April 04, 2003
Rebuilding Iraq: Humanitarianism Versus Opportunism
by William Baue
Socially responsible investing supports companies and nonprofit initiatives that advance
humanitarian efforts to rebuild Iraq and avoids investment in profiteering companies.
Regardless of political leaning or opinion of the war in Iraq, most people are eager to see the
conflict end. While the rebuilding of Iraq and surrounding areas ravaged by the war will certainly
entail massive humanitarian efforts, it will just as certainly involve work by corporations that
have positioned themselves to profit handsomely. Many social investors want to avoid exposure to
such companies, but how to do so is unclear.
"Should there be an Iraq screen?"
asked Tim Smith, president of the Social
Investment Forum (SIF), a socially responsible investment (SRI) industry trade organization.
"It's an interesting concept, though I don't know how such a screen would be created."
"What would you assess companies on? That they're doing something in Iraq?" Mr. Smith
Mr. Smith stressed the need to distinguish between humanitarianism and
"There's a difference between rebuilding and taking advantage of the
situation to be an economic occupying power," Mr. Smith told SocialFunds.com. "The social
investment movement will not rush forward to say 'Let's rebuild through private enterprise,' but
will look toward other, more constructive ways."
Toward that end, the Calvert Foundation has devised several innovative ways
to support constructive humanitarian rebuilding efforts.
For example, 100 percent of
Calvert Foundation's Relief and Recovery Initiative donations are passed on to groups in the
InterAction coalition. The alliance comprises relief, development, and refugee assistance agencies
operating in Iraq, Afghanistan, and other war-torn regions. InterAction members will uphold a set
of standards that ensure their accountability, professionalism, and effectiveness. Investors in
Calvert Group mutual funds can redirect any dividends and capital gains to this initiative.
Pax World Funds has established a similar initiative (see related article.)
The Calvert Foundation also offers two other ways to support constructive efforts in the Middle
East. First, the foundation is offering $50,000 in matching funds to leverage tax-deductible
donations to the Middle East Microcredit Giftshare. This pool will fund small loans to
entrepreneurs operating in the Middle Eastern communities most vulnerable to the effects of the
Second, the foundation's Middle East Peace Giving Folio focuses on promoting peace
by supporting seven nonprofits that operate in the region. The companion Global Peace and Security
Giving Folio focuses on relieving the underlying tensions that threaten peace globally.
addition to supporting such nonprofit efforts, investors can use their financial leverage to voice
their support for constructive rebuilding efforts and their opposition to opportunistic ones.
"It will become clear very soon which companies are in there for exploiting what happened and
those companies that are in there for real humanitarian purposes," said Michael Lent of Progressive Asset Management (PAM), a
national network of SRI investment advisers. "I would recommend holdings in companies where you
could clearly identify humanitarian efforts--providing food and medicine, for example."
"In terms of those companies that are going to be profiting from the war, look at construction
companies such as Caterpillar (ticker: CAT), companies
that are involved in the oil industry, and those that have close ties to the Bush Administration
and the federal government in general, such as Halliburton (HAL)," Mr. Lent told
Mr. Lent pointed out that devising a screen to identify companies
profiteering from the pain and suffering of war may not be necessary, as existing SRI screens may
do just that.
"Socially responsible investment professionals have been paying attention to
these issues for years, and for investors who are concerned about companies exploiting what happens
in the war with Iraq, the environmental and military screening we do has already excluded most if
not all of these companies from portfolios," said Mr. Lent. "My clients don't own any of these
companies, and if they do, as we find out who is profiting from the war, we will discuss the
possibility of selling the stock or doing shareowner action."