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					     This is a collection of the
  presentations on SRI funds and
forums from the 11:00 class in Fall
 2008 for Business 356 (Business
               Ethics)
The Way You Invest Matters
    Be part of the solution




                              domini.com
   1980- Stockbroker

   1989- Begins work with
    Peter Kinder and Steve
    Lydenber on Domini 400
    Social Index

   1990- Launches Domini
    400

   1991- Created Domini
    Social Equity Fund


                        domini.com
   Engaging companies on global warming, sweatshop labor,
    and product safety

   Bringing new voices to the table.


   Redefining corporate America’s bottom line.




                                                        domini.com
   Each of Domini’s stock funds is actively managed
    according to an innovative strategy of strengths of
    Domini Social Investments

   Responsible for the development and application of the
    Funds’ social and environmental standards.
                    California Public Employees’
                              Retirement System

       provides pension fund, healthcare and other
     retirement services for approximately 1.5 million
               California public employees




Calpers.ca.gov
     $235.9 billion worth of stock, bonds, funds,
      private equity and real estate as of August 2008

     Largest pension fund in the United States

     Provides benefits to all state government
      employees and, by contract, to local agency and
      school employees.

     3rd Largest purchaser of employee health benefits
      in the United States


Wikipedia.org
     Calls for reform in executive compensation,
      especially Golden Parachutes

     Sued the NYSE over allegations that their
      specialists (floor workers) engage in practices
      which hurt investors

     Banned investment of its funds in nine
      companies that do business in Sudan until
      the government of that country halts ongoing
      genocide

Wikipedia.org
     Accused of being politically motivated due to
      the fact Democrats control the board

     Removal of President

     Investment in CDOs

     Other Shareholder Activism



Wikipedia.org
A non-profit organization
   A member affiliates in 14 different countries
   Affiliates include pension funds, financial
    service providers, academic institutes,
    research associations and NGO's
   Started in 1901
   Executive board made up of 5 members lead
    by Matt Christensen
   Assets totaling over 1.665 trillion euros as of
    December 31, 2007
   Equally 17.5% of Europe's assets
   They have noticed what Europe’s growth is
    driven by:
    ◦ there’s an increasing demand from institutional
      investors.
    ◦ there’s a further mainstreaming of ESG
      considerations into traditional financial services.
    ◦ External pressures and finally a rising interest from
      individuals and specifically wealthy individuals.
   They segment the SRI into 2 different
    tangents Broad SRI and Core SRI
   Broad SRI is an estimated worth of 2.154
    trillion euro's and Core SRI is worth an
    estimated 5.12 trillion euro's
    ◦ Broad SRI - represents the more mainstreaming
      of SRI and emphasizes the growing interest
    ◦ Core SRI - consists of extensive screening
      strategies systematically impacting portfolio
      construction and often implying a values-based
      approach.
Korie Lebeda
   Description:
    ◦   Inception: Oct. 8, 1999
    ◦   CEO is Joe Keefe, Lead Manager is Mary V. Austin
    ◦   Account Min. = $250
    ◦   Reinvestment Min. = $50
    ◦   “Seeks high current income and capital
        appreciation”
   Social Screens
    ◦ Tobacco= No investment
    ◦ Gambling, defense & weapons, alcohol, and animal
      testing= Restrictive investments
    ◦ Products & services, the environment, human
      rights, labor relations, employment & equity, and
      community= Positive investments
   Do’s (would do business with)
    ◦ Companies with similar social missions:
           Promote quality of life (environment & community)
           Encourage diversity
           Policies/practices with employees & human rights
           Examples: Levis Strauss, Blockbuster

   Don’ts (would not do business with)
    ◦   Marketers of irresponsible alcohol consumption
    ◦   Major manufacturers of weapons
    ◦   Casinos
    ◦   Companies that use animal testing
         Examples: Certain make-up and hair products
   Recommendation
    ◦ Based solely on Social Responsibility & Benefit
      Recommend to self: Yes
      Recommend to others: Yes
        $500,000 settlement with SEC-cleared name of charges of
         violating investment guidelines
        Social Responsibility = big priority
 Environmentally responsible mutual funds
       founded by nonprofit advocacy
organizations. The Balanced Fund invests in
  the stocks and bonds of companies with
        clean environmental records.
   Founded 1991
   provide two mutual funds for those who wish to align
    their investments with their environmental values
   use shareholder advocacy to seek to place direct
    pressure on corporations to change their practices to
    protect the environment
   dedicate GCCM's profits to advocacy organizations
    who work for public policies that help create a
    sustainable economy.
   Nuclear weapons and nuclear energy
   Tobacco
   Fossil fuel
   Animal testing (for non-medical purposes)
   Factory farming
   Genetically modified organisms ("GMOs")
   Agricultural pesticides
   Alternative energy
   Eco-friendly products
   Green technology
   Organic / natural food supply
   Water solutions
   Sustainable development
   Community investment
Location: Vancouver, British Columbia

