We're pleased to announce the launch of the new Brown Socially Responsible Investment Fund!
Starting in the fall, BSRI will manage a $50,000 pool of University money, investing in companies and mutual funds that make a profit while bettering the world. Potential investments include green energy research firms, microfinance and community lending banks, medical and pharmaceutical companies, environmentally conscious retailers, and job training or education companies — and any firm that seeks to mitigate its environmental impact or improve the lives of its customers can qualify for consideration. The fund's members will choose and evaluate potential investments, and ultimately all decisions will be made by Brown students.
Above all, the fund is designed to be a learning experience for everyone involved. Socially responsible investment (SRI) has gained great prominence in both the business and philanthropic communities in recent years. With the launch of this fund, Brown will become one of just a handful of universities to offer undergraduates hands-on experience in the field. Members will learn about a broad array of business and social fields, and gain skills essential for careers in finance, philanthropy, non-profit work, or business. Students with any level of interest and investment experience are welcome.
JOIN!
We're really excited to be able to open the group to the Brown community, and we'll gladly welcome students with any level of knowledge or skill. Ultimately, our investments, strategy, and learning opportunities will be shaped entirely by our members. A number of leadership positions will become available in the fall — we'll have more information on that soon — and we'll be inviting anyone interested to apply.
Please join us for our first info session — Tuesday, April 7th from 8-9pm in Wilson 101. In the meantime, if you have any questions or would like more information, please email us at bsrifund@gmail.com. See you soon!
ABOUT SRI
The Basics
Corporations rise and fall based on the value of their stock. Investing in a company increases that value, thus rewarding its business decisions and encouraging competitors to follow in its footsteps. Divestment sends the opposite message: falling prices tell managers that they're doing something wrong, and push the company to chart a new course.
This means that investments matter on a moral level. Buying stock in a good company does good. Buying stock in a company that is hurting people hurts people.
Over the past two decades, a growing number of investors have realized that their investment decisions are inseparable from their moral beliefs. Individual and institutional investors have taken steps to ensure that their money isn't supporting activities they find wrong. For most, that means divesting from companies involved in genocide, human rights violations, and illegal activity. Now, many investors have chosen to sell stocks in companies involved in war, discrimination, pollution, prostitution, and even tobacco and alcohol. At the most basic level, $2.71 trillion in the U.S. is subject to some form of moral oversight.
Today, a small but growing number of investors are going even further: actively using their portfolios for good by investing in companies that better the world, rather than just excluding those that harm it. By doing so, they reward corporations that have taken positive steps — toward environmental sustainability, increased philanthropy, better treatment of workers, and new services for the poor — and punish those that have not.
A number of universities and foundations have joined this movement, and investment management companies have created a host of new socially responsible mutual funds to cater to smaller investors. For some SRI funds, morality isn't even a central goal: they simply figure that what's good for society today will be good for business tomorrow. Studies tracking SRI stocks show that their returns are no different from the market as a whole.
Learn More
Calvert Investments - The leading SRI investment manager
The Social Investment Forum - The SRI industry's central trade group
Domini Social Investments - A family of SRI Mutual Funds
SocialFunds.com - A clearinghouse of information for individual SRI investors
KLD Research & Analytics - An SRI research firm that maintains a number of SRI indexes
INVESTMENTS
Categories
BSRI's investments will be divided into a number of sectors, each of which will target a different type of social responsibility. During the last 15 minutes of each meeting, members will break out into sector groups, and members can choose which group (or groups) they want to join. Presentations, pitches, and debates will be organized within these groups, each of which will be led by two sector managers.
We've tentatively identified three sectors (though these may change based on group interest or Investment Office feedback):
Environmental Stewardship will target companies whose work benefits the environment. Potential investments include:
* Alternative energy and green technology companies, like those working on solar power, carbon sequestration, or energy efficiency
* Utilities that obtain a high percentage of their electricity through renewable sources, or help their customers reduce energy use
* Companies whose products dramatically beat competitors in environmental performance, like natural gas in the energy sector, or trains in transportation.
* Firms that manufacture environmentally friendly products (e.g., organic food), and retailers that sell and promote them
* Companies that deal with humans' environmental impact in a green way, like sewage treatment firms or recycling companies
Poverty Alleviation and Economic Development will target companies whose work improves the lives of low-income people, betters the areas in which they operate, and promotes long-term economic development.
