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Forum FoundationThe Mission in the Marketplace
Social Investment
How Responsible Investing Can Strengthen the Fiduciary Oversight
of Foundation Endowments and Enhance Philanthropic Missions
2007
A Brief IntroductionThis PowerPoint is based on a booklet produced by the
Social Investment Forum Foundation entitled, “The Mission in the Marketplace: How Responsible
Investing Can Strengthen the Fiduciary Oversight of Foundation Endowments & Enhance Philanthropic
Missions.” This booklet can be found online at http://
www.socialinvest.org/pdf/research/MissionintheMarketplace.pdf.
Acknowledgements: J.A. & H.G. Woodruff, Jr. Charitable Trust
Foundation Partnership on Corporate Responsibility (
www.foundationpartnership.org)
An Invitation to Foundations & Endowments
Responsible Investing Strategies
• Social and Environmental Screening
• Shareowner Advocacy• Community Investing• Social Venture Capital
Creating Value
“[F]oundations are not simply vehicles for distribution of charitable gifts, but rather investors in value creation.”
— Jed Emerson Generation Foundation
What is Responsible Investing?
Responsible investing is an investment process that considers the social and
environmental consequences of investments, both positive
and negative, within the context of rigorous financial analysis.
Terminology
The incorporation of environmental, social, & governance (ESG) factors into investment management has been described in a variety of ways: social investing, mission-related investing, values-based investing, socially responsible investing (SRI), ethical investing, double- or triple-bottom-line investing, and responsible investing. This report will use a number of these terms.
Socially Responsible Investing (SRI)
SRI incorporates issues of Corporate Social Responsibility (CSR), ranging from environmental
concerns to human rights and supply-chain management, from
workplace health and safety to equal employment opportunity and human
resources policies.
Responsible Investing’s Scope and Scale
• Over $3.6 trillion: Global SRI Assets by Institutional Investors
• Over $2.29 trillion: U.S. SRI Assets under professional management
• Over $4 trillion: Assets of institutional investors backing UN Principles for Responsible Investment
• Over $6 trillion: Assets of UN Global Compact endorsers
• Over 26% Annual Growth in US SRI Assets 1995-2005
Fiduciary Prudence, Performance & Mission-Based Investing
• Consideration of sustainability as an element of prudent trusteeship
• Recognition of “extra-financial” benefits
• Added economic value of environmental performance
• Competitive long-term performance• Variety of options across investment
styles, instruments, and asset classes
Social and Environmental Screening
The Incorporation of Environmental, Social and Governance (ESG) Criteria
into Investment Analysis
• Negative Screening Avoids Poor CSR Performers
• Positive Screening Identifies Strong CSR Performers
• “Best-of-Class” Screening Identifies Sector Leaders
Largest Foundations Employing Social or Environmental Screening*
• Bill & Melinda Gates Foundation
• Ford Foundation• David and Lucile
Packard Foundation• California Endowment• Annie E. Casey
Foundation• Rockefeller
Foundation• Carnegie Corporation
of New York
• California Wellness Foundation
• Robert Wood Johnson Foundation
• Charles Stewart Mott Foundation
• Carnegie Corporation of New York
• Heinz Endowments• William Penn
FoundationAmong 50 Largest Private Foundations
Source: Chronicle of Philanthropy, 2006*May include a single screen, such as tobacco
Shareowner Advocacy
• Active Proxy Voting
• Filing and Co-filing Resolutions
• Direct Dialogue with Management
• Participation in Shareowner Coalitions and Networks
Recent Shareowner Successes
• Climate Change and Carbon Disclosure
• HIV/AIDS Policies at Coca-Cola and PepsiCo in Africa
• Labor Conditions at Taco Bell and Yum! Brands
• Fair Trade at Procter & Gamble
Shareowner Engagement Networks
• Council of Institutional Investors• Foundation Partnership for Corporate
Responsibility• Interfaith Center on Corporate
Responsibility (ICCR)• International Corporate Governance
Network• Investor Network on Climate Risk (INCR)• Jewish Shareholder Engagement Network• Social Investment Forum
Recent Social Shareholder Resolution Proponents Among Foundations
• As You Sow Foundation
• Camilla Madden Charitable Trust
• Conservation Land Trust
• Edward W. Hazen Foundation
• Funding Exchange• Haymarket People’s
Fund• Jessie Smith Noyes
Foundation• Lemmon Foundation
• Max and Anna Levinson Foundation
• Nathan Cummings Foundation
• Needmor Fund• Pride Foundation• Tides Foundation• United Church
Foundation• Wisdom Charitable
Trust
Community Investing (CI)
• Provides capital to traditionally underserved communities
• Generates high-impact social returns• Supports affordable housing, child care,
and sustainable economic development• Provides diverse investment
opportunities, from below-market deposits to risk-adjusted, market-rate returns through debt, equity and venture capital
Community Investing Institutions
• Community Development Banks• Credit Unions• Loan Funds• Venture Capital• International Microfinance
Funds• Grown from $4 billion in 1995
to nearly $20 billion in 2005
Sample Foundation Leaders in CI
• F. B. Heron Foundation• Jewish FundS for Justice (JFSJ)• A. J. Muste Memorial Institute• Rose Foundation for
Communities and the Environment
Social Venture Capital
• “Double-bottom-line:” both financial and social returns
• Alternative Investment opportunities in early-stage private equity
• Debt financing to support non-profit social enterprises
• Over $600 million in capital from “Angel Investors” and Institutions alike
Getting Started• Conduct Research and Gather Resources
• Ask Whether Your Existing Managers and Consultants Have the Necessary Expertise
• Consult a Financial Advisor with Expertise in Mission-Related Investing
• Have a Strategic Conversation within Your Organization on Your Investment Policies
• Present Findings to Your Foundation Board or Investment Committee
continued
Getting Started
• Develop Active Proxy Voting Guidelines
• Draft a New Responsible Investing Policy
• Explore Community Investing Opportunities
• Lead by Example: Share Knowledge & Best Practices
• Join Responsible Investor Networks
The Social Investment Forum
Dedicated to advancing the concept, practice, and growth of socially and environmentally responsible investing
www.socialinvest.org
The Social Investment Forum1612 K Street NW, Suite 650
Washington, DC 20006phone (202) 872-5361
fax (202) 463-5125
Join online today!