Doing well by doing good
Socially responsible investors look beyond a company's bottom line
BY ROBYN DAVIS SEKULA
Presbyterians Today | December 2004
Carolyn Cromer bikes and uses public transportation as one way of living out her Christian faith.
She believes cutting down on harmful auto emissions can help save the world for future generations. So it made sense to her keep her money away from companies that go against her environmentally responsible principles.
She invests her money in what are called "socially responsible" mutual funds. But she is puzzled about which ones are best. And she doesn't have time to research individual companies.
"As an individual investor with a little pot of money, I am trying to put it somewhere that I feel good about," says Cromer, a member of Highland Presbyterian Church in Louisville, Kentucky. "It's very hard ... It's not my hobby. I don't spend a lot of time on this.”
A growing number of options
For investors like Cromer, choosing responsibly from among the variety of options for putting money away toward retirement and other future goals can be confusing. But it doesn't have to be. In fact, the past decade has seen the growth of some uniquely Presbyterian investment options.
Socially responsible investors are usually made up of two types of people, says Jack A. Brill, founder of Natural Investment Services Inc., and author of Investing with Your Values (Bloomberg Press, 1999), who has been tracking the socially responsible investing industry for 20 years.
The first type of investor screens for companies that violate certain principles, such as pro-environment, anti-smoking, anti-guns or anti-gambling. The second type invests in companies that take the money and loan it out for mission or benevolent causes. Some socially responsible investors do both.
Corporate scandals making headlines in recent years have heightened the demand for socially responsible investment options, Brill says. In 1990, when he wrote his first book, Brill noted there were only 12 mutual funds screening for such concerns as spotty environmental records, promotion of gambling, manufacture of cigarettes and weapons. Today hundreds of mutual funds address these and other ethical concerns.
Can we make money, too?
Investors who are putting money into mutual funds with socially responsible screens are even finding their investments prospering. Last year 71 percent of the largest socially responsible mutual funds got top marks from Morningstar or Lipper, mutual fund rating companies, reports the Social Investment Forum. Of 21 screened funds with $100 million or more in assets, 15 received top performance marks from one or both rating companies.
The strong performance has helped lend credence to socially responsible investing, Brill says. "More and more people are waking up to the fact that they can and should be investing with their personal values.“
Presbyterians have several investment options that can help them grow financially while assisting the church and its mission. “Religious-based funds are growing, because the investment becomes a symbol of your faith journey and supports the values of the church,” says Jan Rau Walther, senior vice president of marketing for the Presbyterian Church (U.S.A.) Foundation, which sponsors a group of screened mutual funds called New Covenant Funds.
Investors who want to see their money help others may do so through Oikocredit, an international Christian credit group, which makes loans to organizations in Third World nations.
For example, Oikocredit might loan money to a small business that wants to buy equipment to print T-shirts in Zimbabwe, or to a vendor who wants to build a stall in a local market to sell hand-made craft items. “Providing credit to someone is much more empowering than providing gifts and grants,” says Gary Cook, associate director for global service and witness in the PCUSA's Worldwide Ministries Division. "It's an even relationship. There is an expectation of payback and there is trust on both sides. But you are also providing a means for people to help themselves."
In a program that bears fruit a little closer to home, the Presbyterian Church (U.S.A.) Investment and Loan Program Inc. (PILP) takes money from investors and loans it for capital improvement projects, such as new church buildings. "Our mission is to help with church growth, wherever it might be,” says Jim Rissler, senior vice president of the program.
PILP had $48 million in assets at the end of the second quarter of 2004, Rissler says, with $42 million of it loaned out and commitments to loan out another $5 million.
The church's role
To keep its own investments socially responsible, the Presbyterian Church (U.S.A.) has a dedicated staff person who spends much of his time scouring annual reports, news stories and other information about companies in which the denomination invests. Bill Somplatsky-Jarman, associate for Mission Responsibility through Investment, works with a committee of elected Presbyterians to oversee church investments.
