Making money and feeling good

Investing

January 29, 1996|By BILL ATKINSON

PRESUMABLY, most investors have a conscience.

But if that's the case, then why don't more people feel troubled after making bundles of money off of companies that manufacture bombs, dump toxins into waterways or use child laborers to produce their products?

That's what Steve Schueth, president of Calvert Distributors Inc., wants to know.

His company underwrites and distributes seven mutual funds run by Calvert Group. The Bethesda-based Calvert Group operates the nation's largest family of mutual funds that invest in "socially responsible" businesses.

"If investors really stopped to look at the companies their mutual funds own, and then stopped to think of some of the things those companies are doing to the environment, they would pause and wonder why they are supporting such an enterprise," Mr. Schueth said.

In the last 20 years, investors have poured billions of dollars into -- Calvert Group's mutual and tax-free funds.

Calvert has $5 billion in assets under management, of which $1.5 billion is invested in the mutual funds, and the rest is in tax-free funds, like municipal bonds.

Although Calvert Group's philosophy might be too liberal, too green and too politically correct for many investors, it doesn't mean that profits are sacrificed.

"Socially responsible investors don't just invest in the local tidied T-shirt company," Mr. Schueth said. "We are a serious business."

Consider the record of a handful of Calvert funds:

* Calvert Social Investment Fund Managed Growth Portfolio has $577.3 million under management and returned 25.85 percent last year. While it didn't beat returns on Standard & Poor's 500 stock-index, its returns are nothing to sniff at. Since its inception 13 years ago, the fund has average annual returns of 11.5 percent.

* Calvert Capital Accumulation has $22.2 million under management and has returned 33.40 percent since it was formed just over a year ago.

* World Values Global Equity Fund has $200 million in assets under management and returned 11.8 percent last year.

Calvert picks companies as most other firms do, by looking for businesses that have strong management, good products, a promising future.

"The bottom line is how much money can we make and will this achieve our financial goals," Mr. Schueth said.

Unlike other mutual fund companies, however, Calvert screens its selections to make sure that they meet its social criteria.

Calvert Social Investment, for example, won't touch companies that produce nuclear power or oil, because they pollute. It also stays away from cigarette and alcohol manufacturers, companies that it believes treat animals inhumanely during research or those that lock out unionized employees. Its other funds aren't necessarily restricted from such investments, Mr. Schueth said.

"We go out of our way to find companies that do business in a way that has a very positive impact on society at large," Mr. Schueth said.

The criteria have been developed over time by members of an advisory board.

Calvert Group analyzes companies by looking at their environmental records, the safety of their products, whether they discriminate against workers or have violated human rights.

Its favorite companies include H. J. Heinz Co., Bell Atlantic Corp. and the Federal National Mortgage Association, better known as Fannie Mae.

It praises H. J. Heinz for imposing tight restrictions concerning hazardous chemicals on crops it buys for baby food. It also doesn't buy tuna that are caught using a method that traps dolphins, and 50 percent of its work force is unionized.

"Relative to its competitors, this company is a shining star," Mr. Schueth said.

Bell Atlantic is another favorite because it is working to upgrade telecommunications in the Czech Republic. "They have a very strong and improving record on diversity in the workplace, too," Mr. Schueth said.

But Bell Atlantic was in a bitter fight with union members who claimed that the company was replacing their jobs with outside contractors.

"Frankly, that is not one of our screening criteria," he said.

Calvert Group likes Fannie Mae because it promotes affordable housing and its 18-member board is racially diverse.

"They are a very progressive organization from our vantage point," he said.

If Calvert Group invests in a company and finds out that it has been misinformed about employment practices or the company's environmental record, prepare for a fight.

"If it's egregious enough, we will sell the stock," Mr. Schueth said.

Chicago-based R. R. Donnelley & Sons recently found Calvert Group officials at its annual meeting demanding that the company make public initiatives that would ensure equal employment opportunities for all workers. The company capitulated, Mr. Schueth said.

"We carefully select our battles," Mr. Schueth said. "We don't invest in the sinners and try to convert them."

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