Liberal Investing

Calvert Socially Responsible
Citizens Funds scrutinizes corporate conduct... check out the Smal Cap Value fund which seeks to find and invest in under-valued companies that have been overlooked by others
Domini: Social Investments
Green Century Funds Supporting green companies, fighting for corporate environmental responsibility, 1-800-93-GREEN
KPS Special Situations Fund... real progressive style investing. Consider for investing.
The Nicaraguan Credit Alternatives Fund (the NICA Fund) lets socially responsible investors support disadvantaged Nicaraguans who lack access to credit.
Pax World Funds
Sierra Club Funds


"In the wake of Enron-style corporate scandals, in which public pension funds lost more than $300 billion, some of the leading funds have restlyed themselves as more aggressive reformers. They are picking fights with Wall Street orthodoxy they long accepted, like the obsessive maximizing of short-term gains. More important, they are broadening their definition of fiduciary obligations to retirees by trying to enforce corporate responsibilities to serve society's long-term prospects. Instead of adhering passively to market dogma, the activist funds now regularly accuse corporate managements and major financial houses of negligently or willfully injuring the long-term interests of pension-fund investors, therefore injuring the economy and society, too. Pension-fund wealth is thus being mobilized as financial leverage to break up the narrow-minded thinking of finance capital and to confront the antisocial behavior of corporations.

"The core players in this struggle are the largest and most progressive pension funds in the nation--anchored by blue-state constituencies in California and New York... their efforts are possibly the only reform impulse ascendant among Democrats... this notion that infected America that wealth is somehow created in six to nine months and all that matters is whether this quarter's returns are better than last quarter's...

"The reformers understand that the current laissez-faire, let-'er-rip system damages important social values--equitable treatment of workers, the environment and other commonly shared public assets...

"The best evidence that the reform-minded pension funds are onto something--maybe something big--is the fierce and nasty counterattack launched by business and financial interests. Last spring, the Business Roundtable, the US Chamber of Commerce and the American Enterprise Institute began a simultaneous barrage of complaints and name-calling accusations (faithfully echoed by the Wall Street Journal and Forbes). State pension officials, they warned, are departing dangerously from their fiduciary duties, putting "social issues" first and becoming pawns of organized labor...

"CalPERS (the mammoth California Public Employees' Retirement System... is indeed trying to "strong-arm" companies... into making reforms... a whirlwind of reforms--dumping tobacco stocks, black-listing ten "emerging markets" that ignore international labor standards, redeploying capital to neglected sectors like inner-city redevelopment and innovative environmental technologies, and, above all, peppering scores of corporations, banks, brokerages, financial markets and federal regulators with critiques and demands for change...

"Alert elements in labor--unions... are closely involved, mobilizing grassroots support and lobbying the policy-makers... "The old holders of capital--the old status quo--are very nervous about this discussion of capital and the larger context of what's good for the economy," Angelides warns. "They don't want these questions to be asked... They want to control capital and they want to control it to their benefit, not to the larger economy's"...

"Arnold Scharzenegger [is] proposing legislation to begin breaking up CalPERS into private personalized accounts... thus dispersing its financial power and diluting its ability to exercise reform leverage...

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"These officials draw inspiration from the stunning reform victories won by New York State Attorney General Eliot Spitzer, who has blistered financiers and corporate moguls with his continuing exposures of scandal. When Spitzer demanded and won reformed operating rules from Merrill Lynch, the pension-fund leaders embraced the principles and applied them as their own new rules for the banks and financial houses handling their money. More recently, Spitzer exposed a bid-rigging scandal in the insurance industry...

"Spitzer intends to run for New York governor in 2006. Angelides intends to do the same in California... The two men can be seen as representative figures, since each is trying to revive an important dimension of the reform tradition their party has virtually abandoned...

"In behalf of the business-financial elites, the White House has bullied Securities and Exchange Commission (SEC) chairman William Donaldson... for favoring the proposal to allow major institutional investors like public pension funds to nominate independent directors to corporate boards. If that proposal is killed, as appears likely, reformers led by the Carpenters Union will be pushing a more direct initiative at the corporations: requiring that directors and CEOs who run unopposed at least win with majority support from the shareholders. How radical is that? Too radical for the status quo's moguls and titans. They know that majority rule would allow a broad coalition of institutional investors to withhold their votes and veto entrenched managements...

"The problem is, the millions of workers who, collectively, are major corporate shareholders do not get a seat at the table appropriate to their wealth. (The same orphaned status applies to most small investors, who turn over their savings to mutual funds that proceed to ignore their interests.) Creating trustworthy financial intermediaries that speak reliably for their clients is a fundamental reform in itself...

"Grossly oversimplified, the reform strategy is guided by two interacting principles: First, pension funds should invest to restore the once-common understanding that, in the long run, you can't have a successful economy and a failing society (roughly speaking, that's what the "market ideology" ignores). Second, while pension funds adopt this perspective to advance the self-interest of their members (including long-term financial soundness), they should also use their leverage to make the financial system incorporate these principles as the system's operating routines.

"If the happy day ever arrives when the financial system itself recognizes and reinforces the values of long-term investing, miscreat corporations will be punished in terms they can readily understand: falling stock prices and higher costs on their borrowing. Stock-market analysts will then have to calculate what they now routinely ignore--the long-term economic consequences of social destruction...

"Nappier has promoted the development of an alternative Standard & Poor's 500 index, alongside the existing one, that would include only companies actively committed to sustainable economics. A rival S&P index could deliver serious injury to the stock prices of companies that get kicked out of the "white hat" 500.

"Since the risk-rating agencies also failed utterly to alert investors to scores of fraudulent corporations in the recent wave of business scandals, they too are becoming more sensitive to the reform critique. Social issues do affect returns. Contrary to market lore, the accumulated evidence shows that the best-managed and least socially destructive companies also perform better in the stock market than "low road" rivals in the same sector" (William Greider. "The New Colossus." The Nation, Feb. 28, 2005: 13-18).


Colby Glass, MLIS