Articles Cited

Articles

Mission Related Investing

Letter by FPCR president Tim Smith contributing to the ongoing dialogue in the foundation community about mission related investing, Tim Smith, May 2006 (Downloadable PDF).

New Frontiers in Mission Related Investing, (Downloadable PDF) "Should a private foundation be more than a private investment company that uses some of its excess cash flow for charitable purposes?" That was the question that the F.B. Heron Foundation posed several years ago as it considered how to best use the Foundation's assets to promote its mission of helping low-income people and communities build assets and create wealth. The F.B. Heron Foundation, 2004.

NESsT, "Risky Business: The Impacts of Merging Mission and Market," November 2003.

"Foundation Begins to Reconcile Investments with Programs" – The Fetzer Institute uses screens and community investment to align a small portion of its assets with its social and environmental goals, July 22, 2003.

"The Changing Nonprofit Funding Environment: Implication and Opportunities by Venture Philanthropy Partners" (Downloadable PDF)– This document includes a section focusing upon advocacy and policy work, June 2003.

Where Money Meets Mission (Downloadable PDF), by Jed Emerson, Stanford Social Innovation Review, pg 38-47, Summer 2003.

"Who's Minding the Store?" by Caroline Williams of the Nathan Cummings Foundation, Foundation News and Commentary, March/April 2003.

"Foundations and Mission-Related Investing," Stephen Viederman, August 2002.

"Mission Related Investing." The Clean Yield, 1998.

Mark Dowie, Grantmakers: Put Your Assets Where Your Values Are, Chronicle of Philanthropy, Aug. 27, 1998, page 38.

"Adding Value to Your Grants," Foundation News and Commentary, January/February 1997, 68 ff.

On Being True to Your Mission: Social Investments for Foundations, Journal of Investing, by William B. McKeown, Winter 1997, 6 (1),71-78 Lewis D. Solomon and Karen Coe.

Letts, Christine, Grossman, Allen and William Ryan, Virtuous Capital: What Foundations Can Learn From Venture Capitalists, Harvard Business Review, (March- April 1997).

Stephen Viederman, Foundations Must Invest With a Social Conscience, Chronicle of Philanthropy, Oct. 5, 1995, page 51.

"Dissonance, Responsibility and Corporate Culture Or, How Two Camps Struggle For Our Hearts and Minds and What We Can Do About It." In Jessie Smith Noyes Foundation 1994 Annual Report, pp.5-10.

Socially Responsible Investing

Mutual Funds, Proxy Voting and Fiduciary Responsibility: How do Funds Rate on Voting Their Proxies and Disclosure Practicies, Social Investment Forum, April 2005.

Moving Ahead Together: Implications of Blended Value for the Future of our Work, (Downloadable PDF) A power point presentation by Jed Emerson presented at the SRI of the Rockies Conference in 2004.

Edwards, Ed and Samant, Ajay. "Investing with a Conscience: An Evaluation of the risk-adjusted performance of Socially Responsible Mutual Funds." Mid-American Journal of Business (Ball State University), Spring 2003, Vol 18,No. 1, pg 51-60. (looks at funds from 1991-2000)

Geczy, Christopher C., Robert F. Stambaugh, and David Levin. "Investing in Socially Responsible Mutual Funds." Working Paper, Wharton School, May 2003.

Brill, Betsy and Susan Winer. The Best of Both Worlds: Responsible Social and Financial Investment, Journal of Practical Estate Planning, August/September 2003.

Berenbach, Shari ³From SRI to Community Investment: Integrating Disadvantaged Communities into the Capital Marketplace,² draft paper, Calvert Social Investment Foundation, December 2002.

Garz, Hendriz, Claudia Volk, and Martin Gilles. "From Economics to Sustainomics: SRI - Investment style with a future." WestLB Panmure, May 2002.

Barnett, Michael L. and Robert M. Salomon. "Porous, Pious, and Prosperous: The Curvilinear Relationship Between Social Responsibility and Financial Performance." Working Paper. New York University Stern School of Business, May 2002.

Bauer, Rob, Kees Koedijk, and Roger Otten. "International Evidence on Ethical Mutual Fund Performance and Investment Style." Working Paper, January 2002. This study won the 2002 Moskowitz Prize competition for the best quantitative study of socially responsible investing.

"Community Organizing and Shareholder Activity," Steve Viederman, New York 2002.

