The Complete Idiot's Guide to Socially Responsible Investing Book

What Is Socially Responsible Investing?     1
Socially Responsible Investing Defined     3
Socially Responsible Investing Defined     4
How Is SRI Different     5
Value and Values     6
SRI Investment Options     7
Contrasts with Traditional Investment Styles     8
Emphasis on Impact     9
Offers Many Opportunities for Expression     10
SRI Strategies     11
Screens and How They Are Used     11
Positive Screening     12
Negative Screening     12
Shareholder Advocacy     14
Community Investment     14
Socially Responsible Venture Capital Funds     15
What About SRI Performance?     17
Investing and Rate of Return     18
Will My Retirement Fund Suffer?     18
History of SRI Performance     19
What Comes First, Value or Values?     21
Making a Statement and Making Money     22
The Truth About SRI Performance     22
Another Reason SRI Is Mainstream     24
Overview of Opportunities     25
Mutual Fund Performance     26
Performance of Stocks     28
Performance of Bonds     28
Returns on Community Investment     29
Shareholder vs. Shareowner vs. Stakeholder     31
Shareholder: Traditional View of Business Goals     32
Maximizing Shareholder Wealth     33
Changing Role of Individual Investors     33
Individual Shareholders as Passive Investors     34
Shareowners as Active Owners     35
Shareowner Resolutions Face Mixed Results     35
Growing Movement to Press for Change     37
Stakeholder Recognition of Other Parties     39
Corporate Responsibility Beyond Profit     39
Examples of Recognizing Stakeholders     41
Important Issues to SRI Investors     45
Environmental Issues     47
One of the Founding Issues     48
The Green Movement     48
From Fringe to Mainline     50
Environmental Issues on Two Fronts     51
Operational Environmental Issues     52
Carbon Footprints     53
Product Issues     55
Environmental Impact of China and India     57
U.S. Companies Outsourcing Pollution     57
Pollution in the Supply Chain     58
Societal Issues      61
SRI for Social/Political Change     62
Racism, Diversity, Social Justice     63
Equal Employment Opportunities     64
Unsafe Working Conditions     65
Human Rights     66
Investment in Foreign Countries     67
Sweatshops, Fair Trade     68
Religious Issues     70
Product Liability/Responsibility     71
Safety and Product Liability     72
Environmental Concerns     73
Corporate Governance     75
Role of Board of Directors     76
Represent Owners of Corporation     76
Board Independent of Management     77
Corporate Policies Unchallenged     79
Board of Directors Relates to Management     80
Shareholders Lack Effective Voice     81
The Role of SRI Investors in Corporate Governance     82
Major Corporate Governance Issues     83
CEO Compensation Issues     84
CEO Compensation Out of Synch with Performance     84
Disparity Between CEO Compensation and Workers' Pay     86
Political Contributions     87
Economic Issues     89
Living Wage Issues     90
Employee Compensation     91
Health Insurance Accessibility     92
Globalization     93
The Scope of Globalization     94
The Impact of Globalization on Local/Native People     95
Impact of Globalization on Foreign Cultures     97
The Impact of Globalization on the United States     98
Money and Political Influence     99
Political Donations     100
Bribery and Corruption     101
Community Investment Issues     103
Local, Hands-On Approach     104
Community Development Financial Institutions     105
Basic Financial Services     106
Capital Pools for Local Investment     106
Investing in Community Projects     107
Investing in Affordable Housing     107
Community Development Through Loan Funds     108
How CDLFs Work     108
Who Should Invest in CDLFs     109
Loan Funds for Local Projects     110
Microenterprise Loan Funds     110
Community Development Corporations     111
Venture Capital Funds     112
What Should You Expect     112
Economic Justice Through Community Investment     113
SRI Strategies     115
Screening Investments     117
Screens and How They Work     118
Screens Filter Based on Criteria     119
Screens Can Exclude or Include Based on Choices     120
Not All Screens Are the Same     121
SRI Use of Negative Screens     121
Absolute Exclusion or Partial Screens     122
Negative Screens May Produce Better Results     123
The Big Four of Negative Screens     124
Criticism: Negative Screens Do No Good     126
Positive Screens for a Change     127
Positive Screening for Investments     128
Shareholder Activism Screening     129
Role of Screening     129
Positive Screening     131
Using Positive Screens to Identify Investments     132
The Purposes of Positive Screens     132
How Mutual Funds Use the Data     133
Includes Companies Needing Change     133
Choosing Companies That Do SRI     134
Individual Investors vs. Mutual Funds     135
Where Investors Can Find Bad News     136
Improvement in Areas Is Tracked     137
Screens Monitor Progress     138
Progress of Activism and Advocacy      139
Identifies Management Practices     139
Policies Toward Women, Minorities     140
Progressive Union Relationships     142
Best of Class Models     142
Your Shareholder Rights     145
You're the Owner     146
Corporations Organized to Give Management Power     147
Board of Directors Should Represent Shareholders     148
SRI Position on Boards of Directors     149
Effect on SRI Investors     150
SRI Shareholder Advocacy     150
The Process of Filing Shareholder Resolutions     151
Forces Management to Address Issues     152
Sample Shareholder Resolution     152
