Socially Responsible Investment Guidelines
Approved February 19, 2000
Introduction
The Friends Committee on National Legislation and the FCNL Education Fund (hereafter FCNL) is committed to using prudent investing as a means of furthering our social, ethical, and political goals. This commitment extends beyond mere avoidance of companies whose policies we find objectionable; it emphasizes a positive search for corporations whose economic behavior reflects elements of our vision of a better world. This positive search can be pursued without forfeiting investment performance. Indeed, we believe that in the long run ethical companies make better investments.
This commitment is especially important to undertake in today's culture which encourages investors to become disconnected from the uses to which their money is put. We believe all citizens should consider how their money is being invested and should renew their connection with their money. The FCNL and the FCNL Education Fund commit themselves to being a part of this process, and we encourage participation with us in refining our investment policies.
Sources and Management of Funds
FCNL receives funds in many ways from many different groups of donors. General funds for immediate use come from annual contributions and bequests. Because of the uneven flow of funds, there is always a balance of working capital that must be managed to produce income. There are several forms of deferred giving that produce funds held in trust which must be managed for the benefit of the donors and FCNL. A small endowment fund is invested to support designated programs both now and in the future.
FCNL is committed to sound financial practices including ethical fund-raising procedures, effective budgeting, accounting practices that meet all nonprofit standards, and careful spending to obtain full value from each contribution for the benefit of its programs. Careful investment is also necessary to properly manage contributions in order to maximize the opportunity and potential for good that are intended by donors.
General Investment Considerations
FCNL manages its investments in a manner intended to produce income, preserve the funds, and enhance their purchasing power to the maximum extent while using prudent financial methods and observing the socially responsible guidelines appropriate to a Quaker organization.
We give attention to diversification, financial soundness of companies, market risk, and other technical factors, and seek to minimize speculative motivation. We seek companies and investments that promote socially useful goods, services, and economic activity. We seek to avoid companies that do not have a superior record within their industry of meeting their obligations to society. We acknowledge that companies as well as individuals are not perfect and that we should recognize both the good and bad aspects of their operations in making our investment decisions.
Efforts to influence the behavior of corporations is not a primary function of our investment practices, but such influence may occur incidentally in the process of making inquiries regarding social responsibility. It is not a goal of the investment activity to use FCNL funds to support any other organizations.
Social Responsibility Considerations
A. FCNL seeks investments in companies providing goods and services that people and peacetime industry need by way of food, medicine, clothing, housing, heat and light, transportation, communication, recreation, and som on--all the needs of everyday life.
B. FCNL seeks investments with companies committed to a peaceful world. It is the policy of FCNL to avoid investments in any company that develops, manufactures, or profits from products in the general category of weaponry, including chemical and biological warfare, nuclear weapons systems, antipersonnel weapons, small arms, and goods for the automated battlefield. FCNL avoids investing in corporations that support or profit from the export of arms, and companies that contribute to the rising number of street guns. FCNL will take special care to avoid major defense contractors or suppliers and, in most cases, companies with total military contracts over 2 percent of sales.
C. FCNL seeks investments that support the conversion from military production to civilian services and products. In examining such companies, we will consider the attitude of management to military contracts, their total amount and the percentage of sales they represent, the type of materials and services contracted for, and the direction of the company toward increasing or decreasing military involvement.
D. It is FCNL's policy to avoid investing in companies primarily involved in products or services of limited or questionable social value, such as intoxicants, tobacco, gaming, items of conspicuous consumption, or land speculation.
E. In judging investments, FCNL seeks companies that have a superior rather than an inferior record within their industry in the following areas:
- environmental enhancement, conservation, and pollution abatement;
- personnel practices demonstrating respect for civil rights of all and commitments to affirmative action hiring and to internationally recognized labor standards;
- health and safety of employees;
- general business practices, including advertising and financial practices;
- disclosure to their stockholders of information on business and social responsibility practices;
- recognition of the rights and cultures of native peoples;
- relations with unions and with worker organizing committees;
- ownership and leadership by persons from underrepresented groups (women, minorities, etc.); and
- long-term commitment to communities and sustainable employment.
F. Because of differences in culture and values, it is difficult to make judgments about companies with international operations. Within this caveat, we will take into consideration whether the foreign operation of a corporation (1) benefits the host country, (2) is consistent with the local culture, fosters human dignity, and respects human rights, (3) avoids unnecessary depletion of resources of the host country, and (4) is sensitive to the aspirations of that country. Absolute size of the operation relative to the economy of the host country will be a factor.
G. FCNL seeks investments that promote sustainable development in the United States and in Third World countries. We seek investments that support genuine progressive social change in developing nations, and that support transitions to more democratic and free societies.
H. We seek to support companies committed to the development of alternative energy sources.
I. FCNL may hold bonds of U.S. government agencies. We will not hold U.S. Treasury bonds, which may be used for military spending.
J. FCNL seeks to invest in companies dedicated to the development of a global code of conduct for corporations, as outlined by the United Nations.
Monitoring
Most corporations have uneven performance records under any social responsibility criteria. They can be good in some areas and not acceptable in others. This is compounded by the complexity of many of the larger corporations which have multiple lines of business and which operate in many different locations and settings around the world. Anyone will encounter some difficulty in acquiring all the necessary detailed information in order to apply our guidelines, and the amount of staff and committee resources available is limited. For all of these reasons, it is unlikely that FCNL social responsibility goals in investments will ever be totally accomplished. However, we are committed to continued progress toward these goals.
The FCNL Finance Committee, in addition to its ongoing discussions of social responsibility as individual investment choices are made, annually reviews the list of FCNL investments and investment guidelines at its first meeting of the calendar year. The FCNL Executive Committee and the FCNL Education Fund Board review, and revise as needed, these guidelines at their first meeting following the adoption/revision of the FCNL Statement of Legislative Policy by the FCNL General Committee.
