BEING INVESTED SOCIALLY CONSCIOUS ACTIVISTS WIELDING
THEIR PORTFOLIOS TO TWEAK CORPORATE BEHAVIOR
By Dolores Kong
The Boston Globe
From a tiny office in her modest Hyde Park home,
Sister Regina Rowan oversees a multimillion-dollar
stock portfolio for her Roman Catholic order, making
investment decisions based on issues of social
Any slate of corporate directors without a woman on
the list, she votes against and writes a letter to the
company explaining why. Any pharmaceutical firm with
unfair drug pricing, she files a shareholder
resolution, meets one-on-one with top executives, or
otherwise raises the issue.
"Many times, they ignore you. We tell them, `We're
shareholders in your company. That's why we have this
concern,' " said Rowan, executive director of the
office for responsible investment and administrator of
investments for the Medical Mission Sisters in the
Julie Goodridge, a Boston money manager, became a
shareholder activist on behalf of a client after
advocates approach ed her looking for someone to file
a shareholder resolution against predatory lending.
"It was kind of exciting," said Good ridge, president
of NorthStar Asset Management. She worked with
Responsible Wealth and the Association of Community
Organizations for Reform Now in filing a resolution
linking Household International's executive
compensation to policies preventing predatory lending.
"I really felt like I was doing the right thing."
So-called socially responsible investing is no longer
a matter of sending money to a handful of mutual funds
that screen companies on issues such as labor or the
Instead, Rowan and Goodridge are among the growing
number of activist investors with a diverse array of
social and political concerns who use their
investments in stock or mutual funds to make a
statement or to change corporate behavior.
At one end of the spectrum are mutual funds that make
a stand based on religious values, for example, by
refusing to invest in companies that provide domestic
partner benefits in violation of a faith's belief in
the sanctity of marriage. At the other, there are
funds that make a statement based on gay pride,
women's rights, and other issues.
It's a trend powered by a new spirit of social
activism and a more sophisticated investor with a
desire to raise public awareness about certain
Shareholder activism networks are growing, Web sites
offering information about social investing are
proliferating, community advocacy groups are teaming
up with like-minded investors, and the number of
mutual and pension funds investing based on a broad
range of values is growing by leaps and bounds.
"Social investors have more options today than they
did even two years ago," said Jay Falk, president of
SRI World Group in Vermont, which runs www.SocialFunds
.com, a personal finance Web site for activist
And investors are putting more money than ever into
socially responsible options - more than $2 trillion
in 1999, up 82 percent from 1997, according to the
latest report by the Social Investment Forum, a
That $2.16 trillion figure represents $1 out of every
$8 under professional management in the United States
going into socially screened portfolios, shareholder
advocacy or community investment, according to Steve
Schueth, the forum's director and president of First
Affirmative Financial Network, a Colorado firm
providing services for social investors.
Catherine Hickey, a Morningstar analyst, said socially
responsible mutual funds have "grown at a decent
clip," but compared with total assets in giants like
Fidelity or Vanguard, "it's still kind of a niche of
the mutual fund industry."
Nonetheless, Hickey said, the managers of some
socially responsible funds have been joining forces
with like-minded investors to file shareholder
Of the 200-plus shareholder resolutions dealing with
social issues filed annually, more than 100 go to a
vote each year, according to Meg Voorhes, director of
the social issue service for the Washington- based
Investor Responsibility Research Center, which tracks
Shareholder activists don't necessarily expect their
resolutions to win majority votes and few, if any,
have. Instead, they say, raising their concerns this
way increases public attention and can be a
negotiating tool with a company.
"It's fairly effective in some cases, bringing these
issues to the table and making these companies aware
of things like sweatshops," said Morningstar's Hickey.
Perhaps at no other time has shareholder activism and
the growing diversity of investors been more evident
than during this spring's annual meeting season, with
scores of showdowns nationwide between stock owners
and the corporations they invest in.
For instance, while NorthStar's Goodridge and former
ACORN president Angie Wilkerson of Dorchester spoke at
Household International's annual meeting in Florida a
few weeks ago, ACORN activists staged a protest
outside, featuring someone in shark costume to suggest
a "loan shark" and a gold-colored inflatable shark to
represent a "shark of the year" award. The protest
made headlines in the local media.
The first-time resolution, tying Household's executive
compensation to policies preventing predatory lending,
got more than 4 percent of the vote, enough to put it
on the ballot next year. A company spokesman declined
to comment, and referred to management's proxy
statement opposing the resolution based on what it
calls "Household's commitment to fair and honest
dealings with its customers" and other factors.
Joining Goodridge in filing resolutions this year were
New York's Interfaith Center on Corporate
Responsibility and Boston's Coalition for
Environmentally Responsible Economies, on such issues
as genetically engineered food, tobacco, labor, and
But perhaps the strongest testament to the diversity
of shareholder resolutions is AT&T owner Steve J.
Stefan's asking the company to remove the phrase
"sexual preference or orientation" from its equal
opportunity statement. Stefan, who identified himself
as a conservative Roman Catholic, said his son and a
friend drafted the resolution and he filed it because
he thought AT&T "went kind of ultra-liberal."
Arguably the biggest shareholder showdown this year
will come today at the ExxonMobil annual meeting in
Dallas, when a broad coalition of shareholders and
activists protest the big oil company's policies on
everything from global warming to work force
There was even an "Empowering Democracy" conference to
teach investors and community activists how to use
stock ownership to make corporations pay attention.
About 150 people from around the country attended,
said Peter Altman, national coordinator of Campaign
ExxonMobil, a coalition formed by religious
shareholder activists concerned about global warming.
"People are increasingly recognizing that they have
the ability to influence change and make a statement
with how they use their dollars," said Altman. Any
investor who owns $2,000 of stock for a year can file
a shareholder resolution .
Even investors of mutual funds have more options
today, whether through 401(k) and other retirement
plans or through their own investment accounts.
The number of socially responsible funds has grown to
about 70, according to such Web sites as
SocialFunds.com, and www.social invest.org. Twenty
opened in just the last two years, said SRI's Falk.
The most intriguing development in social investing,
though, lies arguably in the appearance of more
narrowly defined funds based on a growing variety of
values. For example, there's the Meyers Pride Value
fund for investors concerned about equal treatment of
gays and lesbians. Those concerned about equal
treatment of women can invest in the Women's Equity
And for those who want to put their money in companies
that don't violate their religious principles, there
are the newly launched Ave Maria Catholic Values Fund
and the Aquinas funds for Roman Catholics, and the
Azzad/Dow Jones Ethical Market Fund, Amana Income
Fund, and Amana Growth Fund, for Muslims. Mennonites,
meanwhile, have long had the pick of funds under the
MMA Praxis name.
"This is a very real trend," said Social Investment
Forum's Schueth of the increasing diversity of
funds."The religious category is growing quite a bit.
It's indicative of a larger trend. It's similar to
what you see in many industries that mature. Lots of
new players have a pretty easy time starting up and
carving out a new niche within a bigger niche."