          CEO – Kerry Ho
    Net Assets: $143.75 million
   To help Canadian investors build wealth through enhanced
    investment returns.
   Before they invest, Inhance Investment listens to company
    management, researches economic trends, and crunches the
    numbers.
   The thing that separates them from other businesses is that
    they incorporate environmental, social, and governance
    criteria into their analysis.

    ◦ They look at how companies behave, and solely invest in those
      that have compelling growth prospects, and progressive and
      sustainable business practices needing to keep growing in the
      future.
   “We listen to what a company says, then we
    analyze what it does.”



   We call it return on responsibility.”
   Employee relations
   Diversity
   Environmental commitments
   Community relations
   Corporate governance and citizenship
   Human rights
   Sustainable products.
By: Ty Johnston
   Nicknamed “Chikyuryoku” is started by Shinko
    ITM and teamed with KLD Research and
    Analytics to create an index fund for socially
    responsible investors in Japan.
   Chikyuryoku fund is translated as “Global
    Warming Prevention Equity Fund”
   The fund is associated with the GC100 Index
    started by KLD.
   The Chikyuryoku Fund began on June 5, 2006
    with its launch coming on June 30, 2006.
   Saw a promising market with the rise of the
    GC100 Index
   Original investors in Japan are very
    environmentally concerned and wanted to
    prepare for new energy systems
   Investors saw a very profitable market
    available through the GC100 Index and the
    Chikyuryoku Fund.
   More stable market to invest in than other
    volatile markets like the renewable energies.
   Fund has become successful due to equal-
    weighted strategies to accommodate big and
    small companies to have an level playing field
    in the market.
   10 million invested over the next three
    decades
   Growing group of Japanese Investors
    concerned with environmental issues and
    global warming
   Clean energy market to depend less on fossil
    fuels.
   The index has a diverse group of companies
    leading the way in today’s technology
   Profitable Fund with a conscious effort on
    cleaning up the environment and protecting
    global warming efforts.
“the leading authority on
    social research and indexes
        for institutional investors.”
   Provide global research and index products to facilitate the
    integration of environmental, social and governance factors
    into the investment process.

   Define by services, accountability standards that enable
    investors, managers and fiduciaries to influence corporate
    behavior through their investment decisions and share
    ownership.

   Effect through this influence, greater corporate
    accountability and, ultimately, a more just and sustainable
    world.
   Charitable giving
   Innovative giving
   Non-US charitable
   Support for education
   Support for housing
   Volunteer programs
   Labor rights
   Retirement benefits
   Health & safety
         Companies Involved With &
               Owned By:
   Abortion
                             Gambling
   Adult Entertainment
                             Military
   Alcohol
                             Nuclear Power
   Contraceptives
                             Tobacco
   Firearms
   Economic Outcome

   Making Unethical
    Companies, Ethical

   Helping Society
                           Background Information
•Teachers Insurance and Annuity Association – College Retirement Equities
Fund
•Founded: 1918, lead by Henry S. Pritchett
•Headquarters: New York City
•Current CEO: Roger W. Ferguson, Jr.
•Targets those in the academic, medical, cultural and research fields
Additional Information

• Minimum Account: $2,500 initial; $50 automatic investment

• Minimum IRA: $2,000 initial; $50 automatic investment

• 86th Largest corporation according to Forbes top 500.

• $420 Billion in assets as of June 30, 2008

• Meets the needs of nearly 3.4 million individuals and 15,000
institutions

• Operates on a nonprofit basis

• Does outside screening through an independent social investment
research firm
                                Restricted Investments

Alcohol Restricted investment (by fund policy and by practice). Considers retailers that
derive less than 15% of revenue from alcoholic beverages.

Military/Weapons Restricted investment (by fund policy and by practice). Considers
firm with less than 2% in sales, less than $50M in contracts, less than $10M nuclear
arms.

Environment Proactive investment (by fund policy and by practice). Clean energy,
beneficial management systems, pollution prevention and recycling.

Gambling Restricted investment (by fund policy and by practice). Excludes firms whose
primary business is providing gambling products or casino management services.

Nuclear Restricted investment (by fund policy and by practice). No investment in utility
companies that own interests in nuclear power plants.

