Reporting on a Fresh Approach to Socially Responsible Investing

Transcription

1 T: Denny Davidff, Mderatr, FIA / RE Wrking Grup, Finance Cmmittee and Bard f Trustees Date: June 15, 2000 Frm: Mderatrs Ad Hc Cmmittee n Scially Respnsible Investing Reprting n a Fresh Apprach t Scially Respnsible Investing Scially respnsible investing (SRI) allws the UUA t harness the pwer f its financial resurces t live ut and express UU values. We strive t manifest ur values in ur daily lives, including in ur financial activities. It wuld be hypcritical thugh t use incme generated by the prductin f weapns f destructin t advance ur views f peace and scial justice. In the early days f the SRI mvement the UUA held a leadership rle. Reslutins passed by the UUA Bard and the General Assembly between 1967 and 1986 were amng the earliest manifestatins f the evlving trend t invest assets fr the cmbined purpses f investment return and t advance a specific scial r envirnmental agenda. We are indebted t Dr. Lretta Williams fr her cntributin t the evlutin f grassrts SRI within the UUA; examples f her cntributins still exist n the web-site. Mney is frequently viewed as a frm f pwer. The UUA and its cnstituencies have a right and the pprtunity t utilize available resurces t exercise mral suasin tward influencing and imprving crprate and public plicy. Opprtunities fr leadership still exist. In recent years, the SRI mvement has evlved mre rapidly than we have. The investment industry has discvered that there are many investrs wh wish t be scially cnscius in their selectin f cmpanies in which t invest. It has been estimated that ver $2 trillin is nw invested in cmpanies whse peratins and crprate behavir have been examined and screened based n psitive criteria, nt simply with the frmer, negative screen apprach. Exclusinary screening methds f the past 30 years are being augmented with psitive screening techniques and als with utreach activities such as spnsrship f sharehlder reslutins, dialgues with crprate management and prxy vting. These new appraches in cmbinatin with the use f the Internet and the maturity f grups such as the Interfaith Center n Crprate Respnsibility (ICCR) have helped t transfrm SRI frm a largely reactive t a practive frce. Thus, there are nw a number f investment firms wh have chsen t add research capacity and t develp criteria t apply a scial verlay t the business f investment. An ften expressed cncern has been that SRI wuld result in less cmpetitive financial returns. This cncern has been addressed ver time by statistical evidence as well as the experience and investment results f a number f firms and scial investrs. Scially respnsible investing has becme mainstream, as evidenced by an increasing number f mutual fund firms such as Calvert, Citizens, Pax Wrld and Dmini. Nw traditinal investment cmpanies such as Vanguard, Smith Barney and Neuberger, Berman have begun t intrduce scial investment prducts. Scial investing has als expanded t include investment in freign securities; internatinal r glbal mutual funds are currently ffered by Calvert, Walden and Citizens including bth active management and indexing and it is anticipated that Vanguard and thers sn will intrduce internatinal r glbal scial funds. Scially respnsible investing allws the UUA t supprt ur cngregatins as they seek ethical means t cnduct their financial activities. It als ffers the pprtunity t minister t individual Unitarian A:\SRI622BOTReceived.dc 6/23/00 1

