article: Investing in
a Healthy Economy
by David Wann
co-author
of "Affluenza:
The All-Consuming Epidemic"
author of "The Zen of Gardening"
When medical tests come back that are less than satisfactory, doctors tell us we need to reevaluate our priorities. "More exercise, healthier food, less stress," they say. And when an economy is diagnosed with less-than-satisfactory symptoms like severe habitat destruction, human rights violations, and disturbing levels of substance abuse, it's time to emphasize healthier priorities at the social level.
"Socially responsible investing (SRI)," in which stocks and bonds are screened out for negative qualities and screened in for positive qualities, uses the market to help eliminate social and environmental symptoms, while at the same time invigorating individual investment portfolios.
Golden, Colorado financial planner Virginia Moran explains, "SRI can mean different things to different people. For example, links to tobacco, alcohol and gambling cause some of my clients to screen out certain companies, while others want to support companies that take strong stands on issues like the environment, gay rights, or a narrowing of the salary gap between executives and employees."
She adds, "Screened investments have increased 36% in the last two years, to pass the $2 trillion dollar mark in 2001. What that means is that one in eight dollars invested in U.S. markets is now screened for at least one social or ethical value, and in many cases, multiple values."
Essentially, SRI holds to a wider definition of "return on investment" than conventional investors are used to. Its mission is to deliver sustainable values not only to shareholders but also society at large. Enlightened self-interest, some might say, since every individual benefits from a strong, healthy society, and every individual is dependent on "natural capital" in the form of resources like clean air and water, food, recreation, and natural waste-absorbing capacities.
Certainly, the vital
signs of indexes like the Dow Jones and NASDAQ are in our faces everywhere
we go. (Now they're up, now they're down!) But for something a little
more refreshing, go to the Socialfunds.com website, where Calvert Social
Index (CALVIN) and Domini Social Index (DSI 400) are tracked, right along
with the conventional indexes. CALVIN assesses the 1,000 largest U.S.
companies for variables like product safety, environment, workplace issues,
international operations/human rights, community relations, and weapons
contracting, then tracks only the "winners" - those that do
well in SRI criteria. Similarly, the DSI 400 tracks equities which are
pre-screened for criteria such as "no links to tobacco" and
"endorsement of environmental principles." "On a total
return basis, the DSI 400 has outperformed the S&P 500 since its inception
in 1990," Virginia points out.
Many of the companies listed in the DSI 400 are familiar to us -- with
names like Coca-Cola, Cisco Systems, Merck & Company, and Ben and
Jerry's. Yet an exploration of the socialfunds.com site will also provide
info about the new kids on the block, who also happen to score very high
on social screens. Companies like NASDAQ-listed Astropower, a solar panel
manufacturer with 50% growth annually over the last 5 years, and Capstone,
maker of small-scale "microturbines" that supply end-of-the-line
power for self-sufficient buildings and neighborhoods.
Until recently, the idea of ethical investing seemed overly altruistic
to many people. After all, why sacrifice retirement investments to "do
the right thing," especially when nobody actually sees you doing
it? However, in an economy that increasingly rewards greenness, innovation
and efficiency, the right thing is often a profitable thing. "One
of the reasons the SRI investments are thriving is that a lot of waste,
liability, and pollution are screened out," says Virginia. "Companies
that don't have EPA citations or labor trouble have a leg up in profitability."
Another element of SRI is shareholder activism. An individual or organization
that owns $2,000 worth of stock in a company is empowered (by the Securities
and Exchange Commission) to introduce resolutions that advocate changes
in corporate behavior. In 2001, 158 resolutions were proposed on issues
ranging from racial and gender diversity on corporate boards to multinational
labor practices in foreign countries. If a resolution receives more than
10% of the proxy vote, it can be resubmitted the following year -- a corporate
toothache that won't go away until it's fixed. This year, according to
investment analyst William Baue, 28% of the proposals exceeded that figure.
Sometimes shareholder advocacy results in stunning victories for SRI advocates,
as when Home Depot agreed in 1999 to discontinue harvesting old growth
timber, and General Electric agreed in 2000 to champion new standards
for clothes washers that will be 35% more efficient by 2007.
What's the bottom line? Maybe it's this: beneath the economic bottom line,
there's a natural, vibrant, living economy that needs to be taken care
of, or eventually none of our stocks will be worth the paper they're printed
on.
For more information about SRI, read publications like Green Money Journal
and Business Ethics Magazine. To contact Virginia Moran and other SRI
advisers, look in the Social Investment Forum website directory, at socialinvest.org.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
David Wann is co-author of Affluenza: The All-Consuming
Epidemic and author of The Zen of Gardening. He lives and gardens
in a cohousing community in Golden, CO that he helped design. Contact
him at wanndavejr@cs.com."
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