Other Restricted investment (by fund policy and by practice). Excludes firms with
revenue from the manufacture of firearms, ammunition or more than 15% in sales.

Pornography Restricted investment (by fund policy and by practice). No investment in
firms that derive vast majority of revenue from distribution or sale of pornography

Tobacco Restricted investment (by fund policy and by practice). Considers retailers that
derive less than 15% of revenue from tobacco products.

                          Information from Social Investment Forum
                                   Positive Investments

Community Relations Proactive investment (by fund policy and by practice). Charitable
giving, innovative giving, support for education, housing and employee volunteering.

Employment/Equity Proactive investment (by fund policy and by practice). Employee &
executive diversity, health & safety, retirement benefits, and work/life benefits.

Environment Proactive investment (by fund policy and by practice). Clean energy, beneficial
management systems, pollution prevention and recycling.

Human Rights Proactive investment (by fund policy and by practice). Considered in social
screens.

Labor Relations Proactive investment (by fund policy and by practice). U.S. workforce labor
rights and relations with indigenous peoples.

Other Proactive investment (by fund policy and by practice). Corporate governance
considered with executive pay, transparency, and accountability.

Products/Services Proactive investment (by fund policy and by practice). R&D, innovation,
quality and products that benefit the economically disadvantaged.

                            Information from Social Investment Forum
Concluding Points

•TIAA-CREF offers it’s clients only positive investments.

•Does not profit from customers and surplus is returned to it’s participants

•Conducts social screening before looking at financial benefit

•Screening process consist of three stages
    •Stage One: Automatically eliminates companies that fall under restricted
    investments.
    •Stage Two: compares companies in the categories of positive investments
    •Stage Three: Takes the top performers and takes a final look.
Are you ready for an Epiphany
   Exxon Mobil (wait what?)
   Lowe’s
   McGraw Hill
   Linear Technology
   Sysco
   Alcohol Restricted investment
   Abortion Specific Products No investment
   Animal Testing Investments NOT SCREENED for this
    concern
   Community Relations Investments NOT SCREENED
    for this concern
   Military/Weapons Restricted investment
   Employment/Equity Proactive investment
   Environment Proactive investment
   Gambling Restricted investment
   Human Rights Proactive investment
   Labor Relations Proactive investment
   Tobacco Restricted investment
   74 billion average market cap
   2.09% average yield.
                  Founded 1979
     Based in Fort Worth, Texas
Luther King Capital Management
   Named after St. Thomas Aquinas.
   Provides investment management services to
    religious organizations, employee-benefit plans,
    endowments, foundations, common trust funds,
    investment companies and high net-worth
    individuals.
   LKCM is committed to selecting securities based on
    sound fundamental investing principles and most
    importantly, Catholic values.
   The investment guidelines set forth by the United
    States Conference of Catholic Bishops in 2003 serve
    as a guide in the selection of securities.
   Funds are managed with the philosophy that
    investors should not sacrifice investment
    performance for their Catholic values.
   LKCM utilizes screening services such as the
    Interfaith Center on Corporate Responsibilities and
    the Investor Responsibility Research Center.
   Category: Equity Large Cap Fund
   Minimum Account: $5,000
   Minimum IRA: $5,000
   Assets: $10 Million
   Fund Return: 6.04% year to date
   Based on Catholic stances for controversial issues.
   Use screening criteria for the following:
       - Shareholder Activism
       - Community Investment
       - Environment
       - Human Rights
       - Employment
       - Products and Services
   Merged together on April 4th, 2008
   Sentinel Government Securities Fund
    Inception date: 9-2-1986
   Citizens Income inception date: June, 1992
   Category: Fixed Income Bond
   Min Account=$2,500(acc to Citizens Income)
   Min IRA=$1,000(acc to Citizens Income)
   Sentinel’s Philosophy:
◦ Consistency- investment-centric culture in
   everything they do
◦ Vision- pursuit of investment excellence and
 dedicated to   research teams for investment
 strategies
◦ Insight- united by the common belief that well
 defined, repeatable investment processes grounded in
 fundamental research have the potential to deliver
 solid, consistent results over time.
No Investment      Positive Investment
   Alcohol              Product/Services
  Gambling                Environment
  Tobacco            Employment/Equality
                         Labor Relations
                          Human Rights



