Making Change

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Anita Green, vice president of social research for Pax World Funds, says she was disappointed with Hawken's accusatory tone. She points out that his critique falsely asserts that Pax invested in General Motors and fails to address her industry's emphasis on advocacy -- the idea that SRI firms sometimes pick an investment in order to have a positive influence on a company's behavior. For instance, Hawken specifically calls out Pax World Funds for including a utility company with no minorities on its board of directors. This is technically true, but Green notes that her firm has also applied pressure on that company to become more sensitive to diversity issues.

In a like-minded critique of Hawken, the Social Investment Forum, an industry trade group, argues that by investing in high-profile companies with suspect reputations, SRI firms and their clients can effect change from the inside out. This sort of subtle activism, the group reports, helped convince the Gap to submit to labor audits, led to the adoption of non-discrimination policies at companies such as Wal-Mart, and further spurred forest preservation and recycling initiatives at The Home Depot and Staples.

Terry Mollner, a co-founder of the Calvert Social Investment Fund, one of just a few SRI firms that Hawken views positively, agrees that there should be stricter criteria to determine what it means to be socially responsible, perhaps through a trade group or association that adheres to agreed-upon standards. This would be especially helpful to progressives, since some 'socially responsible' investments are now made in the name of politically conservative causes (a fund might exclude companies that insure same-sex couples, for instance).

In an open letter to Hawken, Mollner expressed disappointment in the tenor and logic of the report, saying it read like a screed from Rush Limbaugh. The question, Mollner wrote, is not 'Are you for or against greed?' but rather 'Are you moving things in a mature direction as best you can where you are able to make a difference?'

Mark Thomsen, research and news director for Vermont-based SRI World Group, an SRI information and software company, also thinks that Hawken exaggerates the overall problem but still believes there's room for improvement: 'There are transparency issues,' he says -- some investors feel like some investments are not in line with their values.

To that end, Thomsen agrees that SRI firms need to do more to let customers know exactly why and how they are investing in certain companies. 'Socially responsible investing is an amorphous term,' he says. 'The main thing is that the investor can make a clear choice.'

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