Issue Brief: Community Relations
Introduction
Calvert believes that responsible corporate citizenship involves contributing significantly to the quality of life in diverse local communities. Strong community relations programs include focused charitable donations, employee volunteerism, and support for disadvantaged populations and the organizations that support those populations.
Calvert's Approach
Calvert evaluates companies' community involvement, placing great emphasis on companies that:
- Offer innovative giving programs that help support nonprofit organizations;
- Provide financial support for disadvantaged communities; and
- Promote employee volunteer programs.
Calvert prefers companies that produce a publicly available corporate social responsibility report with a focus on community issues. We also look for:
- Evidence that companies consider impacts on the community when making decisions;
- Companies that create high quality of jobs or employment training opportunities for disadvantaged community members;
- Companies that provide support to small-, women-, and minority-owned businesses; and
- Companies that provide support to low-income or minority communities.
When evaluating financial services firms, Calvert will not invest in companies that have a poor record of community investment, as measured by Community Reinvestment Act (CRA) ratings. Since its passage in 1977, CRA has been a mechanism for federal oversight of financial institutions' investment (or disinvestment) in the communities in which they operate. The goal of CRA is to prevent discrimination and to reverse the systematic abandonment of urban, ethnic neighborhoods by financial institutions.
Calvert examines the mortgage lending component of the CRA rating for each financial services company. We avoid financial institutions with poor community investment records and unfair practices, preferring firms with innovative and well-developed programs that target often-neglected communities, including low-income and minority populations.
Criteria in Practice
Regardless of industry, Calvert prefers companies that seek to improve the quality of life in local communities. For example, when entering densely populated cities, retail giant Target (TGT) will often establish stores on environmentally impaired properties known as "brownfields." Remediation and redevelopment of brownfield sites supports environmental improvement by restoring land to communities. Similarly, through partnerships with Goodwill Industries and other nonprofit agencies, Target donates close to 100 million pounds of damaged and overstocked merchandise each year, providing the community with community enrichment, job creation, and job training.
Calvert places special emphasis on the commitment that a financial services firm makes to community reinvestment. By investing in the areas in which they operate, banks are often able to provide a foundation for economic growth and revitalization efforts. For example, UCBH Holdings (UCBH), the parent of United Commercial Bank, was founded in 1974 to serve the financial needs of San Francisco's Chinese community. UCBH has routinely received "Outstanding" CRA ratings for its community support. The bank was one of the first institutions to offer bilingual (Chinese/English) ATM services; many of its printed materials are available in Chinese, English, and Spanish. UCBH actively establishes strategic partnerships with organizations that address the needs of the Chinese community. In addition, bank employees of all levels volunteer in local community organizations, whether by serving on boards of directors or through direct participation with service committees and in community-sponsored activities.
Know What You Own®
Calvert's Know What You Own® screening tool for community relations issues includes securities drawn from a universe of the largest 1000 US companies. Companies may fail Calvert's community relations criteria because they:
- Have CRA ratings of Needs to Improve or Substantial Non-Compliance, or
- Show a pattern of unfair community investment practices.
Advocacy
As Calvert identifies areas in which companies can improve, we enter into dialogues with them to encourage the adoption of best practices. Through our community relations advocacy efforts, companies are urged to improve their support for the communities in which they operate.
In 2006 Calvert co-filed a resolution, with the lead taken by Catholic Healthcare West, asking for Bank of America (BAC) to address predatory lending practices that were the target of negative media stories and activist campaigns. Calvert and Catholic Healthcare West withdrew the resolution after the company agreed to improve disclosure on its lending practices.
|
