[Sri-news] SRI News - Winter Issue

[Susan Leslie]

SRI NEWS - WINTER ISSUE - JANUARY 2004

An E-Newsletter from the UUA Committee on Socially Responsible Investing

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CONTENTS:

(1) A Performance Review of Mutual Funds by UUA CSRI Member Stephanie
Leighton
(2) UUA Sends Letter to SEC re Shareholder Access to Nominations Process
(3) Shareholder Advocacy Update
(4) Report from the Rev. Dee Graham on Presenting a Resolution on Global
Labor Standards at the Sara Lee Corp. Annual Shareholder Meeting
(5) Community Investing Options - Calvert Community Notes & UUA Matching
Program
(6) Fair Trade Coffee
(7) UUA Board Adds Renewable Energy Screen to SRI Guidelines

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(1) SRI Funds Performance Review by Stephanie Leighton, CSRI Member


How do socially responsible investment strategies perform? Will investing in
SRI funds compromise one's financial well being? 

There is a growing body of compelling evidence that socially responsible
investing doesn't require investors to make compromises between their
financial goals and their social and environmental values.  An increasing
number of investors are investing for positive social change and are doing
well financially too.  For instance, one of the best known socially screened
funds, the Domini 400 Social Index, has beaten its benchmark, the S&P500
Index, since its inception in 1990.  For the 10 year period ending October
31, the Domini Index has risen 11.33% annually vs. 10.44% for the S&P.  This
year, in a rebounding market, it has risen 22.64% through October 31,
compared to 21.19% for the S&P.

Academics studying the link between commonly used social criteria and stock
performance haven't found a clear-cut relationship, positive or negative. To
view the growing body of academic literature on the subject on the internet,
go to www.sristudies.org.  
An excellent source of information on social investing is the Social
Investment Forum (www.socialinvest.org <http://www.socialinvest.org>).  The
Forum recently reviewed performance of social funds and found that over 75%
of socially responsible funds get top ratings by Morningstar and Lipper. Of
the 21 socially screened funds with more than $100 million in assets 16
received top rankings from either Lipper or Morningstar or both.  Thirteen
earned an "A" or "B" ranking from Lipper, based on one-and/or three-year
total returns in their investment categories. Twelve received either four-
or five-star ratings from Morningstar.
Two-thirds of the broader universe of social funds earns high marks. Of the
52 socially screened funds with a three-year performance record tracked by
the Social Investment Forum, 35 (67 percent) received the highest marks from
either Lipper or Morningstar. According to the Forum, 29 of the funds
received an "A" or "B" ranking from Lipper based on one- and/or three-year
total returns within their investment categories. A total of 22 screened
funds garnered either four- or five-stars from Morningstar for three-year
risk-adjusted performance. (The Lipper and Morningstar totals add up to more
than 35 since a number of the funds earned top rankings from both
organizations).
The performance of socially screened funds substantially outpaced that of
unscreened funds. Morningstar reports that 32.5 percent of all mutual funds
it tracks received a ranking of four- or five-stars. A total of 42 percent
of socially screened funds tracked by the Social Investment Forum received
the same ranking of four or five stars from Morningstar.
To see a listing of socially responsible mutual funds, their performance
records and social profiles, check out www.socialfunds.com
<http://www.socialfunds.com> on the internet.
Note:  You can find links to these sites and others through the UUA's SRI
website at www.uua.org/finance/sri.
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(2) UUA Treasurer Jerry Gabert sent the following letter to the Securities
Exchange Commission regarding their new proposed rules for shareholder
access to the proxy ballot for director nominations.  

December 22, 2003

Jonathan G. Katz, Secretary 
U.S. Securities and Exchange Commission 
450 Fifth Street NW 
Washington, DC 20549-0609 

COMMENT ON SEC-PROPOSED RULE: Shareholder Access to the Proxy Ballot for
Director Nominations
Subject: File No. S7-19-03

Dear Secretary Katz,

We submit the following comments regarding the proposed rule on shareholder
proxy access and the ability of investors to better nominate candidates for
corporate boards.  We  urge the SEC to support greater democracy in the
corporate elections process, and to vigorously support investors' rights to
nominate legitimate candidates for company boards, and to do so through the
company's proxy statement. For years, directors have failed to serve
shareowners well in their role as investor representatives at public
corporations, and it is time for this faulty governance system to be
reformed. The three-year wave of corporate scandals and the continued
excesses of executive pay only highlight the flaws in allowing incumbent
boards to hand-pick director candidates.

The Unitarian Universalist Association (UUA) represents the interests of
more than one thousand Unitarian Universalist congregations, on a
continental scale. The UUA grew out of the consolidation, in 1961, of two
religious denominations: the Universalists, organized in 1793, and the
Unitarians, organized in 1825. The UUA has over $150 million of assets under
management and in excess of $100 million in retirement plan participant
funds. 

