Sustainable and Responsible Investment: Calvert Investments

If you want to put your money in mutual funds that make their investments based on criteria of sustainability and social responsibility, you have several choices. And as Stephen Miller, CEBS points out in an article for the Society of Human Resource Management, the number of sustainable and responsible investing funds offered to employees to make their 401(k) investment choices may double in the next few years.

Miller points out that sustainable and responsible investment (SRI) funds generally favor corporations that are seen to promote environmental stewardship, human rights, social justice, diversity, and consumer protection. Some SRI funds have certain excluding criteria, such as companies involved in tobacco, alcohol, gambling, and weapons.

One investment company that offers several SRI options is Calvert Investments. According to Calvert, they evaluate companies in terms of sustainability and responsibility and also get involved in companies through strategic engagement and shareholder advocacy on environment, social and governance-related issues in order to promote positive change.

Calvert Investments uses three different approaches: signature strategy, solution strategy, and SAGE (Sustainability Achieved through Greater Engagement) strategy in their evaluation of companies and in their efforts to promote change.

Calvert mutual funds may exclude investments in companies involved in tobacco, alcohol, gambling or weapons. Investments in companies with new nuclear plants may be excluded, and companies with existing nuclear facilities may be excluded unless they are demonstrating leadership in alternative energy.

In its signature strategy, after taking into account the exclusions, Calvert mutual fund investments must pass core criteria in human rights, indigenous peoples' rights, community relations, environment, workplace safety, product safety, governance and ethics.

In the solution strategy, Calvert mutual funds target investments at companies that offer products and services designed to solve some of the most pressing sustainability problems. Holdings in these funds are oriented toward the alternative energy and water sectors.

The SAGE strategy excludes companies involved in tobacco or weapons, and companies with human rights issues. Investments are based on advocacy efforts in companies that have the potential to improve their environmental, social, and governance performance.

According to Calvert, investors have the right and the responsibility to engage with companies on environmental, social, and governance issues. Some of the ways Calvert Investments engages with companies include voting on issues of corporate governance and social responsibility at annual meetings, and filing resolutions calling on a company to change a policy or produce a report on an issue of concern.

Calvert Investments also works in coalitions with non-governmental organizations with common objectives, dialogues with company executives, and participates with other investors, corporations and members of civil society in standard-setting exercises to formulate best practices in corporate responsibility issues.

Calvert Investments also publishes research reports, such as an analysis of the carbon disclosure of the S&P 500 companies, and the green building practices of the U.S. homebuilding industry.

Investors interested in sustainable and responsible investing can find more information on the US SIF, The Forum for Sustainable and Responsible Investment, website, including a chart from Bloomberg on the financial performance of socially responsible mutual funds.

Sources:

Research and Tools, US SIF

Stephen Miller, CEBS, Socially Responsible Funds Popular in Mission-Driven 401(k)s, Society for Human Resource Management