* Firms that make an effort to serve and employ people in developing countries or poor communities with dignity, fair wages, and adequate working conditions
* Companies whose products directly improve needy people's social and economic well-being in the short-run, like technology companies researching third-world agriculture and sanitation, or pharmaceutical companies developing AIDS, Malaria, or Cancer drugs
* Companies whose products indirectly improve people's social and economic well-being in the long-run, like newspaper publishers, for-profit universities, or job training and placement companies
* Companies that provide financial services, like home mortgages, business loans, and insurance to poor, underserved, or minority communities.
Corporate Governance will target companies whose business model isn't inherently SRI but which operate in a socially responsible way.
* Firms whose environmental policies are the best in their industries, and who have made concerted and visible efforts to reduce their environmental impact or publicize environmental issues
* Companies that provide safe and healthy work environments, negotiate fairly with their workers, and provide fair pay and benefits
* Firms that actively work to employ women, minorities, and others who have been or are being discriminated against in the labor market
* Companies that encourage and facilitate employee volunteerism, or engage in corporate philanthropy to a degree that distinguishes them from their peers.
Assets
The fund will be able to invest in two types of assets: common stocks and mutual funds.
The large majority of the group's funds will be held in stock, but mutual funds will be used to target sectors which the group would be unable to invest in otherwise — either because the companies within them are too small, because the key players are based internationally, or because broad diversification is needed to achieve stable financial or social returns.
Mock Portfolio
Company |
Ticker & Exchange |
Industries |
Environmental Stewardship |
||
Honda Motor Company |
NYSE: HMC (ADR) |
Automobile, Motor, Financial Services, Power |
First Solar |
NASDAQ: FSLR |
Solar Energy Research, Manufacturing, and Plant Operation |
PG&E |
NYSE: PCG |
Energy Utility |
CSX Corporation (USA) |
NYSE: CSX |
Transportation: Rail and Intermodal |
Stericycle |
NASDAQ: SRCL |
Hazardous Waste Collection and Processing |
Whole Foods Market |
NASDAQ: wfmi |
Natural and Organic Food Retail |
Ormat Technologies |
nyse: ora |
Geothermal and Recovered Power Energy |
Southern Union Company |
nyse: sug |
Natural Gas Collection, Transport, and Distribution |
Waste Management, Inc. |
nyse: wmi |
Waste Collection, Recycling, Disposal; Waste-to-Energy |
National Grid (ADR) |
nyse: ngg |
Electricity and Natural Gas |
American Trust Energy Alternatives |
Fund: ATEAX |
Alternative Energy, Energy Efficiency |
Poverty Alleviation and Economic Development |
||
The Washington Post Company |
nyse: wpo |
Print and Broadcast Media; Education Services |
Tower Group |
nasdaq: twgp |
Insurance |
Manpower |
nyse: man |
Employment Services |
DeVry |
nyse: dv |
Post-Secondary Education |
Abbott Laboratories |
nyse: abt |
Pharmaceuticals and Healthcare Products |
Baxter International |
nyse: bax |
Pharmaceuticals and Medical Devices |
Leap Wireless |
nasdaq: leap |
Wireless Communications |
American Public Education |
nasdaq: apei |
Postsecondary Education |
Washington Trust Bancorp |
nasdaq: wash |
Banking and Finance |
Calvert Global Water C |
Fund: CFWCX |
Water Services and Technologies |
Corporate Governance |
||
Apple |
NASDAQ: AAPL |
Personal Computers, Handheld Devices, and Software |
IBM |
NYSE: IBM |
Information Technology |
nasdaq: goog |
Online Advertising and Search |
|
The Procter & Gamble Company |
nyse: pg |
Consumer Goods |
Intel |
nasdaq: intc |
Semiconductors and Integrated Circuits |
State Street |
nyse: stt |
Finance |
Costco |
nasdaq: cost |
Big-Box Consumer Retail |
The Walt Disney Company |
nyse: dis |
Entertainment |
Avon Products |
nyse: avp |
Beauty-Oriented Consumer Goods |
Hansen Natural |
nasdaq: hans |
Beverages |
Pax World Women’s Equity |
Fund: PXWEX |
Broad: Corporations that “Promote Gender Equity” |
SCREENS
In addition to the guidelines for companies that BSRI will invest in, the fund will set standards for companies that it won't invest in (known as "screens").
