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Socially Responsible Investing: Frequently Asked Questions
We thought that it would be useful to provide answers to some of the questions likely to be raised by investment or endowment committees or trustees when approached on the subject of socially responsible investing. Here are the most common questions encountered with answers from the Investment Committee (IC) and the Socially Responsible Investment Committee (SRIC).
1) Are there certain kinds of companies the UU Common Endowment Fund (UUCEF) will never hold?
For our directly managed investments, we do not hold any companies that derive more than 5% of their revenue from the manufacture/sale of tobacco or weapons, or any companies whose operations support the government of Sudan. The UUA CEF also invests in many pooled vehicles, (in which investments are comingled with those of other investors). These comingled funds may not screen out all of the above-mentioned investments, but are necessary to give us exposure to certain asset classes and allow us to meet our return goals, given the relatively small size of the endowment. For pooled vehicles, we seek whenever possible to hire managers who have demonstrated competence in responsible investment.
2) What about companies that are bad for workers or the environment?
There are broad-based social and environmental screens in place in two areas of our endowment. First, the separately managed accounts where we directly hold US stocks exclude any company ranked in the lowest 5% of its peer by social research firm Sustainalytics, as well as companies facing severe social, environmental, or governance controversies. Secondly, some of the asset managers we employ, such as Boston Common Asset Management, are dedicated SRI firms that build their own social and environmental criteria into stock selection.
3) How much of the UU Common Endowment Fund is subject to some kind of SRI screen?
As of the first quarter of 2013, a little over half.
4) What is you position on fossil fuel divestment?
There's been a lot of media over the last several months regarding fossil fuel divestment. Recently, the Investment Committee and the Socially Responsible Investment Committee met to discuss this issue and unanimously adopted a fossil fuel statement (PDF) and prepared answers to the most frequently asked questions (PDF).
5) What other issues are you working on through shareholder advocacy?
The UUA has been a leader in advocating the adoption of employment policies that protect workers from discrimination on the basis of gender identity, as well as sexual orientation. In response to resolutions we have filed at several major US employers, over 3 million workers have gained this kind of nondiscrimination protection over the last few years. For more about this, visit: Shareholder Advocacy.
6) What are our investments doing to decrease poverty and discrimination?
The UUA has pledged up to 1% of its total investments to support Community Development Financial Institutions, which provide access to capital and financial services for underserved people, including low-income communities and communities of color. Part of this set-aside is a matching program for investments in CDFI's by UUA congregations. Currently twenty-four CDFI's have received investments, including a community development credit union in Jackson, MS, a community loan fund that provides affordable credit to Native Americans in South Dakota, an association that support the development of healthy rural communities in Louisiana, and a low-interest lender to developers of affordable housing in the Washington DC area. For more information, see the Community Investing and the UU Common Endowment Fund Q&A (PDF) with Marva Williams, member, Socially Responsible Investing Committee.
7) Where can I get more information about responsible investment and the UUCEF?
You can learn more about socially responsible investing and the UUCEF at Socially Responsible Investing.