Calvert News

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 screening, advocacy, or integration of environmental, social, and governance (ESG) analysis. Calvert has approximately $16 billion in assets under management and provides a full-range of SRI investment products, from institutional funds to separate accounts.

Consider these facts:

The SRI market is growing rapidly. The SRI market has grown rapidly over the past 10 years, from $639 billion in 1995 to $2.29 trillion in 2005. That means 9.4% of the $24.4 trillion under professional money management in the United States, including retail and institutional assets, is 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 recently been cited as foundations that pursue either screening or advocacy approaches in their investments.²

Public pension funds are recognizing that environmental, social, and governance 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 include an SRI option and 41% of plan sponsors not currently offering SRI options to investors expect 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 is arguably required by fiduciaries in these jurisdictions.⁸

¹Social Investment Forum, "2005 SRI Trends Report."
² Charles Piller, Edmund Sanders, and Robyn Dixon, "Dark Cloud Over Good Works of Gates Foundation," The Los Angeles Times, January 7, 2007.
³"Perspectives on Responsible Investment: A Survey of U.S. Pension Plans, Foundations and Endowments, and Other Long-Term Savings Pools," January 2006, Mercer Investment Consulting.
⁴Signatories to the UN Principles for Responsible Investment (PRI), http://www.unpri.org/signatories/.
⁵U.S. Bureau of Labor Statistics 2005 total private employment data, "National Compensation Survey: Employee Benefits in Private Industry in the United States, March 2005", U.S. Department of Labor, and "Attitudes Toward Socially Responsible Investing", Yankelovich, January, 2006.
⁶Mercer Report for Social Investment Forum, "Defined Contribution Plans and Socially Responsible Investing in the United States," June 2007.
⁷Department of Labor Letter to Calvert Group, Ltd., May 28, 1998
⁸ "A Legal Framework For The Integration Of Environmental, Social And Governance Issues Into Institutional Investment," produced for the Asset Management Working Group of the UNEP Finance Initiative, Freshfields Bruckhaus Deringer, October 2005.