Socially Responsible Investing

Corporation’s role in mitigating risk to attract investor assets

A great deal of attention has been focused lately on the idea of socially responsible investment (SRI). According to an annual report from the Social Investment Forum, approximately $1 of every nine under professional management in the U.S. is involved in SRI. Assets under management linked to SRI in the U.S. alone reached $2.71 trillion by the end of 2007. This number represents 18 percent growth from since 2005, compared with 3 percent growth across the broader investment universe, according to the same report.

Management opposes first resolution in the sector on Sudan genocide

Fidelity Investments finds itself facing the mutual fund industry’s first shareholder resolution campaign, a drive generating a lot of heated rhetoric and investor protests. The Investors Against Genocide campaign asserts that two Chinese oil companies, PetroChina and its parent China National Petroleum Co., by doing business with Sudan, are providing funding that the Sudanese government uses to “conduct genocide in Darfur.”

Shareholders show increased resolve to support proxy ballots

Total assets of professionally managed socially responsible funds rose more than 18 percent between 2005 and 2007, the Social Investment Forum reported. The study identified $2.71 trillion in total assets invested in one or more core strategies—screening, shareholder advocacy and community investing.

Institutional Shareholder Services tracks the trends and changes for the 2007 proxy season in report.

Institutional Shareholder Services (ISS) discovered a focus on accountability, engagement, proposals for takeover defenses and social issues in their report on the 2007 U.S. proxy season. Overall, ISS found that individual investors had a good season in terms of attracting investor support.

Recent report finds corporations that lead in corporate responsibility also lead in the market.

A new study, released by investment bank Goldman Sachs at the U.N. Global Compact Summit July 5-6, found that companies that are considered leaders in environmental, social and governance (ESG) policies are also leading the pack in stock performance—by an average of 25 percent.

Investment indexes with a socially responsible tone abound, but it appears there is always room for more.

In February, JPMorgan and Innovest Strategic Value Advisors announced the first bond index “designed to address the risks of global warming.” The new JPMorgan Environmental Index-Carbon Beta is intended to take into account risks and opportunities bond issuers face as they address climate change.

How best to accomplish a foundation’s mission? Passive investment vs. shareholder activism

Bill and Melinda Gates may not be that unusual after all—at least when it comes to the investment policies of their eponymous foundation. The Gates Foundation is the largest in the world, with an endowment larger than the gross domestic products of 70 percent of the world’s nations.

Amidst general praise for its work on social issues, the foundation found itself in the spotlight in January following the publication of a two-part Los Angeles Times investigation, which claimed that hundreds of Gates Foundation investments have been in companies that “contribute to the problems of health, housing and social welfare that the foundation tries to solve.”

Investors are listening—is your company’s investor relations team prepared to talk about corporate responsibility?

A recent thomson Financial survey showed that 89 percent of institutional investors rate corporate responsibility as a primary or
secondary influence in their decision making. In North America alone, portfolio managers representing more than $13 trillion in assets take corporate responsibility concerns into consideration. Unfort­unately, IROs are rarely aware of shareholder concerns in this area or how to address them when they arise.