BY CAROL BAASS SOWA
TODAY’S CATHOLIC
SAN ANTONIO • When Laura Berry, now executive director of the Interfaith Center on Corporate Responsibility (ICCR), worked on Wall Street as a portfolio manager, institutional clients with justice goals were routinely shuttled her way. “I was actually enthusiastic about investing this way,” says Berry, who grew up Catholic, with a strong sense of social justice. “Many of the more traditional investment managers at the time,” she notes, “thought it was: ‘You go to church on Sunday and you worry about investing your money Monday through Friday.’ I didn’t see it that way.”
The little girl who attended St. Benedict School growing up in Detroit, today enthusiastically heads an organization that has been a leading force in the corporate social responsibility movement since its founding nearly 40 years ago. As ICCR’s executive director, Berry was in San Antonio on April 29 as guest speaker at the Socially Responsible Investment Coalition’s fundraising dinner, held at Oblate Grotto Ministries.
Berry’s path to her ultimate calling in life was, as she puts it, “labyrinth-like.” As recipient of a scholarship in chemical engineering, she started off in that field, going to work for Occidental Petroleum in the early ’80s. This was followed by 20 years on Wall Street managing portfolios, before taking the helm at ICCR. It has, she says, “been a wonderful, wonderful path.”
The ICCR, she relates, got its start in 1971 when 12 representatives of Protestant denominational money came together, troubled by U.S. corporations’ investments in apartheid South Africa. Realizing they owned large pools of invested capital, the representatives sat down with General Motors and asked that they divest themselves from association with South Africa’s repressive regime. They also asked U.S. banks to stop financing projects for the government there.
Soon a handful of Catholic orders joined the original 12 investors in this effort, helping bring about the eventual end to apartheid, and the ICCR was well on its way as a morally responsible financial voice to be dealt with.
One of their successful methods of influence has been to bring advisory resolutions before corporations who, while far from enthusiastic about this originally, have become eager to work with faith-based investors since discovering the harmful effects of bad public relations on companies’ profit-making.
Faith-based investors predicted the recent sub-prime lending debacle, Berry noted, viewing it through the lens of social justice and warning against this back in the ’90s. They have also been filing climate and environmental resolutions since the ’90s, she said — long before this issue gained popularity as a cause — and have seen much progress in this area.
This April, Berry noted, the Ford Motor Company, as a direct result of 30 years of “conversation” with the Dominican Sisters of Caldwell, N.J., agreed to be the first U.S. auto maker to enforce specific emissions reductions in their vehicle fleet this year — a landmark decision. The same sisters also took on Exxon-Mobil at a shareholders meeting in April, with a resolution on exploring alternative energy sources, and Berry was elated with garnering 31 percent of the votes.
“The important thing is not ‘winning’ a majority vote,” she said. “The important thing is raising the issue for the governance structure of the company, to have shareholders go on record as saying, ‘Something’s got to be done about this.’”
It was not long after this that the Securities and Exchange Commission began discussing the rights of shareholders in filing advisory resolutions. At one point, mention was made of raising the amount of stock that must be owned in order to file an advisory resolution from $2000-worth of stock to as much as $1 million.
Aware that this important issue was “flying under the radar,” so to speak, ICCR and its members began a “little campaign” with only 60 days to mobilize supporters. The result was a staggering 38,000 public comments being sent to the commission. Previous issues had never drawn more than 5,000 to 6,000 comments, Berry noted.
Needless to say, the rules regarding the amount of stock owned to file advisory resolutions did not change.
Berry was invited by SEC chairman Christopher Cox to meet with them to discuss the position of faith-based investors on the proposed regulatory changes. Accompanying her to this meeting was Paul Neuhauser, the attorney who had filed the first resolution for the Episcopal Church back in the ’70s regarding apartheid. “It was a lovely, very cordial meeting and I am quite sure that the voices of faith investors came through loud and clear,” she says with a smile.
Berry adds that San Antonio’s own Socially Responsible Investment Coalition (SRIC), which celebrated their 26th anniversary this year, has been a powerful presence in the financially responsible investment scene, covering a breadth of issues from corporate governance to environmental and human rights issues. “They were absolutely present,” she said, “in addressing many, many immigration and justice issues, addressing issues with the maquilas over the border.” Referring to SRIC as ICCR’s “poster group,” she also praised their efforts in bringing in other faith traditions as part of their coalition, and their director, Sister Susan Mika, OSB, for her tireless and effective work.
Another significant issue in recent times has been Darfur, and Berry notes that it was young people who have been pushing their universities to divest their endowments from places like Darfur and to give thought to socially responsible investment.
“We’re really trying to find ways to engage the next generation,” notes Berry, “because we know they care about these issues and we know that they are very sophisticated in ways of outreaching.” This global outreach includes making use of the Internet and social marketing sites.
Berry’s speech for the SRIC event tackled the question of what comes next for socially responsible investing and, previewing that, she noted the impact of today’s global environment. When ICCR started in 1971, the capital markets were predominantly U.S. ones and the idea of an “activist shareholder” was revolutionary. Now, the group stewards about 650 corporate dialogues a year and has a global network of partners.
As to what comes next, Berry notes there is a move from looking at divestment as the sole way of using investment leverage to right social wrongs, to pro-active screening of companies that faith-based investors might not previously have invested in, such as the energy sector. In this case, this would involve over-investing in “good guys” who are looking at the world in the context of cataclysmic climate change and making management decisions based on that.
Another technique to expand on is more active stewardship of investor rights, as in voting proxies and encouraging such things as the ability of shareholders to nominate persons to the board of directors for companies. Also, with the future holding more powerful computers and new kinds of training for young econometricians, she foresees more powerful mathematical modeling and the development of a higher level of sophistication in analyzing and deconstructing investment results.
“More and more, powerful institutional investors are starting to look backwards at some of the things that faith investors have been talking about for a long time,” she says. A recent study by the Association of British Insurers on governance issues discovered that good corporate governance adds around 36 basis points to portfolio returns per month. Other studies are revealing similar results, with a U.S. study on governance, done in the wake of ENRON and WorldCom, when companies could no longer opt out of certain governance rules, has indicated gains in investment returns of around 70 basis points when good governance practices are followed.
Berry is confident that as science gets more sophisticated in measuring such things, it will confirm what faith-based investors have been saying all along — that companies can act morally and still be successful. “The Creator set us up that when we did good, things would work better,” she says.
“When you think about just about any faith tradition, not just our own, they say things like: Love the Creator, love each other, take care of the globe.” She notes that we as Catholics don’t need science to prove to us this is the right way to do things; it is part of our social justice tradition.
Socially responsible investing has morphed into a $2 trillion mainstream industry, she relates, and is the fastest growing investment style, with an 18 percent growth rate in the last two years. Growing with this is justice, though she realizes there is still a long way to go.
“I try to remind myself it’s not my time, it’s God’s time,” she says of the gains made by socially responsible investing. “I’m here for a reason,” she adds. “I’ll be doing this as long as I’m doing it and, hopefully, somebody will pick it up after I am gone.”