For example, a company doing promising environmental research would be excluded if it treats its workers terribly and has cheated on its taxes, or a company with a strong record of philanthropy and employee satisfaction would be excluded if it owns coal power plants and employs lobbyists to fight environmental regulations.
In the fall, group members will propose, debate, and vote on what these "do not invest" screens will be. Potential ones we've identified include:
Environmental Stewardship:
* Firms that invest in coal, oil, or nuclear energy
* Firms that fight environmental regulations, or have violated them
* Firms that have lagged behind their peers in reducing their environmental impacts
* Firms without written environmental policies
Poverty Alleviation and Economic Development:
* Firms that violate international standards of conduct in developing countries, regardless of relevant laws
* Firms that operate in regions where the international consensus calls for divestment due to pervasive violations of human rights
* Firms that have lagged behind their peers in providing services to poor communities or individuals
* Firms whose employee pay and benefits are among the lowest in their industries
Corporate Governance
* Firms that have violated national laws or acted in poor faith toward customers or employees relative to industry standards
* Firms that discriminate, formally or informally, toward customers, suppliers, or employees on the basis of race, color, religion, age, national or ethnic origin, disability, status as a veteran, sexual orientation, gender identity, gender expression, or sex
* Firms whose non-discrimination, environmental, or disclosure policies do not apply to international subsidiaries
* Firms that have lagged behind their peers in implementing disclosure protocols or requirements
* Firms that have bribed government officials or otherwise encouraged corruption internationally or domestically
"Sin" Industries
* Firms that profit from alcohol, tobacco, firearms, military contracting, gambling, or prostitution
MEETINGS
Starting in September, BSRI will host a weekly meeting (tentatively Tuesday at 8:00 or 9:00) where members will learn about SRI techniques and sectors, pitch new investments, and ultimately debate and vote on changes to the portfolio. The meetings will be the core of the fund's operations, and all decisions will be made at them.
A typical meeting might run like this:
8:00-8:10 - Welcome; discussion on how the markets and our investments have done over the past week
8:10-8:20 – two students give a presentation on the natural/organic food sector — how companies within it operate, who the major players are, and what its outlook is for the future
8:20-8:40 – a student presents a proposal to buy $4000 of stock in Whole Foods Market, Inc. (WFMI); another student presents a counter-proposal on the reasons not to buy it
8:40-8:45 - Group members ask the two students questions on the stock option, then vote on Whole Foods (if the majority votes yes, the investment will be made, pending Investment Office approval)
8:45-9:00 - Members break out into smaller sector groups:
Enviromental Stewardship - group discusses upcoming pitches for First Solar, Inc. (FSLR), a solar panel manufacturer and plant operator, and Honda Motor Co., Ltd (HMC), an automaker with a great record of environmentally conscious design. A group member asks why the group decided to prohibit investment in nuclear power companies, and decides to argue next week that they're actually good for the environment; the two sector managers assign another group member to argue the opposite, after which the group as a whole will vote on whether to change the policy.
Poverty Alleviation and Economic Development - group discusses proposals next week on the Calvert Global Water Fund (CFWCX), an SRI mutual fund that invests in corporations that build and manage drinking water infrastructure in developing countries, and future pitches for Washington Trust Bancorp (WASH), a Rhode Island-based bank known for its community lending programs that recently won an award from the American Bankers' Association for its efforts to help community food banks in the state, and the Washington Post Company (WPO), which owns several newspapers and magazines.
Corporate Governance - group discusses upcoming pitches for Google, Inc. (GOOG), an online search provider that allows its employees to spend 20% of their time working on not-for-profit projects and has a strong record of hiring underrepresented minorities, and the Pax World Women's Equity Fund (PXWEX), a mutual fund that invests only in socially responsible companies with a record of promoting gender equity. A member volunteers to do research on corporate philanthropy, and two other group members offer to help — eventually one will deliver a sector presentation on companies with large philanthropic arms, and the other two will do the buy/counterbuy proposals for a specific stock within the sector.
Group Structure and Leadership
BSRI's executive board will be made up of two Co-Presidents and six or more Sector Managers (two for each of the group's major investment areas). Applications for these positions will be available soon. People with relevant experience in the investment areas (e.g., Environmental Science concentrators for the Environmental Stewardship sector, students with business experience for the Corporate Governance sector; etc.) will probably have an advantage in seeking management positions, but all students are encouraged to apply.
CONTACT:
ALAN HARLAM
(401) 863 2338
