How Green Is Your Portfolio?

by Paul K. Haeder & r & & r & & lt;span class= "dropcap " & "P & lt;/span & utting your money where your mouth is" goes back to the British abolitionist movement of the 1760s, when hundreds of thousands of Brits boycotted sugar from the West Indies sugar plantations where slaves worked.


In a world of $520-an-ounce gold, record profits for oil companies, hedge-fund madness and expectations of 20-percent returns in a steroid-induced bull market, it seems counterintuitive that there are American investors worried about a corporation's transparency, social responsibility and duty to protect the environment.


Believe it or not, investing with one's conscience is one of today's fastest-growing markets.


"There's no such thing as a perfect company," says Geoff Ashton, senior vice president of Calvert, a company that offers socially responsible mutual funds. "What we try to do is get companies to change directions."


Paul Hawken calls it "humanity's immune response to resist and heal political corruption, economic disease and ecological loss."


Hawken, one of the country's preeminent environmentalists, is the co-author of Natural Capitalism: Creating the Next Industrial Revolution, which was cited by President Bill Clinton as one of the five most important books of 1999.


Others call these tremors in investing circles a social justice movement. Then there is the "treading lightly" philosophy, as well as this ancient, American Indian ethos that demands every action made in the present be weighed against the impact it will have on the earth's children nine generations into the future.


Eco-economy analysts like Lester Brown and Hawken realize people today are having difficulty understanding the impact billions of humans are having on the Earth.


"As nightfall does not come at once, neither does oppression," wrote late Supreme Court Justice William O. Douglas (who grew up near Yakima). "In both instances, there is a twilight where everything remains seemingly unchanged, and it is in such a twilight that we must be aware of the change in the air, however slight, lest we become unwitting victims of the darkness."


More people, along with some governments and corporations, are realizing the impending collapse of ecosystems through overuse, over harvesting and pollution.


With such doom and gloom comes a time of regeneration and great hope for dynamic solutions. To drive home the hope, the United Nations has named 2006 the first year of a decade focusing on sustainable development.


Meanwhile, more and more individuals are seeking ways to invest in companies, big and small, that are environmentally friendly and/or socially responsible. Thumbnail descriptors for these investment methods include "green funds" and SRIs, or socially responsible investments.


The number of dollars invested in the SRI market -- mutual funds that allow people to "harmonize" financial interests with their own personal values -- is incredible, when one realizes that SRI funds are actually a fairly recent investing avenue. More than $2 trillion (one dollar out of every nine dollars invested) are already "screened" in one or dozens of ways, largely through a large filter determining how a corporation does its business with regard to human rights, labor, the environment and within the broad category of ethics or religious-slanting.





The Apartheid Model & r & The modern SRI has its roots in racism. Activists and not-so-vocal citizens wanted their investments to speak loudly, so they began looking for ways not to support the segregation system found in South Africa's apartheid. Public pressure helped end apartheid.


"Look, investing strategies -- divesting and boycotts -- changed a country," Ashton said recently at a luncheon at the Empyrean coffee shop organized by Steven Amble of Edward Jones.


This change was largely created through corporate intervention, Ashton emphasized, because government and religious intervention, while effective in galvanizing the movement and gaining media attention, did not stop apartheid.


"My hunch is that the progressive movement would prefer to invest in the future of the planet rather than the future of Donald Trump, obesity or steakhouses," Hawken recently wrote. "If we are to see the kind of transformation required to abate climate change, rescue our oceans, eliminate species die-off, stop the assaults on indigenous cultures, eradicate clear-cutting and restore our water, air and soils, we will need to move a lot faster and more elegantly than we are now. Will investors put financial return before conscience? Many will, and the number of people who won't compromise their values for profiteering is increasing."


There are many SRI services and tools to screen the more than 110 SRI mutual funds, some of which use more than 100 individual stocks to populate their particular investment fund. Here are some more narrowed categories for screening: abortion; adult entertainment; alcohol; animal testing; board diversity; corporate governance; defense contracting; environment; gambling; human rights; labor relations; minorities; terrorism; tobacco; weapons; workplace practices.





Women's Power & r & The social equity tenets now touted by SRI funds such as Pax, Domini, Calvert, and even the Sierra Club Mutual Fund have their roots in the Methodist Church. Rev. John Wesley preached in a sermon called "The Use of Money" that companies should operate without rendering harm to their neighbors. The Methodist Church's founder also believed businesses should avoid practices that harm the public commons.


It's safe to say that women in Wesley's church and among the Quakers felt that companies making booze and bullets were going against God's law and therefore should not be given a single red cent of their money.


"More than 63 percent of Calvert's shareholders are women," Ashton said at the Empyrean. "Calvert has been voted one of the best 100 companies nine years in a row for women to work for."


Steven Amble has been in his Edward Jones position for two years, beating the pavement on the South Hill surrounding his office near 29th Avenue and Regal. For him, the learning curve on social responsibility and green funds has been steep, but he sees more of his customers requesting information on SRI's for their retirement and children's 529 education accounts.


Calvert, Pax and Domini want to tap into the fact that one-third of baby boomer women will be single when they retire, so the "invest now, regularly, for the long-term, and with an eye toward diversification to reduce risk" mantra was hot on both Ashton and Amble's agenda.


The global snapshot for women sheds light on why Calvert's female directors are fighting for more women on boards of directors and for more measures to aid women in the workforce, like day-care provisions and championing women as managers:


& lt;ul & & lt;li & Two-thirds of all human work hours are worked by women -- yet women earn 10 percent of the world's income; & lt;/li & & lt;li & Less than 1 percent of the world's property is owned by women, and only 26 percent of U.S. companies are owned and operated by women; & lt;/li & & lt;li & But $14 trillion in wealth is held by American women. & lt;/li & & lt;/ul &


Calvert estimates that in five years, American women alone will have more than $30 trillion in total net assets. That's a lot of leverage when it comes to forcing social and environmental change through your checkbook.