Restricted Investment
         Defense/Weapon
          Animal Testing
   Merged together on April 4th, 2008
   Sentinel Government Securities Fund
    Inception date: 9-2-1986
   Citizens Income inception date: June, 1992
   Category: Fixed Income Bond
   Min Account=$2,500(acc to Citizens Income)
   Min IRA=$1,000(acc to Citizens Income)
   Sentinel’s Philosophy:
◦ Consistency- investment-centric culture in
   everything they do
◦ Vision- pursuit of investment excellence and
 dedicated to   research teams for investment
 strategies
◦ Insight- united by the common belief that well
 defined, repeatable investment processes grounded in
 fundamental research have the potential to deliver
 solid, consistent results over time.
No Investment      Positive Investment
   Alcohol              Product/Services
  Gambling                Environment
  Tobacco            Employment/Equality
                         Labor Relations
                          Human Rights



Restricted Investment
         Defense/Weapon
          Animal Testing
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                              http://www.meritas.ca/Asset/iu_images/Meritas_English_Colour.jp
                              g
   Owned and managed by Gary Hawton, CFA
   Based in Cambridge, Ontario, Canada
    ◦ Founded in 2000 by Hawton
   Specializes in SRI funds
    ◦ Focuses on Screening, Shareholder Advocacy, &
      Community Investments
   Negatively Screens for:
    ◦   Military & weapons contracting
    ◦   Alcohol & Tobacco manufacturing
    ◦   Pornography & Gambling
    ◦   Nuclear power
   Positively Screens for:
    ◦   International labor standards
    ◦   Environmental impact
    ◦   Employee relations
    ◦   Gender and cultural equity policies
   Respect the dignity and value of all people.
   Build a world at peace and free from violence.
   Internalize a concern for justice in a global society.
   Exhibit responsible management practices.
   Support and involve communities.
   Practice environmental stewardship.
   Guarantees shareholders strong involvement
    in picking socially conscious funds
   Posts voting criteria on-line for each firm up
    for investing
    ◦ Allows both investors and company being invested
      in ability to see what will happen
    ◦ Gives investors ability to provide input, suggestions
   Meritas takes 2% of assets in each portfolio
    and donates to community
    ◦ Domestic and international donations
   Meritas feels impact on investors’ portfolios
    is small, but impact on social responsibility
    and communities affected is extremely large
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                              http://www.newcommunitycu.com/assets/img/Ethical%20Funds%20Logo.JPG
   The Ethical Growth Fund founded in 1986
   In 1992, the Ethical Funds Company was created and
    took over the Ethical Growth Fund and created other
    funds
   Shared ownership: 50% Provincial Credit Union and
    50% Desjardins Group
   Ethical Funds is a Canadian Investment Company
    ◦ A majority of investments are made to Canadian based
      companies
   Negatively Screens for:
    ◦   Military and weapons
    ◦   Tobacco
    ◦   Nuclear power facilities
    ◦   Uranium mining
    ◦   Countries supporting racial inequality
   Positively Screens for:
    ◦ Environment
         Regulation of emissions, sustainability
    ◦ Stakeholder relations
    ◦ Human rights and security
    ◦ Good labor practices
   Companies that are financially sound
   A concern for sustainability and the
    environment, having little “adverse impact”
   Contribution to the local community in
    positive manner through ethics, governance,
    and accountability
   Respect for human rights
    ◦ Fair labor practices, reducing poverty, safe work
      environment, peaceful conflict resolution
   Many funds to choose from
    ◦ Growth, year goal, index, equity, dividend
   Evaluation through financial analysis
   High standard of investment in terms of companies
    that fit the screens
   Choose sustainable companies resulting in less risk
   Low $500 minimum
   Philanthropy and donates to charitable funds
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                                     http://www.unificompanies.com/images/Calvert_color_tag.gif
   Formed in 1976 by D. Wayne Silby and John G.
    Guffery, Jr
   Started SRI in 1982
   Based in in Washington D.C.
   Specializes in SRI funds
    ◦ Focuses on Screening, Shareholder Advocacy
   Manages over $14 billion in assets
    ◦ Wide range of funds (i.e. Alternative Energy)
   Negatively Screens for:
    ◦ Military & weapons contracting
    ◦ Alcohol & Tobacco manufacturing
    ◦ Pornography & Gambling
   Positively Screens for:
    ◦ International labor standards
    ◦ Human rights
       Treatment of indigenous people
    ◦ Environmental impact/ Energy Conservation and Alternative
      energy
    ◦ Employee relations
    ◦ Gender and cultural equity policies
   Original board member Muhammad Yunus won 2006 Nobel Peace
    Prize
   First out of South Africa First back in (1982 and 1994)
   As of 2006, had donated $25.4 million to community investments
   Sudan partnership with Save Darfur and Sudan Divestment taskforce
   The Calvert Social Index
    ◦ Market index of 468 of the largest socially responsible companies
    ◦ Commonly used by other funds as a benchmark for their
       performance
By: Seth Sinovic, Maurice Brewer,
           Tess Reddin
   Started:
      October 1988 for internal use
      Went public in 2004

