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December 30, 1999
The Five Biggest Social Investing Stories of 1999
In the growing field of socially responsible investing, here's five news items that topped the
charts and made 1999 a year to remember.
SocialFunds.com --
When all the tinsel is put away, when all Y2K paranoia is set aside for another millennium, how
will social investors reflect on the year 1999? "This has been a banner year in many respects,"
said Jay Falk, President of SocialFunds.com, a personal finance site devoted to responsible
investing. Five top news stories illustrate some of most noteworthy changes in social investing.
 1. Calvert-Vanguard Partnership: In
December Calvert Group, a leading provider of socially responsible mutual funds, announced a
partnership with Vanguard Group, the second largest mutual fund company in the U.S. Calvert will
launch the Calvert Social Index, a new broad-based index of the largest companies in the U.S. that
will be the benchmark for the first socially screened mutual fund offered by Vanguard.
Calvert Group also plans to develop a fund based on the index. But Vanguard's launch of the
Vanguard Calvert Social Index Fund is sure to send a clear message to other companies about the
untapped market of socially responsible investors. This move stands to substantially broaden the
horizons for social investing, a giant step toward making socially screened funds available to more
investors.
"The Calvert-Vanguard announcement is a significant event in the mainstreaming
social investing," said Falk. "With Vanguard's customer base of 14 million people, I'm sure other
mutual fund companies will be watching this new fund with great interest. We will likely all look
back at this as a pivotal point in the broader acceptance social investing," he added.
2.
New Dow Jones Index: In September the world's leading global index provider, Dow Jones & Company,
launched the world's first global equity index for companies committed to social and environmental
issues. The Dow Jones Sustainability Group Index (DJSGI) brought a new high profile to the growing
market demand for socially responsible investments, and could prove to be a valuable tool for
investors.
The DJSGI was created and is maintained through a partnership with
Sustainability Asset Management (SAM), a Zurich-based consultant and pioneer in corporate
sustainability assessment. Based on a systematic multi-factorial methodology for identifying
leading sustainability-driven companies, the DJSGI consists of 225 securities selected from the
largest 2000 in the familiar Dow Jones Global Index, representing 73 industry groups in 33
countries.
3. The WTO Ministerial Meeting: In November/December the Seattle meeting of
the World Trade Organization (WTO), an international body designated to remove barriers to trade,
drew heated debate and 40 thousand protesters over the environmental and social costs of corporate
globalization. While not strictly an investing story, the WTO debacle hinged on many of the same
concerns espoused by socially responsible investors, such as labor and human rights, environmental
protection, and local and national sovereignty.
In the end there was more consensus
between the protesters outside than delegates inside the WTO meetings. The final collapse of the
meeting, under pressure from protesters and the conflicting interests of member countries, may be a
turning point for the way multinational corporations do business in the world. President Clinton's
attempts to include human rights and environmental protection in the agenda may have fallen flat on
their face, but the public demand for these considerations will not easily be overlooked in future
negotiations.
"The failure of the WTO meetings illustrated that corporate responsibility
issues must play a role in future negotiations," said Falk. "Social investors have made great
strides in making companies aware of these issues, but WTO brought them to the front burner, on
full blast."
4. Eleven New Mutual Funds: Looming large over the year was a flurry of new
mutual funds devoted to social and environmental goals. Walden Asset Management introduced its
first four funds, including a balanced fund, an equity fund, and two index funds. Progressive
Investment Management of Portland, Oregon, launched Portfolio 21, a global mutual fund devoted to
an environmental sustainability, and Pax World Funds offered the first socially screened, high
yield corporate bond fund.
Other new mutual funds in 1999 include the Reinvest in South
Africa Fund, investing in stocks on the Johannesburg Stock Exchange, the Avalon Water Fund, and the
Citizens Small Cap Index Fund. Finally, Friends Ivory & Sime, the largest manager of ethical
investments in the UK, launched both a domestic and an international mutual fund here in the U.S.
5. Community Investing Tax Credit: The world of community investing does not usually
generate big headlines, being more of an earthy, person-to-person enterprise, but President
Clinton's proposal to include a New Markets Tax Credit in the FY2000 budget promises big benefits
for low- and moderate-income communities. The president proposed a tax credit to investors worth 25
percent of the amount invested, potentially spurring $6 billion in private sector investment for
business growth in these communities.
For instance, during President Clinton's
high-profile "poverty tour" last summer to advance his New Markets Initiative, he visited South
Phoenix, Arizona, where Mennonite Mutual Aid (MMA) invests targeted community development funds.
The president's initiative brought nation-wide attention to the economic need and opportunities in
many communities, and stands to offer a win-win situation for both communities and investors in
funds like MMA.
These events of 1999 boldly highlight the most recent developments in
socially responsible investing, a vibrant and expanding component of the finance industry. A recent
report by the Social Investment Forum, a nonprofit professional association, confirms that socially
responsible investing is now firmly rooted and growing splendidly in the U.S.
"Social
investing has come into its own after its slow evolution through the 80's and early 90's," said
Falk. "Community investing keeps growing, shareholder activism is gaining more and more
credibility, and socially screened mutual funds have consistently proven that they can perform.
Having come so far, one can only expect this trend to continue and produce more exciting news over
the next year."
©
SRI World Group, Inc. All Rights Reserved.
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