Garz, Hendriz, Claudia Volk, and Martin Gilles. "More gain than pain - SRI: Sustainability pays off." WestLB Panmure, November 2002.

Boutin-Dufresne, Francois and Patrick Savaria. "Corporate Social Responsibility and Financial Risk." Working Paper, May 2002.

Burke, Paul. ³Sustainability Pays.² CIS Cooperative Insurance, June 2002.

Chen, Larry. "Sustainability Investment: The Merits of Socially Responsible Investing." UBS Warburg, August 2001.

Troutman, Michael. "Staying on (the) Course: Risk Control Techniques for Social Investing." Journal of Investing, Winter 2001

"Addressing Obstacles to Social Investing," Stephen Viederman, May 2001.

Andrews, Nancy O., Equity with a Twist: The Changing Capital Needs of the Community Development Field, A Capital Xchange Journal Article, The Brookings Institution, April 2001.

"Socially Responsible Investment Screening: Strong Evidence of No Significant Cost for Actively Managed" Portfolio." 2001 Moskowitz Prize Competition - Honorable Mention, by Stone B. K. et al, -- Using KLD data and proprietary quantitative model, the aurthors constructed screened and unscreened portfolios with similar rishc characteristics for the 1984-1997 time period form a universe of approximately 1300 stocks. Screen portfolio performance was virtually identical to that of unscreened portfolios.

Pfau, Bruce. "Watson Wyatt¹s Human Capital Index: Human Capital As a Lead Indicator of Shareholder Value." Watson Wyatt Worldwide, 2001.

"Bringing Social Investing to Foundations." Business Ethics, July/August 1998.

"Foundations Must Invest With a Social Conscience." Chronicle of Philanthropy, Editorial - October 5, 1995.

"Social Investing at the Jessie Smith Noyes Foundation," December 2, 1994, Case N9-295-056 available from the Harvard Business School.

Additional information on developments in the field of socially responsible investing is available from the Social Investment Forum.

"Studies in the field of Socially Responsible Investing", by Kurtz, L.: This website serves as a resource for people interested in the impact of social screening on investment performance, and in other quantitative aspects of socially responsible investing (SRI).

"Titans of the Enron Economy: The 10 Habits of Highly Defective Corporations" (downloadable PDF) United for a Fair Economy Report, by Klinger, S.-- A new report by financial analyst Scott Klinger, reveals that key maneuvers leading to Enron's meltdown are legal and widely practiced. The report ranks the worst companies in 10 categories and gives Enny Awards to companies that exemplify Enron's harmful behavior in each area. The 10 habits encompass profits won through political influence, corrupting the watchdogs, tax dodges, undue risks for workers and excessive rewards for executives.

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Shareholder Advocacy

Chemical Risk Shareholder Campaign Grows Dramatically: Record Thirteen Resolutions Represent Robust Effort to Protect Shareholder Value, by Sanford Lewis and Rich Liroff, August 2006.

The Boston Foundation Policy on Socially Responsible Investing and Proxy Voting Guidelines -- 2006, Jerry Mitchell, Chief Investment Officer of the Boston Foundation.

Proxy Season Preview -- Spring 2006: Helping Foundations Align Mission And Investment by As You Sow Foundation and Rockefeller Philanthropy Advisors.

Proxy Season Preview - Spring 2005 (downloadable PDF) will help foundations to learn about important upcoming proxy votes and ensure that they vote in an informed manner on those social and environmental issues that are directly relevant to their mission and programs. With total endowments of more than $400 billion, foundations are major institutional investors. Yet when it comes to using the proxy process to enhance both its mission and investments, most foundations passively follow managements recommendations even when they are not aligned with the foundations own interest or values. Foundations annually grant 5% of their endowment to support their mission but how many utilize the remaining 95% to promote the same mission? Proxy voting is an easy first step for foundations wishing to align their mission and investments. Publication from As You Sow, Rockefeller Philanthropy Advisors and Jessie Smith Noyes Foundation.

Unlocking the Power of the Proxy: How Active Foundation Proxy Voting Can Protect Endowments and Boost Philanthropic Missions (downloadable PDF) by Rockefeller Philanthropy Advisors and As You Sow Foundation. This guidebook walks readers through the myriad issues relating to proxy voting, from the roles played by all involved entities such as investment managers and public pensions to definitions of key terms and a discussion of related legal issues. It includes step-by-step advice for developing formal voting guidelines and policies, including how to move the guidelines through potential internal roadblocks; it then explains how to implement guidelines once they are approved.