2 Universalists as they strive t invest in ways cnsistent with their cre values. Scially respnsible investment is anther venue thrugh which we may prvide leadership and service. Recmmendatins The UUA s current structure fr the develpment and implementatin f scially respnsible investment guidelines prvides fr the Bard f Trustees t direct and prduce the specific plicies with respect t SRI which are then implemented by the Investment Cmmittee, and thers as apprpriate. In rder fr the UUA t becme a mre practive and creative frce in SRI a new mechanism fr the develpment, refinement, implementatin and mnitring f the UUA s SRI missin shuld be established. Sme key gals include: review, augment, replace and maintain guidelines which are current and reflective f UU values, as embdied in ur Principles and Purpses and thrugh reslutins f the General Assembly; visibly and practively prvide fr the distributin f infrmatin and resurces t harness the pwer f UUA s cnstituencies and prvide service t encurage the invlvement f cngregatins, thus putting ur faith in actin; imprve the UUA s utreach t the significant number f UU husehlds with equity hldings, whether direct r thrugh IRAs and mutual funds. T achieve these ends, the Cmmittee recmmends that the Bard establish an nging Cmmittee n Scially Respnsible Investing (CSRI). The CSRI Cmmittee cmpsitin shuld verlap with the Investment Cmmittee. The respnsibilities f the CSRI wuld include: update and maintain current SRI plicies and practices fr funds ver which the Bard has respnsibility (including alternative scial investments) that reflect ur UU values, especially as expressed by the General Assembly reslutin prcess, the Bard f Trustees plicies, and ur UU Principles and Purpses; develp a prcess t ensure the implementatin f these SRI plicies thrugh delegatin t investment managers and ther utside service prviders; cmmunicate the UUA s SRI activities t the Bard, staff, member cngregatins and ther cnstituencies; prvide infrmatin t assist cngregatins in the develpment and implementatin f their wn SRI plicies and practices. Recent experience with a current issue in scially respnsible investment highlights an pprtunity fr the UUA s leadership, which such a structure wuld facilitate. The UUA learnedthat its retirement funds held a small psitin in Occidental Petrleum thrugh ne f the Fidelity mutual funds. Occidental is planning t drill n sacred U wa land in Clmbia and scially cncerned sharehlders are attempting t press the cmpany t abandn these plans. A questin cncerning the issue was placed n their recent prxy statement as a result f effrts f a calitin f sharehlder activists, despite Occidental s ppsitin. With the exceptin f the scially respnsible mutual funds, current practice in the mutual fund industry des nt include disclsure f fund vting recrds. Public disclsure and accuntability are ften the first, key steps tward psitive scial change. UUA s leadership amng its wn cnstituencies and within ther religius rganizatins culd meaningfully advance the cause f disclsure at Fidelity and ther mutual fund firms. This wuld greatly strengthen the psitin f scially cncerned sharehlders whse equity interests are held by mutual funds. A:\SRI622BOTReceived.dc 6/23/00 2

3 Anticipated Results The apprval and implementatin f these recmmendatins are designed t prduce the results utlined belw, amng thers. This summary list is intended nly t address key areas f cncern. The UUA Bard f Trustees, thrugh its implementatin: delegates the detail-riented wrk f the determinatin f best practices t an apprpriate grup and retains the brad mandate and cntrl fr SRI; prvides a cmmittee structure t apply the General Reslutins and Statements f Cnscience passed by the General Assembly and the UUA Bard t the area f scially respnsible investment; expands the services prvided t cngregatins in the frmatin and implementatin f SRI guidelines, plicies and practices; affirms the interest and invlvement f prgram staff (Faith in Actin, Ministry, Religius Educatin, Cngregatin, District and Extensin Services) and the rle f the Investment Cmmittee and the Cmpensatin, Benefits and Pensin Cmmittee in the area f scially respnsible investing; bradens the ecumenical thrust f the UUA thrugh active participatin in the ICCR and ther faith-based initiatives, including increased participatin in sharehlder activism (see the Appendix fr additinal infrmatin cncerning the structure and cmmitment f ther denminatins.) Prvides additinal infrmatin fr disseminatin cncerning the UUA and its leadership by the Office fr Public Witness; prvides an nging structure fr the assessment, implementatin and audit f SRI plicies and practices which impact investment strategies, alternative investments, cmmunity reinvestment and ther financial resurces; allws increased participatin and visibility in sharehlder activism; prvides infrmatin t individual Unitarian Universalists wh are interested in investing in a scially respnsible manner. A:\SRI622BOTReceived.dc 6/23/00 3

