Subject: Tips for the `Socially Responsible' Investor 
Date: Published: 11/20/92 (98 lines)
Source: Wall Street Journal. Copyright Dow Jones & Co. Inc.

    LEISURE & ARTS -- Business Bookshelf:
    Tips for the `Socially Responsible' Investor
    ----
    By Stanley W. Angrist

    Investing used to be simple.  All you had to do was follow Will
 Rogers's oft-quoted maxim:  Buy a stock and if it goes up sell it; if
 it doesn't go up, don't buy it.  But the market is more complicated
 now.  Today people insist you must also probe into the political
 correctness of a stock.
    To this noble end, there is now a stream of books that will tell
 you everything you need to know about how to select stocks and
 mutual funds that meet every PC test, so you can engage in what is
 getting to be known as "socially responsible investing," or SRI. 
 Advocates of this type of money management argue that it's not
 difficult to do well while doing good.
    I'm not so sure.  SRI is a mountain covered with slippery slopes.
 Practitioners of this type of investing tend to have what investment
 types like to call a "screen," which will automatically throw out
 certain types of companies.  For example, any company making military
 hardware would be screened out, as would a company that tests drugs
 on animals, one involved in nuclear power, one that uses assembly
 lines to make its products, or one that doesn't seem to treat well
 women, blacks or those with nontraditional sexual preferences.
    Of course, there are plenty of investors who consider themselves
 to be ethical and who believe that, on the whole, it's a good idea
 for the U. S. to have a strong defense establishment.  They argue that
 the world will always have political leaders who would not hesitate
 to take advantage of the U. S. if they thought they could do it
 without fear of reprisal.  Many of the authors who play this game
 have an absolutist turn of mind.  Either a company meets every test
 or it doesn't, and will not be an appropriate investment.
    Consider, for example, investing in U. S. Treasury securities.  For
 many of those who advocate this type of investing, the debt
 obligations of the Treasury are necessarily on the forbidden list.
 SRI proponents argue that the money an investor lends to the
 government could be used to fund the activities of the CIA or other
 such politically questionable government organizations (never mind
 that most of the government's expenditures pay for a wide range of
 nonmilitary activities that include saving endangered species,
 running school hot-lunch programs and sponsoring medical research on
 AIDS or heart disease).
    If you want to know almost all there is to know about SRI, start
 with the compendium "The Social Investment Almanac" (Henry Holt, 904
 pages, $50), by Peter Kinder, Steven Lydenberg and Amy Domini.  One
 chapter discussing the financial risks and rewards of SR investing
 includes several tables that suggest that the risk-adjusted return
 of an index made up of SR stocks is higher than that of the S&P 500.
 Other data suggest that on an absolute basis the socially
 responsible index offers returns very close to those of the S&P over
 a long period of time.
    For those who don't want to go to the trouble of putting each of
 their stocks through a politically correct screen, this book also
 provides descriptions and performance data for a number of mutual
 funds that invest in stocks that meet the socially responsible
 tests.  Included in this list are the funds offered by the Calvert
 Group in Bethesda, Md., the Dreyfus Third Century Fund and the
 Fidelity Social Principles Fund sold by Fidelity Bank in
 Philadelphia.
    A wider overview is offered by Jack Brill and Alan Reder in
 "Investing From the Heart" (Crown, 414 pages, $20), which comes with
 a list of about 400 "approved" stocks and the socially responsible
 mutual funds that own each of them.
    A book that shows little willingness to compromise on SRI
 principles is Ritchie Lowry's "Good Money" (Norton, 220 pages,
 $19.95).  Here you will find a Good Money Utility Average that
 includes only electric utilities not using nuclear plants to produce
 power.  Presumably, utilities that employ coal-burning electric power
 plants are OK. 
    Still, while this book provides a very narrow walkway for the SR
 investor, Mr. Lowry generously does not conclude that capitalism is
 always unethical, and he thoughtfully lists a few companies that
 meet his tests of "social purity."  They include W. L. Gore &
 Associates, which manufactures the Gore-Tex fabrics widely used in
 outdoor clothing and in many medical applications.
    But suppose you not only want to invest in SR companies but you
 want to turn your own into one.  Then Mary Scott and Howard Rothman's
 book, "Companies With a Conscience" (Carol, 224 pages, $19.95),
 might be just what you are looking for.  It provides a description of
 12 companies that the authors believe meet the SR tests.
 Interestingly, it lists The Grateful Dead as one.  The rock group,
 which in 1991 had concert ticket sales of $35 million, disperses,
 through its Rex Foundation, funds to causes that range from saving
 the rain forests to AIDS research.  It has given away about $3
 million, according to the authors.  One cause it so far hasn't seen
 to address is its loyal fans, termed Dead Heads, who camp outside
 the band's concert sites and who follow the band from concert to
 concert.  Now there is an ongoing ecological disaster that needs to
 be addressed.

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