Many Top SRI Mutual Funds Fail Socially Responsible Criteria, Dragonfly Media Article Says

Business Wire, Oct 4, 2004

SAN ANSELMO, Calif. -- Article Says New Report Reveals SRI Industry Lacks Standards, Regulations and Oversight; Unaware Investors Are Supporting Weapons Makers, Polluters and Others

Contrary to widespread marketing claims, many of the top funds in the socially responsible investment (SRI) mutual fund industry invest in companies that produce products or components for the defense industry, fail to screen for environmental responsibility, and in some cases, support questionable equal opportunity practices.

In an exclusive article in the U.S. magazines published by San Anselmo, Calif.-based Dragonfly Media, noted environmentalist and best-selling author Paul Hawken says a soon-to-be-released report by the Natural Capital Institute shows that the SRI industry has no standards or definitions, is unregulated and too often invests in the same companies as non-SRI mutual funds.

The socially responsible investing (SRI) industry in the United States has more than $2 trillion under its control, according to the Social Investment Forum, and is one of the fastest-growing areas of mutual funds.

In the copyrighted October article, "Is Your Money Where Your Heart Is?" (story available at www.dragonflymedia.com), Hawken, director of the San Francisco-based Natural Capital Institute, says the industry's use of "negative" screens does not exclude companies involved with weapons manufacturing, extractive and polluting resource development and many with poor records on equal opportunities for women and minorities.

The report, "Socially Responsible Investing: How the Industry has Failed to Respond to People Who Want to Invest with Conscience, and What Can be Done to Change It," notes that the term "socially responsible investing" is so broad that it is meaningless. According to the report and the article, more than 90 percent of Fortune 500 companies are included in SRI portfolios. Pressure to perform as well as traditional mutual funds leads to what Hawken calls "portfolio creep -- porous and spurious criteria about what is a socially responsible company."

Among the surprising findings, the article lists the holdings of numerous SRI funds that are not in alignment with socially responsible principles.

As of December 30, 2003, 23 SRI funds are invested in Haliburton; Wal-Mart was held by 33 funds; tobacco-maker Altria (formerly Phillip Morris) was held by 12 SRI funds; weapons manufacturer Raytheon was held by 12 funds; ExxonMobil was held by 40 SRI funds; and Monsanto, maker of genetically modified seeds and Round Up weed killer, was held by 19 SRI funds.

"We found that the advertising for the SRI funds was less than transparent," says Hawken. "We found no external or common standards by which a consumer could measure their fund -- there was no accountability. We also found that there was no commonality in definitions and terms. The fund companies don't have to tell their investors what the standards are, how they are applied or what the process is.

"I do feel that the SRI mutual fund companies care, and they're trying to do something worthy, but my criticisms still apply," he adds. Hawken is an environmentalist, entrepreneur, journalist and best-selling author of The Ecology of Commerce: A Declaration of Sustainability and co-author of Natural Capitalism: Creating the Next Industrial Revolution, among others.

The full report, which also outlines steps the industry can take to improve its social responsibility, will be available after October 15, 2004, at www.naturalcapital.org.

The Dragonfly Media article, "Is Your Money Where Your Heart Is?" is available now at www.dragonflymedia.com.

About Dragonfly Media

Dragonfly Media publishes city-based, monthly, green/healthy lifestyle magazines in five North American cities: Los Angeles (Whole Life Times), San Francisco (Common Ground), Chicago (Conscious Choice), Seattle (Evergreen Monthly) and Vancouver, B.C. (Shared Vision). The magazines are free to consumers and available at a wide variety of locations in each Dragonfly market. For more information, visit www.dragonflymedia.com.

For interview requests, contact Paul Hawken, The Natural Capital Institute, 415-332-6990.

For reproduction rights or more information, contact Frank Lampe, Publications Director, Dragonfly Media, 303-604-6231, frank@dragonflymedia.com.