"Confronting Companies Using Shareholder Power: A Handbook on Socially-Oriented Shareholder Activism," Extensive guide to social shareholder activism has case studies of proxy fights, info on international campaigns, regulatory issues, and a brief timeline.

"A Bigger Voice for Small Nonprofits," Business Week, Jessi Hempel, April 5, 2004.

"Proposed Security Holder Director Nomination Rules," Roundtable Discussion, Lance E Lindblom, The Nathan Cummings Foundation, March 10, 2004

Investor pressure is a key driver – Careful research into the link between shareholder activism and corporate performance suggests that focus lists are most likely to have a galvanizing effect, by Colin Melvin. Financial Times (London) July 21, 2003.

"We're Owners, Not Traders" by Lance Lindblom September - October 2002. Foundation News And Commentary.

"Foundations Should Behave as Responsible Corporate Shareholders and Utilize an Ignored Asset - the Proxy Vote," Lance Lindblom, August 2002.

Manry, David and David Stangeland. "The United Shareholders Association Shareholder 1000 and firm performance." Journal of Corporate Finance (2003) 353-375, April 2002.

The New Global Investors: How Shareholders Can Unlock Sustainable Prosperity Worldwide -- A book by Robert Monks (OXFORD,UK, CAPSTONE, 2001).

"Shareholder Activity and Community Organizing." In Jessie Smith Noyes Foundation 1997 Annual Report, pp.9-15

"Foundations' Shareholder Activism." Chronicle of Philanthropy, January 25, 1996.

"Foundations Explore Shareholder Activity," Responsive Philanthropy, Fall 1996, 16 ff.

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Corporate Governance

Brown, Ken. "Weak Boardrooms and Weak Stocks Go Hand in Hand." Wall Street Journal, September 9, 2003, page C1. Companies ranked high in corporate governance outperformed businesses with weak governance during the past three years.

Carter, David A., Betty J. Simkins, and W. Gary Simpson. "Corporate Governance, Board Diversity, and Firm Value." The Financial Review, February 2003.

Fields, M. Andrew and Phyllis Y. Keys. "The Emergence of Corporate Governance from Wall St. to Main St.: Outside Directors, Board Diversity, Earnings Management, and Managerial Incentives to Bear Risk" The Financial Review, February 2003.

Conference Board Report: ³Doing Good and Doing Well: Making the Business Case for Corporate Citizenship.² Research Report 1282-00-RR, Conference Board. Contact Simon Zadek, zadek@csi.com.

Gompers, Paul, Joy L. Ishii, Andrew Metrick. "Corporate Governance and Equity Prices." (Downloadable PDF) July 2001. Study linking governance performance and equity prices.

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Fiduciary Responsibility

Fiduciary Duties and Toxic Liabilities -- Myths and Realities: Toxic chemicals, such as lead or the additives in some plastic, are found in toys and other office products and frequetnly can be found in humans. Hazards from such exposures are a growing scientific, public, regulatory and reputational concern. By Jonas Kron and Tim Little, August 2006 (Downloadable PDF).

Getting Values for Your Money, by Kelly Candaele, Los Angeles Times, May 14, 2006.

Fooling Investors & Fooling Themselves: How Agressive Corporate Accounting & Asset Management Tactics Can Lead to Environmental Accounting Fraud," by The Rose Foundation for Communities and the Environment Sanford Lewis and Tim Little, July 2004 (Downloadable PDF).

"The Gap in GAAP" (downloadable PDF), by The Rose Foundation for Communities and the Environment, Susannah Blake Goodman and Tim Little, December 2003--This paper examines the "Gap in GAAP"-- the loopholes in Generally Accepted Accounting Principles (GAAP) that allow environmental accounting practices similar to the irregularities that contributed to the massive fraud that has been attributed to Enron and a number of other companies over the last few years.

