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February 11, 2003
National Wildlife Federation and Amnesty International USA Embrace SRI
by William Baue
Two well-known advocacy organizations have made a commitment to lowering the wall between their
program activities and their investments.
SocialFunds.com --
It may surprise some that many nonprofit organizations with social or environmental missions do not
utilize socially responsible investing (SRI) strategies. Two exceptions are the National Wildlife Federation (NWF) and Amnesty International USA. These two advocacy organizations are
meeting the challenges of implementing SRI with innovative solutions that incorporate screening,
community investing, and shareowner action.
"The fiduciary responsibility of maximizing
investment performance while at the same time struggling with how to meet the mission goals creates
a natural tension that is not easily reconciled," said NWF Senior Vice President of Finance and
Administration Lawrence Amon. "People are thinking about the issue, but they are still in the
process of developing solutions and responses to the questions."
Although the SRI
strategies employed by NWF and Amnesty International USA are still in the maturation process, they
demonstrate the kind of ingenuity being applied by other institutional investors that use SRI
strategies.
Neither NWF nor Amnesty applies strict exclusionary screens, but instead they
both implement positive screens that reflect and advance their respective missions.
NWF,
whose portfolio totals about $40 million, employs a "green screen" toward its domestic equity
portfolios. The screen is a best-in-class scorecard generated by Innovest Strategic Value Advisors, a firm that specializes
in assessing companies' environmental performance. This scoring system seeks to reward and
encourage the better environmental performers in all industries and sectors.
NWF
provides its value and growth money managers with the Innovest scores and reports for its portfolio
companies. The managers' instructions are, with all other investment factors being equal, to pick
the better environmental performers. However, NWF does not have a threshold score that companies
must achieve in order to stay in their portfolios.
"Because I'm still holding the
investment managers to their benchmarks, I'm not going to pressure them into making sell
decisions," Mr. Amon told SocialFunds.com. "I'm not focusing on the score of any one company so
much as I'm looking at the overall effect, the aggregate score."
"The idea is, if we have
a poor overall score, we want to increase it over time, and if we have a good score, we want to
hold onto it," explained Mr. Amon. NWF's approach thus looks for improvement over time.
Consistent with its mission, Amnesty International USA applies positive screens that focus on
social issues, such as workers' rights, justice and equality for minorities, and support for such
initiatives as education, health care, affordable housing, and adequate nutrition.
Amnesty USA divides its assets of $25 million into several pools, including two categories of
endowment, three categories of reserves, and pooled income and gift annuity funds.
Amnesty
has only one negative screen: it will not invest in any government issues. An exception is made to
this screen, however, for pooled income and gift annuity funds. The exception must be made to
comply with state laws.
"Some states do require that you invest in government issues,"
said Gary Giscombe, deputy executive director of finance and administration for Amnesty
International USA. "What we do in that case is invest in specific bonds, such as Fannie Mae or
Ginnie Mae, instead of investing in general obligation items."
Fannie Mae (ticker: FNM) and Ginnie Mae create a positive social
impact by supporting housing, whereas general obligation investments could end up in U.S.
Treasuries, which support the Department of Defense.
Amnesty also practices community
investment and shareowner action.
"We invest in some community capital banks, such as
South Shore and Amalgamated Bank of New York," said Mr. Giscombe. "And we started shareholder
activism last year."
Amnesty filed a shareowner resolution along with
Walden Asset Management, the New York City Employees' Retirement
System (NYCERS), and the Interfaith Center on
Corporate Responsibility (ICCR) asking ExxonMobil (XOM) to adopt a human
rights policy.
"The resolution received 6.3 percent of the vote, a very good result for
the first time out the chute," said Mr. Giscombe.
"Rather than being in an adversarial
position, we are working with them," said Mr. Giscombe. "With this experience under our belt, our
shareholder activism will only increase."
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SRI World Group, Inc. All Rights Reserved.
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