Investing stories

1. Shareholder Activism Regarding Genetically Engineered Food: This year, 22 food and agricultural product companies received shareholder resolutions on the issue of genetically engineered (GE) food, making it the fastest growing corporate responsibility issue in the history of shareholder activism. Most of the resolutions concerned labeling or feasibility studies and included some big names, such as McDonalds, Coca-Cola, Pepsico, Philip Morris and Quaker Oats.

"The fact that one issue generated 22 shareholder resolutions is extraordinary," said Falk. "Given the recent growth in shareholder activism, though, I don't think the record will stand for long," he added.

2. Environmental Group Involvement in Shareholder Activism: This year saw environmental groups stepping into a new role, that of shareholder activist. Perhaps most notable was Greenpeace's announcement in March that it had acquired 4,400 shares of Royal Dutch/Shell. Also notable was a coalition of 11 environmental groups endorsing a slate of 85 social and environmental shareholder resolutions. This is the second year that the coalition, led by the Friends of the Earth (FOE), acted to support shareholder resolutions.

Falk believes more environmental group involvement is good for the social investing industry as a whole. "I think all social investors welcome increased shareholder activism from environmental groups. We are all aiming to advance corporate responsibility," he commented.

3. New Indexes: Three new indexes were introduced in the U.S. in 2000, as the industry busily attempted to fill the need for more benchmarks. A new index was also launched in Canada.

While January is usually associated with white, it was green in terms of new indexes. Light Green Advisors (LGA), a Seattle-based investment adviser, introduced the Eco*Index that month. This broadly diversified, passively managed index is based on the Standard & Poors (S&P) 500, comprising 313 companies with above-average environmental performance from all industry groups except tobacco.

A few months later, Calvert Group launched the Calvert Social Index, which consists of 468 companies weighted on a market capitalization basis. Firms included in the index were objectively screened from a base of approximately 1,000 of the largest companies in the United States.

In December, KLD & Co., Inc. (KLD) celebrated its 10th anniversary by introducing the Broad Market Social Index (BMSI). The BMSI covers approximately 2300 companies, giving it the broadest market coverage of any current social index.

In Canada, the Jantzi Social Index (JSI) was launched by Michael Jantzi Research Associates. JSI is a socially screened, market capitalization-weighted common stock index modeled on the S&P/TSE 60.

4. New Mutual Funds: The eight social mutual funds introduced in 2000 imply that specialization is starting to hit the social investing industry. A new bond fund was introduced, and new funds were launched in Canada and Europe.

Perhaps the year's most interesting fund was introduced in January, when Salomon Brothers Asset Management launched The Humane Equity Fund. Using guidelines established by The Humane Society of the United States, the fund is designed to avoid investing in companies that directly harm animals and their habitats.

Friends Ivory & Sime, a London-based investing firm, introduced two funds for the U.S. market the next month. The two no-load mutual funds are the Friends Ivory Social Awareness Fund (FISWX) and the Friends Ivory European Social Awareness Fund (FIESX).

Spring saw a flurry of new funds. TIAA-CREF expanded its offerings by introducing the Social Choice Equity Mutual Fund, and also launched a socially responsible variable annuity, the Social Choice Equity Account. Calvert Group made news by introducing the first socially screened technology fund, the Calvert Technology Fund. And The Vanguard Group launched its much-awaited Vanguard Calvert Social Index Fund, which tracks the performance of the Calvert Social Index.

The number of faith-based funds continued to grow with the unveiling of The Dow Jones Islamic Index Fund, which tracks the Dow Jones Islamic Market USA Index. The fund is managed by Allied Asset Advisors Funds, an investment advisor based in Burr Ridge, Illinois

Trillium Asset Management launched its first mutual fund in September, the Advocacy Fund. The fund invests in companies that Trillium believes are making a positive contribution to society and the economy, and Trillium promotes greater social responsibility in those companies by engaging in shareholder activism.

A new bond fund was also introduced. In June, Domini introduced the Domini Social Bond Fund, which is sub-managed by South Shore Bank, the nation's oldest and largest community development bank. The Domini Social Bond Fund commits up to 10 percent of fund assets to community development.

A slew of social mutual funds were also introduced in Canada over the year. Ethical Funds launched four new funds, the Ethical Canadian Equity Fund, the Ethical Global Equity Fund, the Ethical RSP Global Equity Fund and the Ethical RSP North American Equity Fund. Acuity Funds Ltd. expanded its line in the social investment market with two new funds, the Acuity Social Values Canadian Equity Fund and the Acuity Social Values Global Equity Fund.

In Europe, The Sustainable World Fund was launched by ABN-AMRO, a leading international bank based in Amsterdam. The $100 million fund combines ABN-AMRO's stock-selection expertise with the specialized environmental research methodology of Innovest Strategic Value Advisors, a New York-based investment advisory firm.

5. Community Investing: The top story in community investing this year was the State of California's plans to infuse state treasury funds in emerging markets in California. In a report entitled "The Double Bottom Line: Investing in California's Emerging Markets," California State Treasurer Philip Angelides listed five broad areas where he plans to mobilize $8 billion to broaden economic opportunity for Californians.

The first and second areas focus on publicly managed investment funds. For example, the state's investment pools and public pension funds, CalPERS and CalSTRS, representing more than $300 billion, will commit 2 percent of their portfolios to domestic emerging markets in the next three years.

The third area involves utilizing public assets to leverage capital investment in economically struggling communities. For example, the California Pollution Control Financing Authority, chaired by Angelides, is developing a new program to attract $400 million in private investment to clean up and redevelop "brownfield" sites.

In the fourth area, California will enter partnerships with the private sector to fund research on potential domestic emerging markets. Finally, the state will engage the private sector to join in community investments that will create wealth in a broader context.

Yet again the trailblazer, California may find this initiative to be an effective tool for supporting community development. Certainly other states will be watching the results with great interest.

These standout events of 2000 indicate that socially responsible investing is striking a chord with an increasing number of investors and financial advisers. Likely future developments in community investing, shareholder activism and socially screened investing should make 2001 just as momentous.