Nelson Mandela's remarkable leadership and courage in the struggle against apartheid -- and dedication to reconciliation as president of a democratic, multi-racial South Africa -- inspired his nation and the world. Among those he stirred were a generation of investors in the United States and elsewhere who in the late seventies and eighties heeded his call to put economic as well as political pressure on the apartheid regime by divesting from companies then operating in South Africa. That pressure worked as Mandela and Archbishop Desmond Tutu later attested that the divestment movement and the withdrawal of U.S. companies played an important role in ending apartheid.
In 1982, the Calvert Social Investment Fund was the first mutual fund in the U.S. to exclude companies that had operations in South Africa and a dozen years later, one of the first to invest in the new South Africa. Calvert's founders had the foresight to recognize that mutual funds -- not just college and university endowments as well as public pension funds -- also had the responsibility to make a statement and ultimately an opportunity to make a difference as international pressure intensified on apartheid South Africa.
South Africa divestment was the cause that crystallized -- and galvanized -- the power of investment to change the world. The willingness to align portfolios with principles raised the profile and over time demonstrated the impact of what was then called socially responsible investment (SRI), along with the closely allied community of faith-based investors. That divestment movement had its echo in the face of another morally compelling human rights challenge on the same continent beginning nearly a decade ago, when the genocide in Darfur spurred divestment from companies supporting the government of Sudan.
The moral and political impetus behind these movements -- along with the growing climate crisis -- had a subtler but no less powerful effect on successive generations of investors. These investors have come to recognize not only the power of investment to change the world, but also the impact of non-financial environmental, social and governance factors to change the way we think about investment. The growing mainstream appeal of what we call sustainable and responsible investment today is based on the recognition that attention to those factors -- along with financial fundamentals -- can allow investors to see around corners and over horizons that bring into focus a range of risks and opportunities related to the great corporate responsibility and sustainability challenges of the 21st century.
These challenges range from addressing climate change and water scarcity to fighting disease and hunger, to ensuring digital access and freedom to educating and empowering women and girls. The success of the companies in which we invest will depend in part on their willingness and ability to see risk and opportunity in these terms, especially in the emerging and frontier markets which are moving front and center into the global economy. That is exactly the proposition underlying the Signature, SAGE and Solutions Strategies that Calvert pioneered and applies to managing our various SRI mutual funds.
Investment in the 21st century must become increasingly sustainable and responsible if it is to address the world of dynamic risk and opportunity we face. At the same time, investment with a moral compass will continue to have its place and the legacy of Nelson Mandela will remain among its lodestars.
Bennett Freeman is senior vice president, sustainability research and policy, at Calvert Investments and served as deputy assistant secretary of state for Democracy, Human Rights and Labor from 1999-2001.