4 A:\SRI622BOTReceived.dc 6/23/00 4 Recmmended Structure and Implementatin The cmpsitin envisined fr the CSRI with nminatins frm the Cmmittee n Cmmittees and apprval by the Bard f Trustees is utlined belw: An Investment Cmmittee liaisn, Tw liaisn members frm prgram departments r thers related t key SRI issues which invlve UUA cnstituencies, and Tw r three members frm Cngregatins, preferably with investment and / r scial actin experience and expertise. Plus Ex-Offici: Bard liaisn Financial Advisr Treasurer In additin, a key respnsibility f the CSRI will include management f the relatinships between the Bard and the fllwing with respect t SRI: Department fr Faith In Actin General Assembly Reslutins UUA cnstituencies including: DRUUM, Interweave, Wmen s Federatin Office fr Public Witness Investment Cmmittee Cmpensatin, Benefits and Pensin Cmmittee Department f Ministry Office f Church Staff Finance Treasurers Office f the UUA Interfaith Center fr Crprate Respnsibility Investment Managers & Cnsultants Respnsible fr SRI and UUA investments Cngregatins implementing plicies n Scially Respnsible Investing Individual Unitarian Universalists investing in scially respnsible ways Alternative Scial and Cmmunity Investments We recgnize that staffing and budget allcatins are nt the direct respnsibility f ur cmmittee, nr f the Bard f Trustees except thrugh the annual apprval f the budget as recmmended by the administratin. Hwever, the establishment f any cmmittee requires sme level f staff supprt. As guidance t the administratin as it cnsiders the ptential staffing f these recmmendatins, the Cmmittee envisins at least tw pssible alternatives that are prgressive in their dependence n paid staff rather than vlunteers, that are labeled Optin A and Optin B, as shwn n the fllwing page. The staffing implicatins culd be implemented thrugh a redirectin f existing staff resurces r by additinal

5 staff resurces. The Cmmittee's respnsibilities and activities under each f these ptins are dented by an X, r lack theref, in the apprpriate clumn that appears t the right f the respnsibility r activity. Optin A assumes a full-time staff member that will wrk with and assist the Cmmittee and its activities; Optin B assumes part-time staff member crdinatin. The variatin in the cst is primarily, thugh nt exclusively, salary and benefits expenses. CSRI Respnsibilities Optin A Optin B Meet at least 6 times per year X 4 times per year X Cntinuusly refine the SRI plicy t reflect GA reslutins and Bard f Trustee activity X X Develp and maintain prxy vting guidelines X X Direct UUA participatin in sharehlder X X prpsals, cmpany dialgues and X crprate campaigns X Reprt activity t the Bard f Trustees and Investment Cmmittee X X Representatin/leadership f UUA at ICCR by staff X by vlunteer X Develp and implement prcedures t reprt t X X member cngregatins n UUA SRI activity, including articles in UU publicatins Maintain pages n the UUA website that prvides access t the UUA's SRI activities and prvides infrmatin t members and cngregatins abut hw t becme invlved X Prepare and present SRI educatin t member cngregatins X Lead prgrams at General Assembly X Mnitr, evaluate and reprt n implementatin A:\SRI622BOTReceived.dc 6/23/00 5

6 impact f activities every 1-2 years X 3-4 years X Evaluate Cmmittee gals, bjectives, results and recmmend imprvements every 2-3 years X 3-4 years X Annual Estimated Cst $75,000 $35,000 The Ad Hc Cmmittee believes bth f these ptins are viable and each represents an pprtunity t enhance the present plicies and practices f the UUA with respect t scially respnsible investing. The Cmmittee welcmes yur questins and cmments and wuld be pleased t assist in any additinal effrts the Bard may direct in this regard. Appendix PROTESTANT DENOMINATIONAL MEMBERS OF INTERFAITH CENTER ON CORPORATE RESPONSIBILITY ( ICCR ) Denminatin American Baptists American Friends Service Cmm. Disciples f Christ Episcpal Church Pensin ffice Exec Cuncil Publishing C. Dicese f MA Evangelic Lutheran Number and Type f Representatives(1) 1 r 2 Full-time staff prgram 2 part time staff - finance Frmerly 1 full-time staff prgram Currently vlunteer 1/3 time f cnsultant prfessr f business ethics vlunteer cmmittee chair vlunteer prfessinal Bard member 1/3 time f prgram staff persn Mennnite Mutual Aid (Mutual Fund) Presbyterian USA Refrmed Church United Church f Christ: Hmeland Wrld United Methdist: Pensin Wmen s Div. A:\SRI622BOTReceived.dc 6/23/00 6 ½ time f prgram staff persn 10% f prgram staff persn 1 full-time prgram staff persn 20% f prgram staff persn 4 staff 2 frm prgram 1 frm finance staff

