2009-04-06T08:28:00.000-07:00

Starting in the fall, the Brown Socially Responsible Investment Fund 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. 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.

GET INVOLVED

The fund won't fully open to the Brown community until the Fall, but once it does we'll gladly welcome students with any level of knowledge or skill. Our first information session, on Tuesday, April 7, drew 49 people, and we hope to leverage that turnout into a broad-based, active, and diverse student group.

In the meantime, we're focusing on recruiting the fund's leadership, and applications for leadership positions (due April 26) are available at the bottom of this page. Serving as a leader within the fund will allow you to play a key part in designing and structuring a 50-person student group, teach you a great deal about socially responsible investing in general and your area of responsibility in particular, and (let’s face it) help you in whatever career path you choose to pursue after graduation. A number of positions with broadly varied responsibilities, time commitments, and areas of expertise area are available, and we urge you to consider applying for one. You'll find more information below.

In the meantime, if you have any questions or would like more information, please email us at sri@brown.edu or bsrifund@gmail.com.

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. Selling a stock 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 company that does good — whether by improving the environment, helping the poor, donating profits to charity, or any number of other things — helps that company prosper, and encourages competitors to improve their social and environmental practices. Buying stock in a company that hurts people — through pollution, discrimination, or support of human rights violations — helps that company buck criticism, and shows its peers that morally wrong practices can be good for business. Thus, the right investment can be a powerful force for good, while the wrong one can do serious harm.

Over the past two decades, a growing number of investors have realized this, and taken steps to ensure that their money isn't supporting activities they find morally wrong. For most, that means divesting from companies involved in genocide, human rights violations, and illegal activity. Many investors have chosen to do even more, and 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

Sectors

The fund will be organized into four major sectors. Three — Environmental Stewardship,Poverty Alleviation and Economic Development, and Corporate Governance — will each have the responsibility for finding, researching, purchasing, and maintaining investments in their area, and a fourth — Finance — will focus on analyzing the financial returns of stocks originating in the other sectors.

For example, in a given week members of the Environmental Stewardship sector might:

* Propose three new stocks (a solar company, an organic food retailer, and a recycling corporation) for consideration by the fund,
* Research two stocks that the Corporate Governance sector has proposed (a computer manufacturer and a bank) to make sure their environmental policies meet the fund’s standards before they get cleared for investment,
* Draft and present a proposal to sell one of the fund’s current investments in the sector because they believe the industry it’s in (rail transport) is about to enter a rough patch, and
* Write and submit a shareholder resolution urging a medical technology company that we’ve invested in to improve its climate change policies.

The Poverty Alleviation and Economic Development and Corporate Governance sectors will work on similar projects in their target industries. Members working in Finance will have slightly different responsibilities, and will (among other things) analyze proposed investments for their profitability, research the potential impact of companies’ financial situations on their social impact, choose when to buy stocks that have been approved for investment by the other three sectors, monitor the fund’s holdings, and vote on or propose non-social shareholder resolutions.

While specific tasks will be organized within sectors, major decisions — including all proposals to approve a stock or mutual fund for investment, and any official advocacy efforts targeting specific companies — will be presented to all fund members and put to a general vote. Thus, each member of the fund will have a voice and a say in overall operations, regardless of their position in the group.

Fund members will be able to move easily between the four sectors and take on a range of projects within each (though sector leadership will be relatively fixed.)

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. Potential investments include:

* 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. Potential investments include:

* 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 (Brown's utility company)
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	Specialized Insurance (often in markets no one else will enter)
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	NADAQ: 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
Google	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, discuss and debate on potential investments, share their work within sectors, and vote on stocks, proxies, screens, and other issues that require a decision from the whole group . The meetings will be the core of the fund's operations, and all decisions will be made at them.

We're still discussing exactly how meetings will be structured, but they'll begin with a discussion of how our investments are performing and what various sector groups have been working on, proceed to presentations by members on issues that require group votes (especially new potential investments) and educational presentations on particular issues or industries, and conclude with a period of time where members will break out into the group's four sectors and discuss sector business.

LEADERSHIP

We sent out applications to our mailing list (made up of people who attended our first info session or e-mailed us to express interest) on April 16. If you weren't included in the e-mail, you can download copies below. They're due Sunday, April 26. Good luck!

First, read this: Background Information and Position Descriptions (PDF)

Then, fill out this: Application Form (Word Document)

The Brown Socially Responsible Investment Fund