When the church owns stock in a particular company and wants to see something at the company change, Somplatsky-Jarman files a resolution with the company seeking a vote at its annual meeting. He filed shareholder resolutions for the 2004 annual reports of about 10 companies. Shareholder resolutions call for a matter to come before company shareholders for a vote, but often it doesn't come to that, Somplatsky-Jarman says.
Such was the case with energy giant Cinergy Corp., based in Cincinnati, Ohio. A number of organizations, including the PCUSA, filed a shareholder resolution pushing the company to work toward reducing emissions that may be contributing to global warming. "That was a success story,” Somplatsky-Jarman says. "We reached an agreement and withdrew the resolution."
Somplatsky-Jarman also filed a shareholder resolution on behalf of the PCUSA with CVS, the drug store chain, seeking information on the ethnic makeup of its workforce. The drug store chain responded by providing some data, and agreeing to meet and talk about other concerns expressed by the church. So the PCUSA withdrew the resolution. Such measures are an integral part of managing the church's money, Somplatsky-Jarman says. "Our financial investments should be consistent with our values so that there is an integrity to the church's witness."
Brill, the California-based author and long-time investment counselor, agrees that it's important for investors, especially those with strong religious convictions, to be sure their values dovetail with their portfolios.
It doesn't make sense, he says, for a person "to go to church on Sunday and pray and then on Monday go out and violate the teachings of the church" by investing in companies whose products or practices are antithetical to Christian faith.
It's not necessarily an easy witness. When the 216th General Assembly of the PCUSA voted last summer to "initiate a process of phased, selective divestment in multinational corporations operating in Israel, in accordance with General Assembly policy on social investing” a firestorm of protest resulted. The action accompanied a resolution restating past General Assembly stands, including calls for an end to the Israeli occupation of Palestinian lands, mutual security guarantees, a negotiated, equitable peace and an end to attacks on innocent people by both sides.
In typical Presbyterian fashion divestment, if any is approved by the 2006 General Assembly, will not come until after much study by the Mission Responsibility through Investment team. But clearly someone cares whether the PCUSA backs up its words with action.
Put your money where your faith is (SIDEBAR)
Here are several options for Presbyterians to earn interest while investing their money through the church:
• New Covenant Funds-These four professionally managed mutual funds (Growth Fund, Income Fund, Balanced Growth Fund and Balanced Income Fund) are sponsored by the Presbyterian Church (U.S.A.) Foundation. The funds steer clear of companies that make money from tobacco, alcohol, gambling and firearms, as well as defense contractors. Minimum investment is $500. For more information see www.newcovenantfunds.com or calI (877) 835-4531.
• Oikocredit, an international Christian credit organization, makes loans to organizations in Third World nations seeking to improve living conditions through job creation or other similar initiatives. Minimum investment is S1,OOO for a two-year term. Investors can choose what percentage of interest to have paid to them from zero to two percent. Less interest paid to investors means more is available for loans. For more information, see www.pcusa.org/oikocredit.
• Presbyterian Church (U.S.A.) Investment and Loan Program Inc. takes money from investors and loans it for church capital projects, such as building new churches or constructing additions for existing churches. Investors are paid from 1.1 percent annually to 3.9 percent for longer-term notes. Terms of notes are six months to five years. Minimum investment is S500. For more information see www. pcusa.org/pilp or calI (800) 903-7457.
Guidelines for socially responsible investors (BOX)
• Invest in agencies and companies that support your values.
• Use your money to reinvest in your community, for example, to assist with affordable housing, health care, jobs and proper use of land.
• Become an activist shareholder. Try to influence companies to change their policies.
These guidelines are defined by Jack A. Brill, founder of Naturallnvcstment Services Inc., and author of Investing with Your Values (Bloomberg Press, 1999).
Top 5 reasons not to invest (BOX)
A November 2003 survey of religious investors in the United States reveals these top five business ethics concerns:
• Use of sweatshops
• Problems with product safety
• Excessively high CEO pay
• Poor environmental record
• Links to adult entertainment/pornography
SOURCE: Mennonite Mutual Aid
Robyn Davis Sekula is a freelance writer who lives in New Alba1Jy, Ind., and is a member of Highland Presbyterian Church in Louisville, Ky.