Socially Responsible Investing

Investments mirror values. Practices and policies of corporations have great impact on all of us: how societies function (or not); how the environment is nurtured (or not); how opportunities are afforded (or not). In a very real way, socially responsible investing (SRI) is work of implementing Vision.

Institutions invest for the benefit of employees or retirees or for the future of the organization. The purpose is for good. Unless there is attention to the actions/products of the investment, however, the investment could be working at cross-purpose of the organization’s values. In awareness of this potential hazard, many institutions adopt ethical screens. These screens exclude investments in industries or companies whose products or manner of operating are contrary to the investor’s values: e.g. manufacturers of abortifacients, weapons, tobacco products or gambling; and pornography. Living values by way of investing is also implemented through exercise of the shareholder voice — proxy voting, engaging companies as shareholders, and also by community investing.

In the United States, faith-based institutional shareholders collaborate through the Interfaith Center on Corporate Responsibility (ICCR). Within ICCR, the issues are organized into the Working Groups of the ICCR: Access to Health Care, Contract Supplier System, Corporate Governance, Enabling Access to Capital, Environmental Justice, Global Warming, Promoting Human Rights, Violence and Militarization of Society, and Water and Food. As of 2009, the Arc of Change, The ICCR Story is available as the first in a new series of podcasts.

Rules for Shareholders

The Securities and Exchange Commission (SEC) governs the rights of shareholders. The particular venue that shareholders use to raise an issue with all other shareholders of a company is the proxy resolution, a statement to the company that requests information or urges a change in company policy. A shareholder must own $2,000.00 worth of stock for a year before submitting the resolution to the company. If the resolution survives all challenges, it appears in the Proxy Statement accompanying the Annual Report. All shareholders receive a ballot for voting to support or oppose the resolution.

According to the SEC, if a resolution receives 3 percent of the vote in the first year of submission, it may be resubmitted. For the second year, 6 percent is required, and for the third, 10 percent. A resolution receiving over 10 percent can always be resubmitted. While 10 percent can never be translated into a majority vote, it allows the filers to keep the social issue before all the shareholders in a very public way — through the proxy statement and through a speech moving the resolution at the shareholder meeting.

Numerous resolutions filed by members of ICCR never reach the proxy ballot, however. If shareholders who have filed the resolution are convinced that the company has moved on the issue, or has committed to study or reconsideration of company policy or practices, they frequently withdraw the resolution.

Shareholders wrestle with questions such as:

  • Has the company moved enough on the issue?
  • Has the company been forthcoming?
  • Are the shareholders giving up too much by withdrawing the resolution?
  • What about the opportunity to inform other shareholders?

There is reflection about strategy and negotiation. Perhaps most important, as with any work of social change, is the effort that it takes to act with integrity without arrogance, with openness without gullibility, with moral conviction without self-righteousness.

Using the Power of the Vote

For the investing world, voting means company proxies. Comparable to the political process: there is no guarantee of victory or satisfaction. Yet shareholder proxies are powerful tools for education and information and, ultimately, for social change. Votes matter.

Shareholder proposals, presented by religious investors, unions, pension funds and individual shareholders, are often bellwethers of corporate responsibility and accountability. Stockholders are asked to support greater transparency regarding (a report) or a policy. Company management usually urges shareholders to oppose these initiatives. The proxy proposal is the tool for getting management’s focus on an issue, and to inform other shareholders regarding the issue.

Success Stories

Desmond Tutu believes in the power of disinvestment. He told members of ICCR that their efforts, urging companies to disinvest from South Africa, were a significant factor in the dismantling of apartheid. Currently, shareholder initiatives on the risk of climate change are receiving high votes, an indication that the broader financial world understands the business case for reducing greenhouse gases. In the area of health, Coca-Cola fully supported a shareholder request for the company’s Board to “review the economic effects of the HIV/AIDS, tuberculosis, and malaria epidemics on the company’s business strategy…”, and the resolution received 97 percent of the vote. Numerous companies now do environmental and social reporting, a direct result of shareholder requests for public accountability.

Not all successes are immediate. Socially responsible investors often are bellwethers to issues that become mainline business concerns, such as the risks from global warming.

Purchasing as Investing

Definitions of “invest” include: to commit money in order to earn a financial return; to make use of for future benefits or advantages; to furnish with power or authority; to grant someone control or authority over; to endow with a quality, infuse; to clothe, adorn.

In today’s world, the first definition of invest predominates. The public has continual reminders about how to invest — the stock market numbers are cited numerous times per day. Not all of the returns on investment, however, show up in the “bottom line” of financial returns. Investing to make use of for future benefits or advantages encompasses taking into considerations other concerns such as workers’ rights, environmental effects, and impacts on local communities.

Not all of us are “investors,” but all of us invest in the future. We encourage certain actions or behavior by naming them as “investments” for the future — education, health, and energy conservation are prime examples. Being conscious of how we already do that is the first step toward increasing that investment capacity. Making deliberate choices with values in mind is the next. A little exploration reveals a wealth of “investment” options. It can be as easy as sitting down for your next cup for coffee.

For coffee and tea drinkers:

  • Equal Exchange, started fifteen years ago, offers fair trade coffees and teas direct from farmer cooperatives, both organic or conventional, regular and decaf.
  • TransFair is the certification program for fair trade, and lists locations for purchasing fair trade coffee and other products in Canada and the United States.

General shopping:

  • The Green Money Journal has several articles on how do be a “green” shopper
  • Real Goods will lead the shopper to options for energy efficient light bulbs, non-toxic cleaning supplies, garden and home furnishings, and organic clothing.


  • Chlorine Free Products Association has a list of sources for certified totally chlorine free (TCF) or processed chlorine free (PCF) office paper and printing and needs.

Energy savers:

  • Purchasing energy conserving appliances and using compact fluorescent bulbs is immediately available.
  • If you are ready for a big-ticket item such as a car, the hybrid automobiles offered by Toyota (Prius), Honda (Insight, Civic Hybrid, Accord Hybrid) and Ford (Escape) use both electric motor and combustion engine, increasing the fuel efficiency and decreasing the emissions.

For those interested in various boycotts, check out Green America’s updated list.

The world of socially responsible investing (SRI) has grown immensely since its beginnings in the early 1970s. It is estimated that one of every eight dollars invested has some element of SRI. The 275 members of ICCR hold approximately $100 billion. They are long-time investors, successful in financial as well as social returns.

Years ago a financial advisor would frequently respond to SRI by saying that the investor would lose money. Today the record is clear: SRI is good for business. It is good socially and ethically. It is a powerful way to “love your neighbor as yourself.” It is an invaluable way to walk gently and compassionately on the earth.