It takes a leap of faith to believe that corporations will tackle egregious environmental and human rights blunders, but Christian Brothers Investment Services, which manages about $4 billion in assets for over 1,000 Catholic institutions worldwide, is committed to helping them try.
Aside from its negative screens for firearms, pornography, tobacco and companies with ties to life ethics (abortion, contraception, and embryotic stem cell research), there is no environmental, social or governance (ESG) issue CBIS is unwilling to touch.
While BP and fossil fuels in general are being shunned by some large socially responsible investors, CBIS is trying to get the company to engage in meaningful dialogue about its plans to identify and mitigate risk and increase board oversight. CBIS has also been talking with Schlumberger, which has operations in the Sudan, to see what the oilfield services provider is doing there to improve human rights.
"You can't engage in any robust, substantive way if you don't own a company," says Julie Tanner, assistant director of Socially Responsible Investing for CBIS. Active ownership for CBIS, which owns about 1,000 companies, includes initiating ongoing dialogues with corporate boards and management, filing resolutions, and proxy voting,
For the 2011 proxy season, CBIS has filed resolutions with Layne Christensen (for water sustainability), Exxon Mobil (climate change), and Goldman Sachs (separation of chairman and CEO roles). CBIS was the lead co-filer in a 2011 resolution prepared but not filed with BP. Instead, it has joined a coalition of global investors seeking better dialogue with the company as a potentially more effective alternative.
CBIS identifies itself as a faith-based investor because of its moral and ethical foundation (its firearms and life ethics screens come directly from Catholic social teachings) and its 100% Catholic clientele includes dioceses, religious institutes, educational institutions and health care organizations. But its investment philosophy also factors in trends, emerging issues, and the decisions of its secular SRI colleagues, says Tanner.
In addition, CBIS surveys its clients every three years to see what investments they don't want to hold and which areas they'd like CBIS to engage in. That's how the tobacco screen evolved.
CBIS, a manager of managers, hires outside investment management firms to manage its funds and separately managed portfolios according to its philosophy. An SRI approach hasn't compromised returns. Its CUIT Core Equity Index Fund has closely tracked S&P 500 performance over the past 16 years. Last year, its growth, small-capitalization and international funds closely tracked or outperformed, respectively, the Russell 100 Growth Index, Russell 2000 Index, and MSCI EAFE-Gross Index.
CBIS, a member of the Interfaith Center on Corporate Responsibility (ICCR), has been successful in its engagement efforts with many companies. There's no time, though, to rest on its laurels. "You get a victory but you have to keep pressing," says Tanner--particularly for evidence of policy implementation.
In 2007, Newmont Mining's board agreed to support a CBIS-led resolution asking it to create a report on ways to strengthen community relations associated with its Peru, Indonesia and Ghana operations. Newmont has yet to reveal how it plans to implement the report's recommendations--something Tanner planned to bring up at its annual board meeting last month.
What other issues have CBIS hopping? Last year, it initiated campaigns with the hotel industry to help fight child sexual exploitation. "It's a very frustrating sector ... it's pretty much 10 years behind the times," with regards to corporate social responsibility, says Tanner.