   Account Minimums:
        Individual: $1,000
        Institutions: $1,000,000

   Typically holds 40-60 stocks in a fund

   Standardized Returns for 1 year: 11% on investments for N shares
    and I shares (since inception +3%), 14% for Domini 400 (since
    inception +1.7%)
   Environmental sustainability
   Corporate governance
   Human rights
   Product safety
   Community relations
   Employee relations
   Tobacco
   Gambling
   Weaponry
   Alcohol
   Abortion
   Nuclear power
Portfolio 21 companies seek to prosper in
     the 21st Century by recognizing
     environmental sustainability as a
  fundamental human challenge and a
    tremendous business opportunity.
   Philosophy
    Climate Destabilization=
    Economic and Investment Destabilization
   Inception Date
    Retail Shares September 30, 1999
    Institutional Shares March 30, 2007
   Account Minimums for Global Equity Mutual Fund
    Individual   $5000
    IRAs         $1000
   Portfolio 21’s institutional shares
    $1,000,000 minimum
   Uses “The Natural Step” and “Global Footprint Network” to
    help set evaluation criteria
   3 areas of evaluation
    - Biotechnology
        Rejects companies that engage in biopiracy, non-transparency (no
        labeling), human genetic engineering, and agricultural genetic
        engineering
    - Nuclear
        Will not invest in companies that generate a significant proportion (more than
        5%) of revenues from nuclear energy business
    - Globalization, Human Rights & Social Justice
        No investments in companies that have significant business in countries that are state
        sponsors of terrorism and/or where significant human rights violations or significant labor
        rights violations occur in company-owned facilities
   Oracle
    Has not enforced sustainability measures in the companies
    that it has acquired.
    Misses market opportunities by not promoting the potential
    environmental benefits of its products
   Deere & Company
     Does not direct any funds to the development of non
    agricultural biofuels
   UPS
     Less than 1% of fleet vehicles powered by alternative fuels
   Others include Bank of America, Lehman Brothers,
    Goldman Sachs, Wachovia
   A Sovereign Wealth Fund (SWF) is a state-
    owned investment fund composed of
    financial assets such as stocks, bonds, real
    estate, or other financial instruments funded
    by foreign exchange assets.
   SWFs are typically created when governments
    have budgetary surpluses and have little or
    no international debt.
   The Petroleum Fund was established in 1990 after a
    decision by the legislature assembly to counter the
    effects of the forthcoming decline in income and to
    smooth out the disrupting effects of highly fluctuating
    oil prices.
   The fund changed name in January 2006 from its
    previous name The Petroleum Fund of Norway.
   It is the largest pension fund in Europe and the second
    largest in the world with a value of NOK 2.019 billion
   Investments have to be in line with the ethical
    guidelines based on sector and company behavior.
    The companies that the Fund invests in are closely
    monitored by a Council of Ethics. If companies are
    operating in conflict with the guidelines the Fund will
    consider withdrawal.
   Several Companies have already been excluded
    including:
    ◦   Singapore Technologies, Singapore
    ◦   BAE Systems, UK
    ◦   Boeing, US
    ◦   Honeywell, US
    ◦   Wal-Mart Stores Inc, US
    ◦   L-3 Communications, US
   The Council of Ethics was established in
    2004.
    The role of the Council on Ethics is to
    provide evaluation on whether or not
    investment in specified companies is
    inconsistent with the established ethical
    guidelines.
   The Government Pension Fund – Global is an instrument for ensuring
    that a reasonable portion of the country’s petroleum wealth benefits
    future generations
   The Government Pension Fund – Global should not make
    investments which constitute an unacceptable risk that the Fund
    may contribute to unethical acts or omissions, such as violations of
    fundamental humanitarian principles, serious violations of human
    rights, gross corruption or severe environmental damages.
   Investment Screens:
    ◦ Serious or systematic human rights violations, such as murder, torture,
      deprivation of liberty, forced labour, the worst forms of child labour and other
      child exploitation
    ◦ Serious violations of individuals’ rights in situations of war or conflict
    ◦ Severe environmental damages
    ◦ Gross corruption
    ◦ Other particularly serious violations of fundamental ethical norms
    ◦ companies from the investment universe that either themselves, or through
      entities they control, produce weapons that through normal use may violate
      fundamental humanitarian principles

				
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