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November 15, 2001
The Socratic Method Expands
    by William Baue

KLD expands the scope of SOCRATES, its database of research reports on issues related to the social and environmental performance of thousands of companies.

On November 5, 2001, KLD Research & Analytics, Inc. (KLD) announced a major expansion of the number of companies it reports on through SOCRATES, its interactive database containing thoroughly-researched profiles of companies’ social responsibility. Also known as the Corporate Social Ratings Monitor, SOCRATES originally covered companies listed on the S&P 500 Index and the Domini Social Index (DSI) 400. The expansion quadruples the number of companies covered to include the entire Russell 3000 Index as well as KLD’s own Broad Market Social Index (BMSI.)

“This is a major breakthrough for the growing ranks of investment professionals who want a ‘one stop’ resource on social and environmental data on every major publicly traded corporation in America,” said KLD Research & Analytics President Peter Kinder. “The enlargement of KLD’s universe of profiled companies reflects our commitment to providing SOCRATES subscribers the most comprehensive and timely social research available on corporations.”

SOCRATES formats information in easy-to-read narratives written by a team of 18 research analysts. Each analyst follows predefined companies while also specializing in specific issues and certain sectors, creating a triangular net for catching breaking news. Analysts update profiles on a daily basis, as new and pertinent information becomes available.

SOCRATES divides its profiles into six categories based on the following social rating criteria: community involvement, diversity, employee relations, environmental practices, non-US operations, and product quality and safety. For example, the sample profile of the Merck Company posted on KLD’s website notes under the “Family Benefits Strength” heading that “In 1999 Working Mother magazine included Merck on its list of the 100 best workplaces for working mothers.”

SOCRATES includes exclusionary screening in six areas: alcohol, firearms, gambling, military contracting, nuclear power, and tobacco. Additionally, clients can request an “involvement report” on a specific issue. For example, Catholic investors can query on contraceptives to identify “any publicly traded company [indexed by SOCRATES] that is involved in the development or manufacture of contraceptives or abortifacients, as well as companies that own or operate acute care hospitals or surgical centers,” according to KLD Director of Media and Communications Anjali Gupta.

Clients can combine multiple queries to search the SOCRATES database, allowing them to pinpoint specific variables of interest to them. They can also browse the database by keyword.

The SOCRATES expansion marks the continuing growth of KLD’s family of investment indicators and tools: the company introduced the Domini 400, the first socially responsible investing index, in 1990; in December 2000, it added the BMSI, which indexes approximately 2,300 socially-responsible companies on the Russell 3000; and in May 2001, KLD introduced the Large Cap Social Index (LCSI), an index of 700 companies screened from the Russell 1000 Index. Future plans include continued collaboration with the Russell/Mellon Analytical Services, including the addition of a screened Russell 2000 Index.


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