'Socially Responsible' Investments Are Broker's Specialty

Some Customers Pro-environment, Anti-war

August 11, 1991|By Erik Nelson | Erik Nelson,Staff writer

Michael Greenman has set out to make his living by taking the guilt out of investing.

The Ellicott City resident is a broker with First Affirmative Financial Network, a Colorado Springs, Colo.-based securities company that he says is the only nationwide network dealing exclusively in "socially responsible" investments.

"If someone gives money to the Sierra Club and Greenpeace, it doesn't make sense to invest money in companies that pollute the environment," says Greenman, the company's only representative in the Baltimore-Washington area.

Greenman is still waiting for state regulators to process First Affirmative's registration so that he can begin work as a financial consultant, a process that could take several months.

When that registration is completed, Greenman will join 51 agents in 17 states who specialize in such investments.

First Affirmative begins its screening process by asking investors to fill out a confidential questionnaire.

Investors are asked to check off their position -- "Strongly oppose," "OK to buy" or "Don't care" -- next to such categories as tobacco, alcohol, weapons manufacturing, selling weapons to a specific country, the use of sexist advertising, poor product or worker safety records and doing business with South Africa orother countries.

"Or you can select a company that you don't like, and be activist in it, get on its board of directors" and try to change its direction after buying its stock, said Greenman.

While there are banks, mutual funds, insurance companies, limited partnerships and publicly owned firms that can be invested in based on similar social criteria, there are only a few brokerage companies that specialize in socially responsible investments.

The two largest are FirstAffirmative and Progressive Asset Management of Oakland, Calif.

Greenman says his priorities are based first on an investment's profitability and second on social responsibility.

He endorses investingin companies such as H. B. Fuller, a chemical company in Minnesota with both a good financial and environmental record.

"Most people believe that if you're a chemical company, you're almost unavoidably apolluter," says Greenman, who hopes to help dispel that belief.

Also on his "A" list are Ben and Jerry, of ice cream fame.

However,two major types of investment -- U.S. treasury bills and savings bonds -- are not considered socially responsible because so much of the federal government's budget pays for the military.

Investing in the government's Fannie Mae, Freddie Mac and Sallie Mae programs is considered responsible because they finance home mortgages and student loans.

Working from his home in the Meadowbrook subdivision, Greenman appears to be the second broker in the Baltimore area to deal exclusively in socially responsible investments.

And that is just fineby the first.

"I'm thrilled that after so many years of talking to a lot of brokers and brokerage firms in the area, that there's finally someone else in the area," said Darrin Kafka of Owings Mills.

A securities principal of Titan Value Equities of Tustin, Calif., Kafka has specialized in this type of investment for seven years and hastried to encourage other area dealers and financial advisers to do the same.

Although socially responsible investing is "not yet on the cutting edge," as Greenman puts it, the field is growing to a pointwhere even big New York brokerage houses are hiring brokers who specialize in ethical investments.

"When you have over $600 billion worth of assets (in the United States) that want to be socially screened, it makes sense to target them," said David Crocker, a financial consultant recently hired to do just that for Shearson Lehman Brothers in New York.

"Many church institutions have been doing this for a long period of time," Crocker said, mostly to keep their assets from supporting "sin stocks," connected to alcohol, tobacco or gambling concerns. Quakers and other pacifist denominations have avoided investments supporting the military.

As Americans' social conscience grewduring the 1960s, other investors began taking a harder look at whether their money was supporting the Vietnam War or polluting the environment.

And with the wave of company takeovers of the 1980s, "people have seen that they can make changes in the management of a company, or the direction of a company," says Toby Pitts, who manages Merrill Lynch's Columbia office.

Pitts says that as community interest in issues like recycling have grown, more clients have expressed concern about the ethics of their investments.

And it isn't just liberals, he insists.

"There are a lot of good, conservative people whorealize that socially responsible investing is in their own best interest," Pitts says.

Although financial consultants in his office can screen investments accordingly, Pitts says, "I have never heard ofanybody doing it exclusively."

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