7 Church & Sciety 10% staff prgram UUA UUSC <10% staff - frm finance vlunteer Nt represented Suthern Baptist African-American denminatins Nte - Estimates supplied by ICCR as f May 2000 T: Lucia Santini-Field, Jann Crkran, Jhn Keller, James Gunning, Lawrence Ladd Frm: Denny Davidff Date: Nvember 1, 1999 CC: Jerry Gabert, Kay Mntgmery, Beth McGregr Thank yu fr agreeing t serve n the Mderatr's Ad Hc Cmmittee n Scially Respnsible Investing. Lucia has agreed t cnvene yu all fr a first meeting and I suggest that yu chse a chairpersn frm amng yur ranks t take the grup frward. Yur charge cmes frm actin taken by the UUA Bard f Trustees in June. This is hw the minutes read: Larry Ladd, Financial Advisr, reprted n investment results and said that he and Jerry Gabert, Treasurer were wrking n the preparatin fr the strategic use f the Assciatin s assets ver the next several years. He nted that, cming ut f cnversatins at the April Bard meeting, there seemed t be agreement n the need fr an ad hc cmmittee t review the Assciatin s practices and plicies regarding scially respnsible investing. VOTED: T instruct the Mderatr t appint an ad hc cmmittee n scially respnsible investing, charged with reviewing current practices and plicies and making recmmendatins fr new practices and plicies with respect t the UUA s uses f financial and physical assets in light f ur religius values. The cmmittee will reprt t the Bard f Trustees at its January 2000 meeting. Given that it has taken me this lng t get yu ging, I will let the Bard f Trustees knw that we shuld expect yur reprt at ur May 5-7, 2000 meeting. A:\SRI622BOTReceived.dc 6/23/00 7

8 Jerry Gabert will be staff t yur cmmittee. He can be reached at (617) , ext. 305 r jgabert@uua.rg. I expect yur meetings will be held in Bstn r New Yrk City and n and phne cnferences. Yur expenses fr travel, ldging and meals will be cvered by the UUA. Thank yu fr this service t ur wider religius cmmunity. Please feel free t be in tuch with me if I can be useful. MODERATOR S AD HOC COMMITTEE ON SOCIALLY RESPONSIBLE INVESTING Lucia B. Santini Field Jerry Gabert, Staff 1691 West Street Treasurer and VP Finance Wrentham, MA Beacn Street res Bstn, MA bus bus fax fax lsantini@ustrustbstn.cm Jgabert@uua.rg Jann Crkran William Gardiner, Staff 340 West 22 nd Street Directr f Anti-Racism Training New Yrk, NY Beacn Street bus Bstn, MA Jann.Crkran@csam.cm bus fax James Gunning bgardiner@uua.rg 740 Palmer Avenue Teaneck, NJ Heidi Sumerai res hsumerai@ustrustbstn.cm fax James.Gunning@wrldnet.att.net Jhn Keller Lng Wharf Investrs 12 Pst Office Square, 5 th Flr Bstn, MA bus JKeller@Lng-Wharf.cm A:\SRI622BOTReceived.dc 6/23/00 8

9 Lawrence R. Ladd 26 Sargent Street Needham, MA res X bus lladd@g A:\SRI622BOTReceived.dc 6/23/00 9

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