We are concerned with what we've seen in the proposed rule. The rule should
go much further in providing investors with strengthened rights regarding
the nominations process. We oppose the "triggering events" described in the
proposal. Put forward by opponents of shareholder access earlier this
summer, triggers have no place in building more democratic board elections.
The new rule must provide investors, large and small, with greater reins
over the boards that represent them-if for nothing else but to pressure
directors to clean up conflicts of interest. 

(READ MORE and find full text of letter at
http://www.sec.gov/rules/proposed/s71903/unitarianua122203.htm)

To read the Proposed Rules go to the SEC site at
http://www.sec.gov/rules/proposed/34-48626.htm

For an excellent commentary on the proposed rules and the efforts to expand
them see "Shareholder Democracy Limps Ahead" in Business Ethics, Fall 2003
Issue at
http://www.business-ethics.com/shareholder_democracy_limps_ahead.htm.

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(3) CSRI Shareholder Advocacy Update

The UUA  filed last season as primary filer with ConocoPhillips on the
subject of sexual orientation non-discrimination, and convinced the Company
to modify its written policy on this subject.  These efforts are coordinated
with a group of GLBT investors, formerly known as Equality Project, and we
will continue cooperate with them.  

We co-filed a resolution last season with ExxonMobil urging them to include
sexual orientation in their written non-discrimination policy.  These
filings will be repeated again this year.

We intend to co-file on issues that we have already agreed on, such as
greenhouse gas emissions, equality in employment, global labor standards,
and board diversity.  The process will be to match our limited portfolio
with resolutions on these topics compiled by the Interfaith Center for
Corporate Responsibility (ICCR) as well as the Shareholder Action Network
(SAN) of the Social Investment Forum (SIF).  (Note to readers: The UUA is a
member of  these advocacy networks.) We will follow the primary filers.  

Look for a progress report in the next SRI News of this year's Shareholder
Advocacy Season and on www.uua.org/finance/sri.

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(4) Report from Rev. Dee Graham, Minister of the UU Church of St. Petersburg
FL on presenting resolution on Global ILO Standards at the Sara Lee
Corporation annual meeting on  October 30th:

Friends,

 I had a wonderful opportunity to speak out for the UUA-CSRI and the NY City
employees' retirement fund* at the Sara Lee stockholders meeting in Tampa
recently. It was a great opportunity for public witness ministry, this time
within the corporate leadership rather than from the streets.

I made the resolution, which was seconded by Alan Howard, speaking for the
NYC firefighters' pension fund. We were asking Sara Lee to engage and
outside firm to monitor their treatment of workers in overseas factories.
Betty Robles from Mexico's Elasse organization spoke personally of her
observations there.

Of course, everything was already done on paper and most proxy votes were
already cast, but I had the honor of doing the formalities. While we knew
the resolution would be voted down, we expected 4 percent in favor and got
11 percent. Then the company representative met with us afterwards for about
an hour and we were able to get his endorsement for the Mexican women to
speak with the company as a group! So a lot was accomplished.

The personal best for me was that I learned I could hold a competent
conversation in Spanish with a native speaker. Indeed, I can now say
"liberation theology" with nearly correct pronunciation.

Our actions were broadcast locally by WMNF, public radio.
That was a feel-good UU moment.

Faithfully,
Dee

The Reverend Dee Graham
3600 - 56th Avenue North
Saint Petersburg, FL 33714
Study Voice/fax: 727-522-3907
*Note to readers:  The UUA sends representatives to shareholder meetings on
behalf of the NYC Comptrollers Office because we are both members of the
Interfaith Center for Corporate Responsibility and the NYC Office does not
have funding to send people out of state to represent them.  This
partnership provides a way for UU folks to gain experience (and publicity)
for shareholder advocacy.

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(5)  Calvert Community Notes
In our last issue of SRI News we mentioned several community investing
options.  In this issue we would like to draw to your attention, Calvert
Community Notes.  See
http://www.calvertfoundation.org/individual/investment/investmentnotes-cci.h
tml for a brochure, a prospectus, and a free community investing kit.
The UUA also offers a community investing matching program of up to $10,000.
See http://www.uua.org/finance/sri/community/matching.html for more
information.

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(6) Fair Trade Coffee 
Buying and investing in Fair Trade Coffee is a great way to participate in
the socially responsible investing and shopping movement and to educate your
congregation.  
Over 400 UU congregations are participating in the UU Service Committee
Coffee Project.  See www.uusc.org/info/coffeeproject.html.
Other sources include Global Exchange, Oxfam, and Equal Exchange.  See their
websites for more info including purchasing, investing, and advocacy efforts
related to Fair Trade:
http://www.globalexchange.org/campaigns/fairtrade/coffee/
http://www.oxfamamerica.org/campaigncoffee/art3391.html 
http://www.equalexchange.com/

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(7) UUA Adopts Renewable Energy Screen
The CSRI recommended to the UUA Finance Committee and Board of Trustees that
an environmental impact screen to favor companies involved with renewable
energy sources be added to the UUA's guidelines.  The Board voted to adopt
this policy at their January 2004 meeting.
Here is the background information that was submitted to the Board.
The Committee on Socially Responsible Investing recommends the approval of
an additional Environmental Impact screen so as to favor companies who
demonstrate an interest in increased involvement in renewable energy
screens.

