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December 29, 2000
Five Top Social Investing Stories of 2000
The end-of-the-year news roundup reflects socially responsible investing's continued march into the
mainstream.
SocialFunds.com --
Whether you believe it marked the beginning of the 21st century or not, 2000 was yet another banner
year for socially responsible investing. "There were some interesting developments that in many
respects extended the reach of social investing," said Jay Falk, President of SocialFunds.com, a
website that specializes in empowering social investors. Those developments are illustrated in the
following five top news stories.
 1. Shareholder Activism Regarding
Genetically Engineered Food: This year, 22 food and agricultural product companies received
shareholder resolutions on the issue of genetically engineered (GE) food, making it the fastest
growing corporate responsibility issue in the history of shareholder activism. Most of the
resolutions concerned labeling or feasibility studies and included some big names, such as
McDonalds, Coca-Cola, Pepsico, Philip Morris and Quaker Oats.
"The fact that one issue
generated 22 shareholder resolutions is extraordinary," said Falk. "Given the recent growth in
shareholder activism, though, I don't think the record will stand for long," he added.
2.
Environmental Group Involvement in Shareholder Activism: This year saw environmental groups
stepping into a new role, that of shareholder activist. Perhaps most notable was Greenpeace's
announcement in March that it had acquired 4,400 shares of Royal Dutch/Shell. Also notable was a
coalition of 11 environmental groups endorsing a slate of 85 social and environmental shareholder
resolutions. This is the second year that the coalition, led by the Friends of the Earth (FOE),
acted to support shareholder resolutions.
Falk believes more environmental group
involvement is good for the social investing industry as a whole. "I think all social investors
welcome increased shareholder activism from environmental groups. We are all aiming to advance
corporate responsibility," he commented.
3. New Indexes: Three new indexes were
introduced in the U.S. in 2000, as the industry busily attempted to fill the need for more
benchmarks. A new index was also launched in Canada.
While January is usually associated
with white, it was green in terms of new indexes. Light Green Advisors (LGA), a Seattle-based
investment adviser, introduced the Eco*Index that month. This broadly diversified, passively
managed index is based on the Standard & Poors (S&P) 500, comprising 313 companies with
above-average environmental performance from all industry groups except tobacco.
A few
months later, Calvert Group launched the Calvert Social Index, which consists of 468 companies
weighted on a market capitalization basis. Firms included in the index were objectively screened
from a base of approximately 1,000 of the largest companies in the United States.
In
December, KLD & Co., Inc. (KLD) celebrated its 10th anniversary by introducing the Broad Market
Social Index (BMSI). The BMSI covers approximately 2300 companies, giving it the broadest market
coverage of any current social index.
In Canada, the Jantzi Social Index (JSI) was
launched by Michael Jantzi Research Associates. JSI is a socially screened, market
capitalization-weighted common stock index modeled on the S&P/TSE 60.
4. New Mutual
Funds: The eight social mutual funds introduced in 2000 imply that specialization is starting to
hit the social investing industry. A new bond fund was introduced, and new funds were launched in
Canada and Europe.
Perhaps the year's most interesting fund was introduced in January,
when Salomon Brothers Asset Management launched The Humane Equity Fund. Using guidelines
established by The Humane Society of the United States, the fund is designed to avoid investing in
companies that directly harm animals and their habitats.
Friends Ivory & Sime, a
London-based investing firm, introduced two funds for the U.S. market the next month. The two
no-load mutual funds are the Friends Ivory Social Awareness Fund (FISWX) and the Friends Ivory
European Social Awareness Fund (FIESX).
Spring saw a flurry of new funds. TIAA-CREF
expanded its offerings by introducing the Social Choice Equity Mutual Fund, and also launched a
socially responsible variable annuity, the Social Choice Equity Account. Calvert Group made news
by introducing the first socially screened technology fund, the Calvert Technology Fund. And The
Vanguard Group launched its much-awaited Vanguard Calvert Social Index Fund, which tracks the
performance of the Calvert Social Index.
The number of faith-based funds continued to
grow with the unveiling of The Dow Jones Islamic Index Fund, which tracks the Dow Jones Islamic
Market USA Index. The fund is managed by Allied Asset Advisors Funds, an investment advisor based
in Burr Ridge, Illinois
Trillium Asset Management launched its first mutual fund in
September, the Advocacy Fund. The fund invests in companies that Trillium believes are making a
positive contribution to society and the economy, and Trillium promotes greater social
responsibility in those companies by engaging in shareholder activism.
A new bond fund was
also introduced. In June, Domini introduced the Domini Social Bond Fund, which is sub-managed by
South Shore Bank, the nation's oldest and largest community development bank. The Domini Social
Bond Fund commits up to 10 percent of fund assets to community development.
A slew of
social mutual funds were also introduced in Canada over the year. Ethical Funds launched four new
funds, the Ethical Canadian Equity Fund, the Ethical Global Equity Fund, the Ethical RSP Global
Equity Fund and the Ethical RSP North American Equity Fund. Acuity Funds Ltd. expanded its line in
the social investment market with two new funds, the Acuity Social Values Canadian Equity Fund and
the Acuity Social Values Global Equity Fund.
In Europe, The Sustainable World Fund was
launched by ABN-AMRO, a leading international bank based in Amsterdam. The $100 million fund
combines ABN-AMRO's stock-selection expertise with the specialized environmental research
methodology of Innovest Strategic Value Advisors, a New York-based investment advisory firm.
5. Community Investing: The top story in community investing this year was the State of
California's plans to infuse state treasury funds in emerging markets in California. In a report
entitled "The Double Bottom Line: Investing in California's Emerging Markets," California State
Treasurer Philip Angelides listed five broad areas where he plans to mobilize $8 billion to broaden
economic opportunity for Californians.
The first and second areas focus on publicly
managed investment funds. For example, the state's investment pools and public pension funds,
CalPERS and CalSTRS, representing more than $300 billion, will commit 2 percent of their portfolios
to domestic emerging markets in the next three years.
The third area involves utilizing
public assets to leverage capital investment in economically struggling communities. For example,
the California Pollution Control Financing Authority, chaired by Angelides, is developing a new
program to attract $400 million in private investment to clean up and redevelop "brownfield" sites.
In the fourth area, California will enter partnerships with the private sector to fund
research on potential domestic emerging markets. Finally, the state will engage the private sector
to join in community investments that will create wealth in a broader context.
Yet again
the trailblazer, California may find this initiative to be an effective tool for supporting
community development. Certainly other states will be watching the results with great interest.
These standout events of 2000 indicate that socially responsible investing is striking a
chord with an increasing number of investors and financial advisers. Likely future developments in
community investing, shareholder activism and socially screened investing should make 2001 just as
momentous.
"Having gained more and more credibility, I expect to see continued growth in
all aspects of social investing over the next year," said Falk. "I am very much looking forward to
another 12 months of exciting news."
©
SRI World Group, Inc. All Rights Reserved.
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