MutualFundWire.com: Events Open Window for Social Funds
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Thursday, August 22, 2002

Events Open Window for Social Funds


The changing economic and political environment is opening up new opportunities for social investing. Pax World, one of the oldest funds using social screening for its portfolio is targeting the events in Afghanistan, while Calvert is responding to the spate of corporate scandals.

Bethesda, Maryland-based Calvert has added a new set of 51 corporate governance and business ethics guidelines to its social investment criteria, the fund firm announced today. Calvert has also added a report on the issue to its Web site as part of an attempt to educate investors about the issue.

The new guidelines at Calvert are intended to weed out companies whose corporate governance and business practices have compromised the interests of shareholders. It will also avoid investing in companies that have engaged in serious securities fraud and whose corporate governance is significantly worse than that of its peers.

Barbara J. Krumsiek, president and chief executive officer of Calvert, explained that although the criteria are new Calvert has long looked at corporate governance when it invested.

"We think companies with poor governance are more likely to stretch the rules," elaborated Julie Gorte, director of Calvert's Social Research. "It's not surprising that the incidence of securities fraud litigation and penalties are significantly higher among companies with non-independent boards and provisions that limit shareholder participation," she added.

The items on Calvert's checklist include:

  • the independence and diversity of boards and key committees;
  • compensation of executives and directors;
  • the quality and independence of auditors;
  • corporate charters and bylaws;
  • the degree to which shareholders are informed and consulted on material items such as anti-takeover provisions and stock option plans.

    Calvert said it will also examine corporate records of litigation or regulatory investigation to identify companies whose business practices have damaged investors, consumers, workers, and communities.

    Meanwhile, investors in the Pax World Balanced Fund have an opportunity to lend a hand in Afghanistan. The Pax World Service, an affiliate of the fund and Mercy Corps, has raised $80,000 from fund shareholders to help rebuild the war-torn nation.

    The funds will be used for school reconstruction, water management systems, wind power, economic rehabilitation, basic shelter and living needs, the firm explained. Mercy Corps' programs also seek to improve the status of Afghan women and bridge ethnic divides.

    The money is raised from Pax World Balanced Fund investors who are able to make a voluntary contribution of their capital gains and dividends distributions to Pax World Service. The service directs the money to aid in the work of Mercy Corps in Afghanistan and elsewhere.

    The program has raised $775,000 since its founding more than four years ago.


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