Annual Meeting and Proxy Voting     155
Proxy Voting     155
Your Rights in Proxy Voting     156
Mutual Fund Proxy Voting Victory     159
Proxy Votes Not Always Known     160
Mutual Funds Own Many Stocks     161
SRI Advocates Wanted to Know     162
Votes on Key SRI Issues     163
Disclosure by Large Mutual Fund Families     163
Traditional Mutual Funds Can Influence Companies     165
Mutual Funds Feeling the Heat     166
Is Climate Change a Real Problem?     167
What Industries Are at Risk?     169
What Is the Track Record on Climate Change?     171
How to Know What Your Fund Is Doing     171
SRI Investment Opportunities     173
Overview of Mutual Funds     175
Popularity of Mutual Funds     176
Benefits of Mutual Funds     177
Professional Management     177
Diversification     178
Convenience     178
Figuring Share Price or NAV     179
Risk and Reward     179
Diversification     179
Asset Allocation     181
Types of Mutual Funds     183
Investment Styles     186
Growth Mutual Funds     186
Value Mutual Funds     187
Blended Funds     187
Management Styles     187
Mutual Fund Expenses, Fees, Taxes     188
Sales Expenses or Loads     189
Mutual Funds and Expense Ratios     190
Taxes and Mutual Funds     190
SRI Mutual Funds     193
Most Popular SRI Tool     194
Professionals Handle Stock Selection     194
The Screening Process      195
Exclusion Screening     196
Qualitative Screening     197
Not All Screens Are Equal     197
Best-in-Class Modeling     198
Ease of Investing     199
SRI Funds and Your Retirement     200
SRI Mutual Funds Work Like Other Funds     201
Most Acceptable for Retirement Accounts     201
SRI Funds Work for College Savings     202
A Question of Expenses     202
Value Added by Expenses     203
Screened Funds May Carry Higher Expenses     203
SRI Index Funds Generally Less Expensive, But Less Engaged     204
SRI Index Mutual Funds     207
How Index Funds Work     208
Creating an Index     208
How Two Famous Indexes Are Calculated     209
Tracking Identified Sector     210
Low-Cost Passively Managed Funds     210
How SRI Index Funds Work     210
Full SRI Market Coverage     211
Example of Broad Market of SRI Index     211
Investing in the Domini 400 Index     213
Sector SRI Indexes     214
Examples of SRI Index Funds     215
Examples of Domestic Index Funds     215
Exchange Traded Funds     217
Trading ETFs Just Like Stocks     218
A Broad Market ETF Example     218
Who Should Use ETFs?     219
More About SRI Mutual Funds     221
Types of Funds     222
What's the Fund's Focus-What's Its Type?     223
Mutual Fund Type Definitions     224
What's the Fund's Financial Focus?     226
A Question of Risk and Reward     227
Conflicting Values and Financial Goals     228
Foreign SRI Funds     229
What You Need to Know     230
Some Examples of International and Global Funds     232
Are They Right for You?     234
Investing in SRI Stocks and Bonds     235
Why Own Individual SRI Stocks     236
The Benefits and Drawbacks of Owning Individual Stocks     236
The Case for Investing in SRI Stocks     237
Do Your Own Stock Screening     238
You Can Set Your Own Financial Criteria     239
Stock and Mutual Fund Screens Do Heavy Lifting     239
Building with SRI Values     240
Where Do You Draw the Line?     242
Shareholder Advocacy as an Individual     243
Investing in SRI Bonds      244
Buying Individual SRI Bonds     244
The Case For and Against Individual Bonds     245
Using SRI Bond Funds     245
Convenient and Easy to Set Up     246
Professional Management     246
May Be Safer Foreign Investment     247
How to Do SRI     249
Investor Tools     251
Information Sources-Mutual Funds     252
SRI Fund Websites     252
Mostly Free Research on Mutual Funds     254
Mutual Fund Key Data     255
Expenses Trump Everything     256
Five and Ten-Year Performance Data     257
Fund Manager     257
Information Sources-Individual Stocks     258
Finding Information on Shareholder Advocacy     260
Community Investing     261
Using an SRI Financial Advisor     263
What Financial Advisors Do     264
Types of Financial Advisors/Professionals     265
What Do Stockbrokers Do?     266
What Do Financial Planners Do?     267
What Do Money Managers Do?     269
Five Things You Should Do Before Hiring a Financial Advisor     270
Why and When to Use a Financial Advisor     272
Access to SRI Research     273
Your First Steps     273
The Selection Process     274
Management for Larger Accounts     275
The Smaller Large Account     275
Large Account Services     276
What Separate Accounts Can Offer     276
Critics of Socially Responsible Investing     279
SRI Self-Defined     280
What Is Socially Responsible Investing?     280
A Vision Becomes Blurred     281
Letting Others Define SRI     282
SRI Integrity Challenged     284
The Problem with Expenses When You're Small     284
The Problem of Portfolio Creep     285
SRI Mutual Funds for Real Change     288
The Marketing of Social Responsibility     288
Genuine SRI Funds     289
The Best Solution     290
What's an Interested Investor to Do?     291
The Financial/Personal Commitment     293
Deciding on SRI     294
Consider How Much You Want to Commit to SRI     295
Set Up Investment Plan to Accomplish Goals     296
Meeting Your Financial Goals     297
Active SRI Investors     298
Know What You Own in a Mutual Fund      299
Avoid Frequent Trading     300
Monitor Progress     301
Measure Financial and SRI Progress     301
Stay Involved and Consider New SRI Opportunities     302
No Perfect Investments     303
Appendixes
Resources     305
Glossary     313
Index     321