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October 15, 2004
Abortion, Sexual Orientation Reveal Diversity of Socially Responsible Investment
    by William Baue

The umbrella of socially responsible investment encompasses a wide diversity of values, running the gamut from social progressivism to cultural conservatism.

Socially responsible investment (SRI), an "ungainly phrase" according to KLD Research & Analytics President Peter Kinder, developed as a description of investing that reflects the values of the investor. Personal and institutional values span a wide spectrum and, therefore, so too does SRI. This broad diversity could be characterized as a strength or an inconsistency, depending on one's attitude toward SRI.

"Notions of what is humane or socially responsible are always evolving, and inevitably they are subjective," said Shelley Alpern, director of social research and advocacy and assistant vice president at the SRI firm Trillium Asset Management. "The term 'socially responsible' is limited in that I may never get you to agree with me as to what is 'responsible' on any or every matter, but it's useful in that it connotes a sense of aspiration, a sense of obligation or duty to society that a more neutral term like 'values-based investing' doesn't necessarily imply."

"What's good about 'social responsibility' is that the term invites debate, and through debate, consensus begins to emerge on various issues," Ms. Alpern told

Broad consensus exists in the SRI community on most issues, such as climate change risk, corporate disclosure of environmental and social liabilities, reigning in excessive executive compensation, and board accountability and diversity, among many others. However, certain issues, such as abortion, contraception, and sexual orientation, reveal ideological schisms within the SRI community.

"Just as there is a range of opinions in society at large about the issue of abortion, so too are there different opinions on this issue among socially concerned investors," said Tim Smith, president of the Social Investment Forum (SIF), the SRI industry organization. "Some investors choose to avoid investing in companies involved in abortion, others support the right of choice and have no such screen."

"This is a matter of personal choice depending on an investor's religious or personal values," Mr. Smith told

In tabulating assets invested under the broad SRI umbrella for its most recent Trends Report, SIF includes mutual and pension funds that screen out companies that develop or manufacture contraceptives and abortifacients as well as funds that invest in companies that support reproductive choice. SIF also includes funds with "non-married lifestyles" screens that exclude companies that "undermine the sacrament of matrimony," such as insurers that cover non-married couples (both hetero- and homosexual) and companies offering domestic partner health benefits.

In other words, SIF is agnostic about what falls under the definition of social responsibility, encompassing the spectrum of values-driven investment strategies from social progressivism to cultural conservatism.

Shareholder resolutions calling on companies to adopt policies barring sexual orientation discrimination represent a case where both sides of the spectrum can clash. For example, the Ave Maria Catholic Values Fund (ticker: AVEMX), which SIF counts as an SRI fund, voted against this resolution at ExxonMobil (XOM), according to its proxy voting record filed with the Securities and Exchange Commission (SEC). Did Ave Maria thus vote in favor of discrimination?

"Voting against these resolutions is not a direct act of discrimination," said Ms. Alpern of Trillium, which co-filed the sexual orientation nondiscrimination resolution at ExxonMobil. "But it endorses a more arbitrary handling of discrimination and harassment complaints."

If voting against such a resolution represented direct discrimination, then the charge against SRI of inconsistency would potentially be valid. However, the expansive definition of social responsibility prevents exclusion based on ideology and instead promotes inclusion even of viewpoints that may be diametrically opposed.


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