Socially Responsible Investing

Socially Responsible Investing (SRI) is gaining popularity among institutional investors. As a leader in SRI, Calvert can help institutional investors identify an SRI approach that best matches your goals, whether it is research, advocacy, or integration of environmental, social, and governance (ESG) performance into our analysis of companies in our portfolios. Calvert has approximately $13 billion in assets under management and provides a full-range of SRI investment products, from institutional funds to separate accounts.

In April 2006, the Principles for Responsible Investment, which encourage asset managers and institutional investors to incorporate ESG factors into investment decisions and analysis, were launched by the United Nations Global Compact and the United Nations Environment Programme. Calvert is proud to have participated in a UN expert working group that helped design these principles. We were one of the few US signatories to these Principles, among the numerous institutional managers and financial institutions from across the globe. We have long recognized that financial analysis is better when it incorporates ESG-related risks and opportunities. We are delighted to see the increasing awareness of these issues by the global financial community.

Consider these facts:

• The SRI market is growing rapidly. The U.S. SRI market has grown rapidly over the past 12 years, from $639 billion in 1995 to $2.71 trillion in 2007. That means 10.8% of the $25.1 trillion under professional money management in the United States in 2007, including retail and institutional assets, was invested in a socially responsible manner.¹
• Major foundations look to SRI as a way to align their investments with their mission. The Ford Foundation, the John D. and Catherine T. MacArthur Foundation, the Rockefeller Foundation, the Charles Stewart Mott Foundation, and the Nathan Cummings Foundation have been cited as foundations that pursue either screening or advocacy approaches in their investments.²
• Public pension funds are recognizing that ESG factors can materially influence financial concerns.³ Some of these funds have publicly pledged to explore investment approaches that include ESG analysis, including CalPERS, New York City Employees Retirement System, New York State and Local Retirement System, Connecticut Retirement Investments and Trust Funds, and Teachers Retirement System of the City of New York.⁴
• Employees are seeking SRI options for retirement plan investments. Over 30 million investors are interested in retirement plan funds that integrate investment returns with quality-of-life issues. In fact, in 2005 68% of employees who did not have an SRI option indicated they would invest in one if it were offered.⁵ Furthermore, a June 2007 report found that 19% of defined contribution plans already included an SRI option and 41% of plan sponsors not currently offering SRI options to investors expected to be doing so within three years.⁶
• In response to a letter from Calvert, the Department of Labor has clearly stated that fiduciaries can legally pursue an SRI investment strategy.⁷ In fact, an October 2005 study of fiduciary law in nine countries found that consideration of ESG factors in investments was arguably required by fiduciaries in these jurisdictions.⁸