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THE TRIPLE BOTTOM LINE* SIMULATION®

“Experience Social Investing
…Without Taking Risk”

*Earning Financial, Social and Environmental Dividends

TREASURERS MEET FOR SECOND ANNUAL
“TRIPLE BOTTOM LINE SIMULATIONS” CONFERENCE

42 Pensions, Foundations, Endowments, Others
Gather to “Test Drive” About SRI

NEW YORK, N.Y.///June 10, 2002/// More than 40 treasurers from leading U.S. pension funds, foundations and religious organizations met for the second annual Triple Bottom Line Simulation – a unique investment model allowing them at make socially responsible investments (SRI) across five key asset classes in a virtual setting.

This year’s conference sponsored by Capital Missions at New York’s Roosevelt Hotel brings together treasurers from organizations such as the MacArthur Foundation, the General Board of Pensions of the United Methodist Church, Amnesty International, Rockefeller Foundation, National Wildlife Fund, Cambridge Associates, Stanford Management Company, the Service Employees International Union (SEIU) and many others.

“Capital Missions is delighted to report that more than 40 treasurers were able to join us at this year’s events. Thanks to a great deal of dialogue, many of the attendees learned a great bit. Many participants can now see that a totally responsibly invested portfolio pays off in many ways – both in financial terms and social and environmental terms. Also the financial officers have created a ‘Simulation Network’ organization to guide the Simulation going forward.”

In May 2001, treasurers met in New York City to create five Simulations of $100 million. The inaugural program was open by invitation only to pension funds, foundation treasurers, religious treasurers, endowments and families. Quarterly reports of the Simulations allow treasurers to compare the “mock” results with the results achieved by their actual money managers. The first quarter 2002 Triple Bottom Line Simulation results compared to their financial benchmarks are shown below.

Social Screening simulation: -0.71 percent
Shareholder Activism simulation: 0.54 percent
Community Development simulation: 0.01 percent
Social Venture Capital simulation: 1.09 percent
General SRI simulation: -1.88 percent

Davis said: “The Simulations are closely tracking or outperforming their benchmarks. It is important to recognize that these comparisons are to appropriate financial benchmarks, not gross return numbers.  It is also important to note that no value is attached to the social and environmental positives attached to the social investment products.”

The five simulations developed by the treasurers have specific social change criteria include:

  • Social Screening Simulation. Generally, socially responsible investors seek to own profitable companies that make positive contributions to society. Screening is the practice of including or excluding companies from portfolios based on social and/or environmental criteria. These criteria can range from the diversity of a company’s board of directors, to the impact of company operations on the environment, or to the percentage of company revenues received from weapons contracting, gambling, liquor or tobacco. The qualitative research and evaluation process known as screening generally seeks to first eliminate the worst of the worst (avoidance) and then, from the large universe of possibilities that remains, identify the best companies in various industry classifications. Negative/avoidance screening yields a social dividend of withholding capital from firms with poor social and environmental performance. Positive social screening yields a dividend of supporting companies that are doing better than most on social and environmental matters.
  • Shareholder Advocacy Simulation. Shareholder advocacy describes the actions many socially aware investors take in their role as responsible owners of corporate America. These efforts include dialoguing with companies on issues of concern, and submitting and voting proxy resolutions. Advocacy efforts are aimed at positively influencing corporate behavior. Social investors generally target the social issues most important to achieving their organization’s mission and often work cooperatively to steer management on a course that is believed will improve financial performance over time and enhance the well being of all the company’s stakeholders – customers, employees, vendors and communities, as well as stockholders. Management teams who embrace the stakeholder concept of management are viewed as more enlightened, exhibiting the progressive attitudes of business leaders of the future, and likely to outperform their competitors over time. Shareholder advocacy can lead to better corporate performance on social or environmental issues, an important social dividend.
  • Community Investment Simulation. Social dividends are achieved in this area by doing business with community development financial institutions (banks, credit unions, venture capital firms and other community-focused entities) for cash equivalent products such as banking accounts and jumbo certificates of deposit. The Social Investment Forum, the industry trade group, advocates that social investors target one percent of their investment portfolios to local community initiatives through reputable CDFIs. Social dividends from community investment include increased affordable housing, job creation and a wider availability of high quality childcare in low-income and underserved communities.
  • Social Venture Capital simulation. Some of the most powerful solutions to social problems come from start-up companies. Sectors that have seen innovative products include alternative energy, organic food, affordable housing, development banking and electric cars. Institutional investors are increasingly seeking benefits for society as well as venture industry financial returns by investing in these “social ventures.”
  • General SRI Simulation. This simulation is a blend of the four other simulations.

The socially responsible funds and investment alternatives employed by the Triple Bottom Line Simulation include: Calvert Social Investment Fund (Equity Portfolio), Domini Institutional Social Equity Fund, Rockefeller & Co. Libra Fund, Walden Asset Management (Innovations Portfolio), Roxbury Capital Management SR Large Cap Core Growth Fund, State Street Global Advisors SR Equity Strategy Fund, Calvert Social Investment Fund (Bond Portfolio), Freddie Mac CMO Sequential, Freddie Mac MBS Pass Through, Pax World High Yield Fund, State Street Global Advisors SR Intermediate Bond Strategy, Calvert Foundation Community Investment Notes, Green Cay Asset Management Siebels Emerging Market Tech Fund, Solstice Fund II and ShoreBank SRI Jumbo CD.

ABOUT CAPITAL MISSIONS

The 12-year-old Capital Missions Company has created 10 networks of social investors in 10 years, including venture capital investors, financiers of America’s leading African-American companies, financiers of premiere women-led businesses, companies offering social investment products, solar investors and micro-enterprise investors.

Capital Missions Company has created a proprietary process to launch social investor networks: KINS, the Key Initiator Network Strategy. KINS targets a particular niche of finance, sets an inspiring goal, identifies the constituencies within the niche, identifies the key influencers within each constituency and invites the key influencers to design and launch the network. CMC’s fees come from consulting on network formation and network growth.

Capital Missions’ Founder and CEO is Susan Davis. Over the past 30 years, she has helped start five respected socially-responsible companies including South Shore Bank, the nation’s first neighborhood development bank. Including her nine years as a division administrator in the Personal Trust Group of Chicago’s Harris Bank, Ms. Davis has spent 29 years in various sectors of finance.

 


Please note that the links below have been disabled due to the time lapse.

Below are the summary of the first quarter 2002 returns of the Triple Bottom Line Simulation, showing that three of five “Social Investment Simulations” beat their benchmarks in the first year.

Executive Summary (PDF; 7K)

Asset Allocation and Return Summary (PDF; 12K)

Community Development Simulation (PDF; 9K)

Shareholder Activism Simulation (PDF; 9K)

Social Screening Simulation (PDF; 9K)

Social Venture Capital Simulation (PDF; 9K)

General SRI Portfolio Simulation (PDF; 9K)