SRI (socially responsible investing) merges personal beliefs and

Journal Record, The (Oklahoma City), May 27, 2008 by Brian Brus

Some investors follow guidelines beyond mere profit margins and dividends.

"There's a Bible verse that sums it up, I think: When Jesus sent out his disciples, he told them to be as wise as serpents but as gentle as doves," said Mark Minnella, president of Missouri-based Integrity Investors LLC. "And if we apply that to finance, it means that if you're not intelligent with finance, you'll be eaten alive. But if you do have worldly knowledge you need to apply it in a way that honors God and cares for others, because otherwise you'll end up leaving bodies in the wake.

"So it really comes down to looking for companies that don't purposely offend God, do things that you consider immoral or harmful to others in what they produce and how they promote it," he said.

As Minnella's Internet site advertises, "Investing can be more than just a return on your money." And as he's observed in recent years, that sort of attitude is becoming more common.

"There's absolutely a lot more interest. The wave has swelled and gotten to a point where people are asking about it instead of being introduced to it," Minnella said.

Socially responsible investing, or SRI, is the premise in which people merge their personal beliefs with profit motives. The practice first came into popular use by religious investors seeking to avoid so-called "sin stock" companies involved in alcohol, tobacco and gambling. Depending on the individual, key investment issues could include anything from war opposition to anti-racism to environmentalism - an investor might put money in a company with strong diversity employment practices, for example, or sell off shares in a weapons manufacturer.

In Bob Rader's experience, organized religion has rarely been an obvious factor in investment. The influence is more subtle and personal, said the executive vice president and director of corporate finance at Oklahoma City-based Capital West Securities.

"You might find someone who's a nonsmoker who doesn't want to put his money in tobacco, or someone who doesn't agree with an advertising campaign because it pulls kids into smoking. Or you might run across someone who doesn't drink alcohol and doesn't want to own shares of a company that manufactures beer or wine," Rader said.

"Those decisions may very well be based on religious beliefs, but it's more low-key than that," he said. "I don't see anyone beating the drum over religion, or declaring, 'I'm a Bible-thumping Baptist.' I've never seen that occur. Most of them don't wear it on their sleeves. ... I'd say it's more of a moral belief than a specific religious belief."

Steven J. Balaban, first vice president and branch manager of Smith Barney's Oklahoma City operations, said his company has long held SRI initiatives. But when asked to comment on local investors' religion-driven decisions, Balaban opted out: "We don't get involved in that specific stuff. We pretty studiously try to stay away from those discussions. They're difficult to win, if you will," he said.

Regardless, faith-based SRI would seem to be gaining ground, and not just in the United States. Earlier this year, for example, the Dow Jones Indexes partnered with Dharma Investments Ltd. to launch the Dow Jones Dharma Index, based on about 250 companies that comply with the moral conduct inherent in Hinduism and the teachings of the Buddha. The index also incorporates principles of the Sikh and Jain faiths. The Indian companies in the index must embrace compassion, loving kindness and a respect for all forms of life.

And the Dow Jones Islamic Fund screens out companies involved in tobacco, alcohol, pork products, weapons and many forms of entertainment. Islamic law also prohibits the collection and payment of interest, or riba, so Muslims who invest in certain financial services companies run the risk of transgressing Islamic law, or Shariah.

Minnella said he has been approached by investors from other faiths: "We've talked. And there's a lot of overlap with some of the Islamic tenets of their faith, depending on who you talk to. ... Especially when it comes down to the ideals of money itself," he said.

But even within the same general religious group, there are bound to be disagreements over the details, Minnella said. Christian investors may have liberal or conservative interpretations of the Bible in the imbibing of alcohol, for example - "A lot of people will say that Jesus drank wine," he said.

"Then it comes down to whether the company manufacturing and promoting its alcoholic beverage is doing it in a matter that is caring for others or not dishonoring God," Minnella said. "Most alcoholic companies promote an immoral lifestyle."

Rader and others said the investor - and sometimes even the advisor - must research a company carefully when it comes to such personal issues. It's easy to lose sight of the goal in the tangle of corporate ownership structures.

"What's happened is that so many public companies have gotten so diversified that it's hard to separate ... the core business from their units and subsidiaries," Rader said.