Social Impact Investing

Domini, shareholder advocacy and community investing are pillars of socially
responsible investing, while doing only negative screening is inadequate.
History
The origins of socially responsible investing may date back to the Religious Society of
Friends (Quakers). In 1758, the Quaker Philadelphia Yearly Meeting prohibited
members from participating in the slave trade – buying or selling humans.
One of the most articulate early adopters of SRI was John Wesley (1703–1791), one of
the founders of Methodism. Wesley's sermon "The Use of Money" outlined his basic
tenets of social investing – i.e. not to harm your neighbor through your business
practices and to avoid industries like tanning and chemical production, which can harm
the health of workers. Some of the best-known applications of socially responsible
investing were religiously motivated. Investors would avoid “sinful” companies, such as
those associated with products such as guns, liquor, and tobacco.
The modern era of socially responsible investing evolved during the political climate of
the 1960s. During this time, socially concerned investors increasingly sought to address
equality for women, civil rights, and labor issues. Economic development projects
started or managed by Dr. Martin Luther King, like the Montgomery Bus Boycott and the
Operation Breadbasket Project in Chicago, established the beginning model for socially
responsible investing efforts. King combined ongoing dialog with boycotts and direct
action targeting specific corporations. Concerns about the Vietnam War were
incorporated by some social investors. Many people living during the era remember a
picture in June 1972 of a naked nine-year-old girl, Phan Thị Kim Phúc, running towards
a photographer screaming, her back burning from the napalm dropped on her village.
That photograph channeled outrage against Dow Chemical, the manufacturer of
napalm, and prompted protests across the country against Dow Chemical and other
companies profiting from the Vietnam War.
During the 1950s and 1960s, trade unions deployed multi-employer pension fund
monies for targeted investments. For example, the United Mine Workers fund invested
in medical facilities, and the International Ladies' Garment Workers' Union (ILGWU) and
International Brotherhood of Electrical Workers (IBEW) financed union-built housing
projects. Labor unions also sought to leverage pension stocks for shareholder activism
on proxy fights and shareholder resolutions. In 1978, SRI efforts by pension funds was
spurred by The North will Rise Again: Pensions, Politics, and Power in the 1980s and
the subsequent organizing efforts of authors Jeremy Rifkin and Randy Barber. By 1980,
presidential candidates Jimmy Carter, Ronald Reagan and Jerry Brown advocated
some type of social orientation for pension investments.
SRI had an important role in ending the apartheid government in South Africa.
International opposition to apartheid strengthened after the 1960 Sharpeville massacre.
In 1971, Reverend Leon Sullivan (at the time a board member for General Motors)
drafted a code of conduct for practicing business in South Africa which became known
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