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December 20, 1999
Calvert Brings Vanguard into Socially Responsible Arena
by Phillip Johansson
A new socially screened index will be the benchmark for the Vanguard Calvert Social Index Fund, not
to mention 14 million potential new clients.
Calvert Group, a leading provider of socially responsible investment products managing $2.2 billion
($US), announced that it is creating a new socially screened index. The Calvert Social Index will
be an innovative new benchmark, and will provide the basis for the first socially screened mutual
fund offered by Vanguard Group, the second largest mutual fund company in the U.S.
"This will be the broadest-based, most rigorously constructed benchmark in the
marketplace for measuring the performance of large, U.S.-based socially responsible companies,"
says Barbara Krumsiek, President & CEO of Calvert Group. The index will screen stocks for inclusion
from approximately 1,000 of the largest companies in the U.S., resulting in an anticipated
portfolio of about 600 of them.
The Calvert group asserts that their index will be
distinctly different from other socially screened benchmarks, such as the Domini Social Index and
the Citizens Index. The Calvert Social Index will use a consistent passive screening process to
select from a discrete universe of 1,000 stocks, while the Domini and Citizens indexes start by
screening companies in the S&P 500, then include additional companies to reach a desired
distribution of industries.
"There will be no substitution of companies," said Elizabeth
Laurienzo, Director of Corporate Communications at Calvert. "We're not modeling the Calvert Social
Index after any other established index. What we get after applying the screens is what we get."
The Calvert Social Index will include only companies with excellent records and policies
addressing environmental issues, hiring and promoting minorities and women, providing a safe and
healthy workplace, responding to product safety problems, and supporting human rights in overseas
operations. These positive screening criteria will be in addition to avoidance screening of
companies involved with weapons contracting, tobacco, alcohol, gambling, or nuclear power.
But what makes the Calvert Social Index really distinctive is that it will provide the basis
for a new socially responsible equity fund by the Vanguard Group, the nation's second largest
mutual fund company. Vanguard offers a bevy of 103 funds already, and is a leading provider of
company-sponsored retirement plan services, managing more than $525 billion in assets.
Vanguard's announcement that it is planning to launch the Vanguard Calvert Social Index Fund, a
no-load fund that will track the Calvert Social index, will send a clear message to other companies
about the untapped market of socially responsible investors. Their 14 million clients stand to
substantially broaden the horizons for social investing, a giant step toward making socially
screened funds available to more investors.
"Many clients have asked us to offer a fund
with a social orientation for more than a decade," said Vanguard Chairman and Chief Executive
Officer John J. Brennan. "With this index, we will be able to accommodate both our clients and
other investors who consider social criteria in their investment selection."
Group, having been active in socially responsible investing since 1982 and offering more than 26
mutual funds of its own, proved to be an ideal partner for Vanguard's social investing debut.
"Calvert Group is a premier organization in the world of social investing," added Brennan, "and we
are pleased that they will develop an index that coincides with our philosophical preference for
In addition to Vanguard, Calvert Group will offer its own new fund
tracking the new Calvert Social Index, distributed through its traditional third party distribution
system. Calvert plans to release the list of component companies in the index in February 2000,
available through its Web site.
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