Economic Evolution or Revolution?
by Amy L. Domini
Does the way in which investment decisions are made have the potential to change
to the world? Advocates of integrating social and ethical criteria into the investment
decision making process (Socially Responsible Investing or SRI) have long argued
that it does. SRI advocates are not drawn to the field by a libertarian impulse to
give freedom of choice, nor do we enter this discipline to provide the world with
a feel-good investment choice. As SRI advocates we vehemently argue that this approach
to investing is a means of returning corporations to their original purpose whereby
financial markets serve economic needs.
At the heart of the argument is the simple fact that capitalism and corporations
did not evolve in a vacuum. Our system of corporate rights and ownership structure
evolved to provide society with much needed goods and services in a timely and effective
way. The implicit social contract made states, "give us food, clothing, shelter,
health care and comforts of humankind, and we will construct financial market-places
to grease the machinery for delivery." The system has worked fairly well and
neither corporations nor most individuals wish to completely dismantle it. But it
is far from a perfect structure and the imperfections are fast becoming fault lines
that threaten to destroy the very values society set capitalism free to protect.
The social investment industry has the potential to change the world. It has the
potential to slow or reverse the common wisdom that the purpose of corporations is
to provide financial return, to remind society that the purpose of Microsoft, for
example, is not to return profits to investors. The purpose of Microsoft is to provide
computer software. Profits are only a means to that end. Our job is to construct
a framework within which corporations give us food, clothing, shelter, health care
and comforts we ask for while also not causing us harm.
How do SRI professionals combat the argument that the business of corporations
is financial returns? The logical extension to the argument that financial return
is the purpose of the corporation, is that corporations will get out of the business
of providing goods and services and stick to money lending. Clearly the end result
of this argument is that five people become very wealthy and billions starve. Our
purpose goes beyond providing personal choice. It goes beyond bearing witness. Our
purpose is to win a desperate struggle - the struggle against the system. The struggle
against an ever dwindling minority benefitting from the economic engine society put
into place to feed, clothe and shelter its population.
At the Social Investment Forum meeting in Minneapolis some years ago, Daniel Quinn,
author of Ishmael, spoke of his book. In it the teacher Ishmael helps his student
to understand that, just as citizens of Nazi Germany shared a terrible secret they
never spoke of, so do we today. Just as the children and grandchildren of Germany
look to elders and ask, "How could you have done nothing?" our children
are looking to us and asking the same question. And what question is this? "How
could we pretend that we did not agree to consume the planet and its resources until
they were gone?"
Philip Morris makes roughly $6,600 per tobacco-related death. Each of these deaths
represent hundreds-of- thousands-of-dollars in costs to society. A direct transfer
has taken place to benefit the economic well-being of a few at the immense hardship
of the many. The tobacco industry is not the only industry in which these numbers
are so dramatic. The mining, timber, sugar, beef and oil industries all make tiny,
incremental benefits to the very few by massive transfer from the majority. They
only escalate the progress toward our shared secret. Can we deny Ishmael's wisdom?
Social investing is our best hope. It can return our economic structure to its
purpose. Investors operate at the rub point where corporations and society meet.
Social investors can define the terms of this intersection. This is our purpose.
The struggle is too great, the need too immediate, the failure too costly to allow
ourselves to do nothing. We investment professionals must be constantly vigilant.
It is not enough to wear our Birkenstocks and Patagonia as we sip Odwalla juices.
We must do more than no harm. Social investing is not just eco-fundamentalism applied
to pricing stocks. It is a means of social change.
If we are to deflect the fate financial markets have catapulting down upon us,
we must achieve institutional excellence at once. We must, as an industry, set our
goals higher. Only firms committed to social change goals can continually push back.
But, if we lack the disciplines to deliver consistently superior social advocacy
research and financial results, we not only let down our clients and ourselves, we
doom the yet unborn to a world created by the system now in place, the system committed
to self-indulgence by the few. A world increasingly dedicated to financial return
to the lucky elite, over economic well being for all.
INVESTING AND BUSINESS PUBLICATIONS
The Socially Responsible Guide to Smart Investing, Samuel Case
Financial Peace: Restoring Hope to You and Your Family, Dave Ramsey
The Morningstar Approach to Investing: Mutual Funds, Andrew Lackey
The Kabbalah of Money: Livelihood & Economic Behavior, Nelton Bonder
Get a Financial Life: Personal Finance in your 20s & 30s, Beth Kobliner
How Good Guys Grow Rich: Proven Strategies, Adriane Berg & Milton Gralla
Aiming Higher: Sound Management & Social Vision, David Bollier for the BET
Beyond Growth: The Economics of Sustainable Development, Herman Daly
Building a Win-Win World: Beyond Global Economic Warfare, H. Henderson
America Needs a Raise: Economic Security & Social Justice, John Sweeney
Financing Change: Sustainable Development, Stephen Schmidheiny
Invested in the Common Good, Susan Meeker-Lowry
Whole Life Economics: Revaluing Daily Life, Barbara Brandt
75 Best Business Practices for Socially Responsible Companies, Alan Reder
How to Get Out of Debt, Stay Out & Live Prosperously, Jerrold Mundis
Cracking the Corporate Closet, Daniel Baker, Sean Strub & Bill Henning
The Socially Responsive Portfolio, James Melton & Matthew Keehan
The Tao of Money: Principles for Financial Independence, Ivan Hoffman
Investing for Good, Peter Kinder, Steve Lydenberg & Amy Domini
Good Money: Profitable Social Investing in the 90's, Ritchie Lowry
Money and the Meaning of Life, Jacob Needleman
Jews, Money & Social Responsibility, Lawrence Bush
Investing from the Heart: The Guide to SRI, Jack Brill & Alan Reder
The Social Investment Almanac, Peter Kinder, Steve Lydenberg & Amy Domini
Your Money or Your Life, Joe Dominguez & Vicki Robin
Business Ethics Report, (800) 601-9010
Clean Yield: Principles & Profits Working Together, (802) 533-7178
Co-op America / Social Investment Forum: Connections, (202) 872-5307
Council on Economic Priorities: Research Reports, (800) 729-4237
Cruelty-Free Investment News, (703) 401-5445
Green: Personal Finance for the Unashamed, (800) 477-2968
ICCR's Corporate Examiner, (212) 870-2295
IRRC's Corporate Social Issues Reporter, (202) 833-0700
Dollars & Sense: What's Left in Economics, (617) 628-8411
Franklin Research's Insight: Investing for a Better World, (617) 423-6655
The GreenMoney Journal, (509) 328-1741
More Than Money: Progressive People with Wealth, (541) 343-2420
Morningstar Investor and No-Load Mutual Funds, (800) 735-0700
Natural Business: Financial News on Health Food Industry, (303) 442-8983
Women's World Banking: What's New and MicroLender, (212) 768-8513
GUIDES (NEW 1996/97 VERSIONS):
Co-op America's Responsible Investors Handbook, orders (800) 58-GREEN
Guide to SRI Mutual Funds and Investment Services, orders (212) 870-2295
Social Investment Forum Member Directory, orders (202) 872-5319
Taking Charge of Our Money, Our Values, Our Lives, orders (541) 343-2420
Women Choosing & Managing Financial Professionals, orders (415) 561-6520
Who is my Neighbor? Economics as if Values Matter, orders (800) 714-7474
(Reprint, GreenMoney Journal, Spring, 1997 Issue)
Copyright © 1996. The Light Party.