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Liberal Investors Let Cash Attest Their Convictions

AMBROSE BIERCE, writing in 1906, called corporations "ingenious devices for obtaining individual profit without individual responsibility." While he may have had a Machiavellian view of the corporate business world, a growing number of individuals and organizations are also beginning to demand ethical standards and social conscience of companies.

No longer labeled off-beat and unrealistic, this emerging group is putting its investment dollars where its heart is and making a tidy sum of money to boot. "Doing good while doing well," the refrain of socially responsible investors, is moving into the mainstream. That investors had made $625 billion worth of social investments by 1991 attests to its broadening appeal.

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Measured against the long history of business enterprise, however, this 20-year old phenomenon has yet to fully define itself. In the process of accomplishing its goals, it needs to reassure society's conservatives that the more shrill pioneers of socially responsible investment are not tarring all business with Bierce's brush.

Screening companies by social ethics has grown in sophistication since the early 1970s when companies were largely assessed on their alcohol, smoking, gambling, nuclear power, and military contracts. These simple screens have been supplemented by a host of more subtle ones like product safety, employee relations, and environmental protection. To help the budding social investor develop his own investment criteria, a slew of new books are available, the most recent of which is "Investing for Good." Jointl y authored by Amy Domini, Peter Kinder, and Steven Lydenberg - all old hands in writing about social investing - the book offers a thorough step-by-step guide to making your money work for you. It also refrains from beating the social drum too loud.

The tome is written for the relatively unsophisticated investor, however.

Those unfamiliar with the nuts and bolts of the markets and monetary instruments - and all the jargon that accompany them - will find it a good road map. Clearly written, "Investing for Good" manages not to be patronizing despite some of its more elementary explanations: "An annual report is a financial statement that state laws require every corporation to supply to its shareholders."

The reader can heave another sigh of relief for the lack of obscure graphs, number crunching, and dry market analysis. Although the book does include tables showing which companies pass or fail social requirements. It also includes boxes that highlight "indispensable resources," like Barron's Finance and Investment Handbook. Peppered with anecdotes and humor, this book makes an interesting read whether or not one has a mattress full of dollars to invest.

The writers draw on literature to round out the historical context of social investing, but never let the prose run away with them. They quote the author of Walden Pond in the chapter on redefining ownership and then deflate any literary pretension, saying: "Quoting Henry David Thoreau to business people produces the same reaction as reciting Simone de Beauvoir to misogynists."

Much of the book is devoted to running through the most common social screens. The authors cite example after example of companies that pass or fail the tests and those that respond to public opinion. McDonald's is an example of the latter. In the late 1980s, its "clamshell boxes accounted for 80 million of the 12 billion pounds of disposable plastic packaging used each year." After teaming up with the Environmental Defense Fund in August 1990 to study the chain's solid waste disposal, the foam boxes wer e dropped for quilted paper wrappers. (Of course, skeptics question whether this is really an improvement.)

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Looking to the future, "Investing for Good" addresses the relatively new area of international social investing. Disinvestment from South Africa is the most striking example of the influence social investors wield. But the standards they draw on are Western. The question now is "whether they can impose their culture/political ideals on other cultures." Or do countries such as North Korea, Burma (Myanmar), and Indonesia need a new set of rules.

In Britain, social investors commonly cross off companies that do business with oppressive regimes. In the United States only Working Assets and Calvert Global Fund have similar requirements.

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