"Environmental Fiduciary: The Case for Incorporating Environmental Factors into Investment Management Policies" (downloadable PDF) by The Rose Foundation For Communities and the Environment, S.B. Goodman, Jonas Kron and T. Little, August 2002--Report shows that fiduciaries who manage funds for institutional investors such as pension funds, foundations, and charitable trusts should incorporate environmental factors into their portfolio management policies. Also shows how a corporation¹s ability to profit from environmental innovations and prepare for future environmental risks and exposures can have a significant impact on corporate earnings potential, cash flow and growth opportunities. Consequently, the paper argues, that fiduciaries for institutional investors should institute financially sound policies to encourage strong corporate environmental performance in the corporations held in their portfolios.

"New Directions in Fiduciary Responsibility" Global Academy's Initiative for Fiduciary Responsibility, by Viederman, S., 2002 -- This paper presents the view that fiduciary responsibility and the obligations of fiduciaries is not a radical approch to institutional investing. Steve Viederman argues that is very conservative because it make best use of all available information that can positively and negatively affect financial returns. The transparency of analysis and action that results should help address not only long-term societal impacts of investment decisions, but also immediate needs for greater disclosure from companies.

The Legal Aspects of Social Investing by Non-Profits, Journal of Investing, Winter 1997, 6(1), 112-119. An expanded version of this article is: Lewis D. Solomon and Karen Coe, Social Investments by Nonprofit Corporations and Charitable Trusts: A Legal and Business Primer for Foundation Managers and Other Nonprofit Fiduciaries. UMKC (University of Missouri-Kansas City)Law Review, Winter 1997, 66(2),213-250

The Tobacco Divestment and Fiduciary Responsibility, a special study on the legal and financial implications of tobacco divestment. The study, which is a culmination of a two-year formal examination of the tobacco investment controversy, includes the results of IRRC's nationwide survey of institutions’ tobacco investment and proxy voting guidelines. In conjunction with the report, IRRC commissioned the law firm of Conner & Winters to analyze fiduciary standards as they apply to various types of retirement plans and endowment assets, and commissioned the quantitative analytical firm of Barra RogersCasey to obtain an analysis of the risk and return characteristics associated with tobacco stocks and the effects of their exclusion on portfolio performance. For more information link to IRRC.

"New Concepts of Fiduciary Responsibility." In Steering Business Toward Sustainability, eds. Fritjof Capra and Gunter Pauli, pp.125-141. United Nations University Press, 1995.

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Environmental Factors that Influence Corporate Performance

Cleaning Up: Toxic Chemicals in Consumer Products -- A Strategic Challenge to Business, by Rich Liroff, Lending Prespectives, Fall 2005.

Protecting Public Health, Increasing Profits and Promoting Innovation by Benchmarking Corporate Governance of Chemicals in Products, by Rich Liroff, January 2005.

"Investor Guide to Climate Risk: Action Plan and Resource for Plan Sponsors, Fund Managers, and Corporations" (Downloadable PDF), a publication of the Investor Network on Climate Risk Commissioned by CERES, July 2004.

"New York City and 8 States Plan to Sue Power Plants," (Downloadable PDF) – by Andrew Revkin, New York Times, July 21, 2004.

"Silence is Golden, Leaden, and Cooper: Disclosure of Material Environmental Information in the Hard Rock Mining Industry" (Downloadable PDF) – by Robert Repetto, Yale School of Forestry and Environmental Studies, July 2004.

Voluntary Approches for Environmental Policies: OECD REPORT (Downloadable PDF) 2003 – Voluntary actions by firms and households to improve environmental performance can be profitable for those taking such voluntary action but it may not be useful for policy makers to rely on voluntary approaches to achieve environmental targets.

Nadeau, Lou, Jeff Cantin, and Richard Wells. "Participation in Voluntary Programs, Corporate Reputation, and Intangible Value: Estimating the Value of Participating in the EPA's EnergyStar Program." Working paper, June 2003.

"Environmental Fiduciary: The Case for Incorporating Environmental Factors into Investment Management Policies" (Downloadable PDF) by The Rose Foundation For Communities and the Environment, S.B. Goodman, J. Kron, and T. Little, August 2002--Report shows that fiduciaries who manage funds for institutional investors such as pension funds, foundations, and charitable trusts should incorporate environmental factors into their portfolio management policies. Also shows how a corporation¹s ability to profit from environmental innovations and prepare for future environmental risks and exposures can have a significant impact on corporate earnings potential, cash flow and growth opportunities. Consequently, the paper argues, that fiduciaries for institutional investors should institute financially sound policies to encourage strong corporate environmental performance in the corporations held in their portfolios.

