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Socially Responsible Investing - avoiding 'sinful' industries

Socially Responsible Investing in the US


Socially Responsible Investing in the US


The issue of socially responsible investing has of late been a topical one, but it is certainly not new. Early Hebraic law issued clear guidelines about how to invest ethically, linking such commercial activity with individual righteousness. In the United States the origins of socially responsible investing (SRI) can be traced back to the Quaker and Methodist immigrants; Quakers have never condoned investing in slavery or war while the Methodists refer back to their founder, John Wesley who considered the use of money as the second most important subject in New Testament teachings. Methodists have in fact managed money in the United States using what today are called �social screens� for over two hundred years. The modern roots of SRI lie in the tumultuous years of the 1960�s where themes of social responsibility, accountability and equal rights dominated the news as much as the radical pop culture of the era. What had earlier been the more exclusive domain of religious organizations was now being taken up with equal fervour by secular groups.

Whereas religious organizations had targeted what they considered �sinful industries� � guns, tobacco and gambling, secular groups focused on different, often broader issues: human rights campaigners fought against discrimination, the Vietnam War brought attention to unpopular foreign conflicts and those who profited from such ventures and lawyer, Ralph Nader came to prominence by attacking the US motor industry while also bringing attention to environmental issues. His book, �The Greening of America� was one of the more influential publications of the time.

Ralph Nader, campaigner, author, lawyer and influential lobbyist pointed the way forward for social action against industry. Powerful political lobby groups and high-profile class action law suits started to hurt company balance sheets and stock prices.

In the United States today, corporations ignore SRI issues at their peril as both the lobbyist and class action law suit have become flourishing industries in their own right and the cynical and often cruel jibe that �today more people live off smoking than die from it� may have some truth to it. ASH, which stands for Action on

Smoking and Health and which describes itself as �A National Legal-Action Antismoking Organization Entirely Supported by Tax-Deductible Contributions� while publishing an article (www.ash.org.com 2 February 2006) on an Oregon Supreme Court ruling that upheld a $79.5 million award against tobacco company Philip Morris to the family of an Oregon smoker who died of lung cancer, concluded with the following advice to readers: Please don�t hesitate. Tobacco class action law suits have the potential to return hundreds of millions of dollars.

The gun industry came under the spotlight only as recently as 1998. On 30 October 1998 New Orleans became the first city in the United States to file suit against the gun industry. Two weeks later, Chicago followed. Within a year, 28 additional cities and counties had files law suits against 40 gun manufacturers, dealers and trade associations, with many more under consideration. In 2002 early notice was given to the casino industry: Scott Harshbarger, president of Common Cause a public industry lobby organization and former Massachusetts attorney general from 1990 � 98 warned that casinos could face similar multibillion dollar law suits that have damaged cigarette, alcohol and gun manufacturers. One of the largest casino groups Harrah�s responded by launching a PR campaign that identifies the company as a staunch proponent of responsible gambling. So far no such law suits have been filed in the United States but in Canada , a Quebec judge has allowed a class action law suit against Loto-Quebec, with some 125,000 plaintiffs seeking more than $625 million in damages after claiming they are addicted to video lottery terminals.

In essence, what is promoted by action groups as socially responsible investing, is now regarded by United States corporations and by both individual and institutional investors alike as � key business risk�. Public Affairs portfolios are increasingly being handled by the CEO, demonstrating the high importance attributed to these potentially costly issues. Strict disclosure regulations make it impossible for companies to cover up impending law suits while the exponential growth of the Internet has given open access and free expression to all and every interested party. Socially responsible investing in the United States has squarely been thrust into the public arena.

�GF Monthly � November 2006� by Goldman Fox Ltd
"Lyn Bell has assisted me with my investment decisions ever since May 2001 and I have not once had cause to be disappointed with her advice. My particular interest involves environmental and social concerns and I have been most impressed that Lyn takes these concerns seriously and has always gone that extra mile in order to satisfy my requirements. On top of all this, she has an exceedingly patient manner and has always been able to explain investment terminology to me in such a way that I, as an investment novice, have been able to understand easily. Thank you very much, Lyn � from one very satisfied customer."
Oliver H, Kohimarama/Auckland
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