COMPREHENSIVE SOCIAL ANALYSIS AND GUIDELINES ENVIRONMENTAL IMPACT

FAVOR COMPANIES WITH:

A COMMITMENT TO INCREASE INVOLVEMENT IN RENEWABLE ENERGY SOURCES

CSRI members developed the recommendation that the UUA add "favor companies
involved in renewable energy sources" to the list of screens they give to
their portfolio investment managers and recommend for congregations and
affiliates. See below for background including their other screens.

An example is Home Depot selling solar panels in its west coast stores.

Another example is Staples.  In their November 2003 Environmental Progress
Report, Staples included the following info on their efforts to purchase
renewable energy.

Staples is committed to reducing its overall energy consumption, purchasing
more power from renewable sources and reducing the greenhouse gas emissions
from their business operations. Staples has a long-standing commitment to
energy conservation and has invested in green technologies incorporating
them into design of stores and distribution centers where they have built
and opened new facilities. Through continued investment in new energy saving
technologies and increasing awareness in the area of energy conservation
Staples has saved 18,964,053 KWh in the last 12 months.

To increase their use of power from renewable sources, Staples joined the
Green Power Market Development Group www.thegreenpowergroup.org
<http://www.thegreenpowergroup.org/> facilitated through the World Resources
Institute. They joined 11 other major corporations who are committed to
promoting investment in affordable renewable power and set a goal for
combined renewable purchases of 1000 MW by 2010. By working with the Green
Power Group, Staples increased its renewable power use from less than 2% to
an industry-leading 10% of its total annual U.S. electricity consumption,
exceeding its initial 2003 goal of 5%. These purchases include a combination
of wind, landfill gas, biomass and certified small hydro generation. This
includes a purchase of RECs (Renewable Energy Certificates) of over
46,000,000 KWh and remaining purchased directly through utilities.

Johnson and Johnson is also in the Green Power Market Development group.
Johnson & Johnson has installed 1.2 megawatts of solar photovoltaics on
facility rooftops across three states, making the company one of the largest
users of on-site solar PV in the country.

The companies active in the Green Power Market Development Group that are
actively seeking to boost demand for renewable energy are: Alcoa Inc.,
Cargill Dow, Delphi Corporation, Dow, DuPont, General Motors, IBM,
Interface, Johnson & Johnson, Kinko's, Inc., Pitney Bowes and Staples.
Toyota Motor Sales of America has also been very proactive in buying green
energy for its corporate headquarters and all facilities in California.

We have historical resolution support for the recommendation and the text is
shown below under Environmental Impact - To favor companies with:

A 1992 Resolution on Safer Sources of Energy Resolution which states: BE IT
FURTHER RESOLVED that the Unitarian Universalist Association advocate
research and development for conversion from fossil fuels to environmentally
sounder, cleaner sources of energy, such as solar, geothermal, wind, tidal,
and other safer sources of power, and that member congregations and
individual Unitarian Universalists be urged to join this action; See
<http://www.uua.org/actions/energy/92safer.html> for complete text.

A 1981 Resolution on Alternate Sources and Conservation of Energy which
states: BE IT RESOLVED: That the 1981 General Assembly of the Unitarian
Universalist Association urges all churches, fellowships and individuals to
request their United States Representatives and Senators to legislate:
Greater financial commitment to long-range basic research and development of
solar and other alternate renewable sources of energy and means of
conserving energy; The institution and support of educational programs at
all levels in schools throughout the United States on alternate renewable
sources of energy and means of conserving energy; and Greater financial
incentives in the form of larger tax rebates to persons who adopt alternate
sources of energy and/or means of conserving energy. See
<http://www.uua.org/actions/energy/81conservation.html> > for complete text.


Approved Screens for Comprehensive Social Analysis and Guidelines were
implemented after the Board established the Committee on Socially
Responsible Investing (CSRI) and the formative work of the committee got
underway. One of its principal responsibilities was to recommend carefully
selected social and environmental screens. The CSRI conducted a
comprehensive review of our principles and purposes and the resolutions,
statements of conscience, and actions of immediate witness that have been
passed by the General Assembly over the years.

The resulting screens, which are in accord with the UUA Principles and
Purposes, were approved by the Board, thus permitting the Investment
Committee to begin to use these positive and negative screens for equity
investments. See the complete listing - to which we recommend this addition
- at http://www.uua.org/finance/sri/investing/screening.html

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Please send us news about how your congregation is participating in SRI and
let us know what kinds of resources you are looking for.  You can write to
Susan Leslie, staff liaison for the CSRI at sleslie at uua.org.

> Susan Leslie
> Director of the Office for Congregational Advocacy and Witness
> Unitarian Universalist Association
> 25 Beacon Street
> Boston, MA  02108
> (617) 948-4607
> sleslie at uua.org
> 
>