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July 17, 2006
Survey Reveals TIAA-CREF Investor Desire to Up Commitment to SRI
    by Bill Baue

TIAA-CREF promises to respond to participants, of whom over three-quarters prioritize social and environmental considerations in investing choices.

In advance of the College Retirement Equities Fund annual meeting this week, TIAA-CREF (also comprised of the Teachers Insurance and Annuity Association) released a survey of its participants' attitudes on socially responsible investing (SRI). TIAA-CREF manages the largest retail SRI fund in the US, the CREF Social Choice Account (SCA), which has grown to $7.9 billion in assets (as of June 30) since its 1990 inception.

The survey, conducted by Washington, DC-based Greenberg Quinlan Rosner Research, canvassed 1002 TIAA-CREF participants, half of whom invest in the SCA and half who do not. Interestingly, consideration of social and environmental issues in investment decision-making is prioritized by both SCA participants (87 percent) and non-SCA participants (78 percent.) Majorities of both sets of respondents also showed a willingness to accept lower returns if their investments could "do some good in this world," with 81 percent of SCA participants agreeing and 64 percent non-SCA participants supporting this.

However, this very formulation reveals a common misperception that SRI automatically underperforms, and the survey further reveals a lack of understanding about TIAA-CREF's SRI options amongst both SCA and non-SCA participants.

"TIAA-CREF believes that investors do not have to give up returns to invest in a screened universe," said Amy O'Brien, who was installed as director of social investing at TIAA-CREF this time last year. "The CREF Social Choice Account is an SRI option that offers competitive returns." A balanced fund, the SCA has closely tracked its benchmark, a weighted composite of the Russell 3000 (60 percent) for stocks and the Lehman Brothers US Aggregate Index (40 percent) for bonds.

"The survey highlights the very real opportunity we have to educate participants about the CREF Social Choice Account and SRI generally," Ms. O'Brien told

This survey and the May establishment of a Social and Community Investing Department reflects TIAA-CREF’s increasing interest in SRI. These moves have been welcomed by some longtime critics such as the Make TIAA-CREF Ethical campaign.

"We appreciate TIAA-CREF undertaking this survey and also showing more concern for social and environmental issues," said Neil Wollman, coordinator of Make TIAA-CREF Ethical. He is a senior fellow at the Peace Studies Institute and professor of psychology at Manchester College in Indiana. "It took a lot of consciousness raising over the years and overcoming their active resistance, but now they can be a true leader on these issues, given their influence."

One survey result particularly relevant to the Make TIAA-CREF Ethical campaign is TIAA-CREF participants' rather low tolerance for corporate irresponsibility. Asked whether it is OK to invest in companies while disapproving of some of their activities, a majority of both SCA (59 percent) and non-SCA (53 percent) disagreed.

These results provide strong backing for the Make TIAA-CREF Ethical campaign targeting six companies "that consistently display egregious behavior," asking to TIAA-CREF to "reform them or dump them." The companies include Wal-Mart (ticker: WMT) and Nike (NKE) for sweatshop labor, Chevron (CVX) and Coca-Cola (KO) for human rights abuse complicity, Altria (MO) for selling cigarettes to kids, and Costco (COST) for cultural and ecological damage.

Prof. Wollman notes that TIAA-CREF made a commitment to step up its shareholder activism--a strategy strongly supported by both SCA (70 percent) and non-SCA (67 percent) participants.

"As far as we know, there has been no engagement with these companies on these issues, and the survey provides some support for divesting," Prof. Wollman told

"We believe that constructive engagement is a more effective means of influencing corporate policies and practices,” said Ms. O'Brien. "People might not be aware of some of these activities because we prefer to work quietly and behind the scenes," added John Wilcox, senior vice president and head of corporate governance at TIAA-CREF.

TIAA-CREF proxy voting, which now occurs in the daylight due to SEC rules requiring disclosure by funds, seems to fall short of the commitment to social and environmental responsibility supported by all survey respondents. According to Jackie Cook, senior research associate at The Corporate Library (TCL), TIAA-CREF opposed 59 percent (92 of 156) of social and environmental resolutions in 2004 and 54 percent (77 of 142) in 2005.


"Every shareholder proposal is voted on a case-by-case basis and support or lack of support for a proposal often relates to how the proposal is crafted, the type of request being made to the company, and the degree to which a business case exists," Mr. Wilcox told "In the second half of 2005, we created separate proxy voting guidelines for the SCA, so we are now in a position to support a greater number of shareholder proposals in that account."

"Going forward, the survey results will be another factor to be taken into consideration as proxy guidelines evolve over time," Mr. Wilcox added.

TIAA-CREF is also considering expanding its SRI options across diverse asset allocations, as well as expanding its SRI screening.

"We are looking into offering specialized SRI funds like screened bond or international funds," said Ms. O'Brien. "We are also looking at ways to enhance our existing screening methodology, particularly in response to the issues participants feel most strongly about in the survey such as the environment, human rights and community impact."

A majority of respondents (67 percent of SCA and 52 percent of non-SCA participants) say they would invest more money in an SRI fund with one to three percent in community investment.

"I think these results lock in the need for TIAA-CREF to start doing community investment in their SCA," said Prof. Wollman. The name of the new department suggests TIAA-CREF agrees.


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