulators to enact reforms that
are welcomed by all investors," said SRI World Group President Jay Falk.
socially responsible investment (SRI) community applauded these reforms, it is continuing to point
out that such reforms do not go far enough to solve some pervasive corporate governance problems.
Both the proposed NYSE standards and the Sarbanes-Oxley Act retain loopholes or even remain silent
on such vital issues as abolishing staggered boards, expensing stock options, and disclosing
corporate environmental and social liabilities.
The next top story was the strong SRI
mutual fund performance in a market where the S&P 500 was down 23.4% for the year. In an analysis
of the mutual funds tracked on SocialFunds.com, SRI World Group found that 32 of 62 SRI funds had
returns that beat more than half of their peer non-SRI mutual funds in 2002. Regarding three-year
performance results, 30 of 52 SRI funds topped more than half of their peer non-SRI mutual funds.
Social investors also demonstrated to mutual fund companies in 2002 that they are an
attractive market sector because they are longer term investors. According to an analysis of Lipper
data commissioned by the Social Investment Forum, between January and June 2002 there was a net
outflow from U.S. diversified funds of approximately 9.5 percent of total assets. However, the
opposite occurred with SRI mutual funds. According to that same analysis of Lipper data, SRI mutual
funds experienced a net inflow of 3 percent during the same time period.
investors tend to be 'sticky'-in other words, they trust that the financial, social, and
environmental strengths of their investments will create long-term value, even when bearish
short-term prospects scare other investors," said Mr. Falk.
The third top story was the
relative performance of community investments. In a year that saw the stock market drop for the
third year in a row and 1-year CD rates fall below 2 percent, investors who had assets allocated to
community investing looked very wise. Many community investments offered investors a 2 or 3 percent
return or possibly higher. At the same time, since community investments have such a good payback
rate, those who participated in community investing in 2002 avoided the minefield of the corporate
The California Public Employees' Retirement System (CalPERS) made community
investing pay not only in 2002 but throughout the whole decade. Last month CalPERS, the nation's
largest pension fund (with more than $132 billion in assets), announced that its Single Family
Housing Program has been its highest returning investment category. The program has returned more
than 20 percent annually since its inception in 1992, earning CalPERS a total of over $500 million.
The highest shareowner vote ever on a social policy resolution was the year's fourth top
story. At the CBRL Group (the parent company of Cracker Barrel) annual meeting, 58 percent of
voting shareowners supported a resolution that called for the adoption of an equal employment
opportunity (EEO) policy that bars sexual orientation discrimination. Cracker Barrel's decade-long
opposition to the policy finally crumbled because of shareowner pressure.
the top five social investing stories was the adoption of SRI principles by legislators in France
and Australia. In February, the French Parliament published its new economic regulations (nouvelles
régulations économiques, or NRE). Besides increasing the transparency of take-over bids, improving
corporate governance, and fortifying antitrust regulation, the NRE also require companies to report
on their social and environmental performance.
In March, the Australian government passed
the Financial Services Reform Act. The act requires investment firms to report on the extent to
which they take into account ethical, environmental, and social considerations. The law does not
mandate SRI practice, but it requires that investment firms who claim to practice SRI must disclose
For more details about the top social investing news stories of 2002,
visit SocialFunds.com at: www.socialfunds.com/news/article.cgi/article1005.html
SRI World Group, Inc. is a financial information and consulting services firm. The
company operates SocialFunds.com and InstitutionalShareowner.com, which serve individual and
institutional investors, respectively. SRI World Group is a news, research, and consulting firm
that advises clients regarding sustainability investment issues and corporate responsibility
practices. It also operates CSRwire, a globally syndicated newswire service that specializes in
distributing corporate social responsibility reports and press releases.