Newspaper Page Text
6A
MARCH 8, 2001
Social investing: you can profit
without sacrificing principles
- ith today’s increas
h, ingglobal awareness
% of social and environ
~mental awareness, many in
wvestors desire that their
strongly held values and be
-liefs be reflected in their in
vestment portfolios. Social
investing gives investors a
~unique and increasingly popu
“lar way to incorporate their
‘values with their investments.
Many religious groups,
-schools, foundations, endow
ments, labor unions, health
‘associations, and concerned
individuals are making social
investing a priority invest
‘ment issue. In fact, nearly one
out of every ten dollars under
management intheU.S.ispart
of some type of social invest
ing portfolio. (Source: Re
-sponsible Investing Trends In
the U.S., The Social Invest
‘ment Forum, 1997)
. Not All Social Investors
‘Think Alike!
-* Social investors are con
cerned about a wide range of
issues, and toreflect those con
cerns, design portfolios that
avoid problematic areas and
support investments that ac
tively promote social and envi
ronmental well-being. Inves
tors may seek to invest in com
panies with strong records in
community service, charitable
giving, employeerelations, and
environmental problem-solv
ing. Alternatively, investors
may choose to avoid exposure
to corporate involvement with
Orinancial
Consultant
tobacco, alcohol, gambling, mili
tary contracts, environmental
problems, nuclear power, or to
doingbusinessin countries with
human rights violations. So
whether concerns revolve
around the environment, the
community, the workplace, or
ahost of otherissuesthat affect
the world we live in, socially
investingoffersindividualsthe
opportunity toinvest with their
values.
The Performance Debate
Despite the fact that social
investing is becoming increas
ingly popular, the gnawing
question remains - must inves
tors sacrifice return to achieve
social objectives? In particular,
if an investor chooses to screen
a traditional stock and bond
portfolio on social criteria, will
that portfolio underperform
similar unscreenedinvestment
vehicles? Traditionally, there
have been three major schools
ofthoughton thiscriticalissue:
1. Social investing cannot
compete. Proponents of this
school believe that if invest
ment portfolios are designed to
meet investors’ social and po-
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litical objectives, they cannot
also provide competitive re
turns. A key argument is that
the social screening process
leads to lower returns by limit
ing the investment universe,
thusreducing opportunitiesfor
portfolio diversification.
2. Screened investments
should outperform themarket.
Advocatesofthissecond school
believethat, over thelongterm,
investments identified as so
cially aware will also prove to
be among the most profitable.
Their theory is that companies
with good employee relations
will have lower turnover a
higher productivity; that cor
porate investment in environ
mentalinitiativescan pay offin
reduced resource costs and
fewer legal liabilities; and that
companies promoting equal op
portunity can better access a
diverse talent pool and
multicultural markets. Inturn,
these factors can lead to in
creased earnings for good cor
porate citizens and ultimately,
higher-than-market returnsfor
.screened stock portfolios.
3. The third, less glamorous
school ofthought proposes that
there is no intrinsic cost or
benefit to the social screening
process.
You Don’t Have to Sacri
fice Profits for Principles
Currentstudies strongly sup
port this third theory; suggest
ing that, in fact, investors do
not have to sacrifice profits for
principles. In May 1990,
AUGUSTA REGIONAL AIRPORT
Business
Kinder, Lydenburg, Domini &:
Co., a firm providing social in
vestment research to the fi
nancial community, created the:
Domini Social Index (DSI) asa
tool to gauge the performance
of the socially screened equity
universe and to measure its
returns against unscreened
market returns. The DSlisa
market capitalization-weighted
common stockindex that moni
tors the performance of 400
corporationsthat pass multiple
broad-based social screens.
In the roughly eight years
since its inception, the perfor
mance of the Domini Social
Indexhassurprised many skep
ticsby generatingreturnsclose
to or above those of the Stan
dard & Poor’s 500-an index
generally accepted as a perfor
mance benchmark for the U.S.
equity market. Sinceitsincep
tion, the DSThasout performed
the S&P 500 for an average
annual increase of 22% against
the S&P 500’s 19.97% average
annual growth through June
1999.
Like all sensible investment
decisions, the decision to select
a social investment manager
should be based on these fun
damental steps: defining your
investment objectivesand time
horizon, determiningyour risk
tolerance, and evaluating how|
this investment fits into your
.total financial picture. While
past performance is not indica-
See PRINCIPLES, page 7A
. y | 4 s
el
e um—.i H ‘
Dianne Leonard (L) and Joyce Smart-Buchanan (R) of
81-LO present a check for $7,000 to James Owens of
the United Negro College Fund. The donation was
made in conjunction with Black History Month.
Knology customer service
rep makes a special delivery
PANAMA CITY, FL
Knology announces Melissa
Woolard as the newest con
tender for their Special Deliv
ery Award - presented to the
employee displaying exem
plary customer service.
Melissa Woolard, a Knology
customer service representa
tive, recently received a call
-from telecommunications cus
tomer, Earl Boone, who ex
plained that he often dialed
phone numbers only to reach
error recordings or wrong
numbers. After speaking with
the man at length, Woolard
realized that the 95-year-old
gentleman simply couldn’t see
the keypad’s small numbers.
That evening, Woolard pur
chased a large-button phone
and delivered it to Boone’s
home. She pluggedin the new
phone and the problem was
solved. Woolard then took the
time to speak with the gentle
man, who revealed that his
wife had just passed away.
According to Boone, her kind
ness and company “made his
day.”Woolard enjoyed his com
pany too, and now frequently
visits Boone.
“We are fortunate to have
an employee like Melissa
[Woolard]. Her thoughtfulness
and resourcefulness is what
we strive to impart in every
Knology employee,” says Tay
lor Nipper, Knology’s senior
marketing director. The Spe
cial Delivery Award recipient
will be announced later this
month.
Knology, based in West
Point, Georgia, is part of the
ITCgroup of companies, which
includes ITC”*DeltaCom,
Powertel and Inter Call. For
moreinformatiion, please visit
our Web site at
www.knology.com.