Mahoney, Lois and Robin Roberts. "Corporate Social and Environmental Performance and Their Relation to Financial Performance and Institutional Ownership: Empirical Evidence on Canadian Firms." Working paper, 2002.

Dixon, Frank. "Financial Markets and Corporate Environmental Results." Innovest Working Paper, 2002.

King, Andrew and Michael Lenox. "Exploring the Locus of Profitable Pollution Reduction," Management Science. Vol. 48 (2), 2002.

The Emerging Relationship Between Environmental Performance and Shareholder Wealth: Executive Summary – Copies ordered for $75 by emailing info@assabetgroup.com.

"Value at Risk: Climate Change and the Future of Governance" (downloadable PDF) CERES Sustainable Governance Project Report, by Innovest, -- This report examines the mounting evidence of the potentially devastating financial consequences of climate change across a wide range of economic sectors and finds that "climate risk" is embedded, to some degree, in every business and investment portfolio in the U.S. The report also includes recommendations for corporate directors and institutional investors seeking to discharge their fiduciary duties in a responsible and prudent fashion in the face of the threats posed by climate change.

Ziegler, Andreas, Klaus Rennings, and Michael Schroder. "The Effect of Environmental and Social Performance on the Shareholder Value of European Stock Corporations." Center for European Economic Research (ZEW), November 20, 2002.

Koehler, Dinah A. "Capital Markets and Corporate Environmental Performance: What Does the Empirical Work Tell Us?" Working Paper. Harvard School of Public Health, 2002.

King, Andrew and Michael Lenox. "Does it Really Pay to Be Green? Accounting for Strategy Selection in the Relationship Between Environmental and Financial Performance," Journal of Industrial Ecology. Vol. 5(1), 2001.

King, Michael. "Sustainability: advantaged or disadvantaged?" PriceWaterhouse Coopers, Manchester, UK. Working Paper, 2001.

Green Dividends: (Downloadable PDF) The Relationship Between Firms¹ Environmental Performance and Financial Performance, by EPA¹s Environmental Capital Markets Committee. Mark Joyce, EPA, author. May 2000.

"Pure Profit: The Financial Implications of Environmental Performance" World Resources Institute-- 2000 Moskowitz Prize Competition Winner, by World Resources Institute-- This report demonstrates a new methodology that translates the implications of a company's environmental performance into financial terms. An application of this methodology to 13 leading companies in the U.S. pulp and paper sector shows that pending environmental issues will have material financial impacts on companies in the pulp and paper sector and that these financial exposures vary considerably between companies. Knowing which companies are best positioned with regard to environmental issues could improve investors' decision making.

Wall Street Goes Green: Investors Look at Environmental Ratings for Link to Stock Performance Public Utilities Fortnightly, Sept 15, 1999.

"From Prudent Man to Prudent Person: Sustainability and Institutional Investment for the 21st Century." In The Investment Research Guide, ed. Brian R.Bruce, pp. 146-152, Investment Research Forums, 1998.

"The Role of Financial Institutions in Influencing Environmental Stewardship." UNEP Fourth International Roundtable on Finance and the Environment, Queens' College, Cambridge, UK, September 17, 1998.

Epstein, Marc, ³Measuring Corporate Environmental Performance: Best Practices of Costing and Managing Effective Environmental Strategy,² Institute of Management Accountants, 1996.

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Legal Basis for Foundation Shareholder Activism and Mission Related Investing

"Environmental Fiduciary: The Case for Incorporating Environmental Factors into Investment Management Policies" (downloadable PDF) by The Rose Foundation For Communities and the Environment, S.B. Goodman, J. Kron, and T. Little, August 2002--Report shows that fiduciaries who manage funds for institutional investors such as pension funds, foundations, and charitable trusts should incorporate environmental factors into their portfolio management policies. Also shows how a corporation¹s ability to profit from environmental innovations and prepare for future environmental risks and exposures can have a significant impact on corporate earnings potential, cash flow and growth opportunities. Consequently, the paper argues, that fiduciaries for institutional investors should institute financially sound policies to encourage strong corporate environmental performance in the corporations held in their portfolios.

On Being True to Your Mission: Social Investments for Foundations, Journal of Investing, by William B. McKeown, Winter 1997, 6 (1),71-78 Lewis D. Solomon and Karen Coe.

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