Review from Ethical Investor of Australia

The blurb describes her as the SRI movement's pioneer and she is probably the one person who could make that claim.

Amy Domini--cofounder and principal of Domini Social Investments and Kinder, Lydenberg and Domini; the name behind the flagship Domini 400 Social Index of ethical US stocks; the woman recently nominated by Barron's as one of the mutual fund industry's 30 most influential people of the century--has a second book out.

Her first, titled Ethical Investing, was published back in 1984. It was a groundbreaker, helping to set the scene for the 'quiet revolution' she retraces here as activists cottoned on to the implications of the explosive growth of the mutual funds industry in the US.

Like her first book, Socially Responsible Investing: Making a Difference and Making Money (Dearborn, 2001) is aimed at helping ordinary people become ethical or (as she now calls them) social investors.

However Domini's book is also interesting to those working within the industry, not only because it contains a heartfelt exposition of the rationale for SRI-let's not forget this is all about justice--but because it embodies Domini's unique experience and is thoroughly up to date.

In fact it is probably the best single-volume explanation of SRI around right now. It is coherent and readable. It tells the history. It is globally aware (although the Australian industry doesn't rate a mention here). It is littered with case studies and diverting tidbits (ie. for some reason Italy of all places is recording the fastest growth in SRI right now).

Socially Responsible Investing is also useful to the Australian reader because it shows what a mature ethical investment sector looks like.

For starters, Domini makes it very clear that SRI is about more than screening investments, although that remains vital.

Shareholder activism and community investment are also essential strategies for the social investor, Domini argues, and she outlines how each strategy has its own beneficial impact.

For those who doubt that SRI makes much difference in the end there is a remarkable story told here about one of the very first shareholder resolutions, filed against General Motors in 1970 by legendary consumer advocate and recent presidential candidate Ralph Nader.

One of two motions broadly attacked the lack of diversity on the GM executive. Although defeated, it led subsequently to the appointment of an Afro-American minister, the Rev Leon Sullivan, to the company's board.

Nader could not have anticipated the impact this would have, although in hindsight it is not altogether surprising. Six years later, after the Soweto uprising, when the heat was on GM (and other corporations) about activities in apartheid South Africa, it was Sullivan who took a keen interest in the issue at board level. He developed what came to be known as the 'Sullivan Principles' designed to cut through rhetoric and monitor the real social impact of GM and other US corporations operating in South Africa.

As Domini tells it, Nader's one resolution had other reverberations too. "The antiapartheid movement built institutions that form the backbone of the growing SRI field today. Churches of many faiths joinedŠin asking corporations to shun South Africa, or at least to sign the Sullivan Principles. Out of this coalition grew the most vital resource for shareholder activism to this day, the Interfaith Centre for Corporate Responsibility (ICCR)" (p.38).

The benefits of hindsight allow Domini to fill her book with examples of how SRI makes a difference.

Her biggest claim is that, over the least 15-20 years, the SRI movement's need for hard data on corporate social responsibility has raised awareness of stakeholder issues within corporations and helped them lift their game across the board.

"This was the lesson we learned from the Sullivan Principles," writes Domini, "systematic data collection leads to knowledge, which leads to civic action" (p.183).

Again: "Imagine a world where corporate social responsibility didn't exist, and remember that only with the advent of socially responsible investing did it come about" (emphasis added, p.191).

The book is also interesting to Australian readers for the differences that emerge, subtly or not-so-subtly. The integration of the defence industry into the economy, a huge spur for SRI in the US, barely registers here.

And although we have some big companies that have important offshore environmental and social impacts, it seems small compared to the vast range of US multinationals all over the world--which among other things creates endless work for SRI researchers and investors.

Lastly the book is interesting because the fire is still obviously in Domini's belly. She casts the message of SRI in stark terms: "make money for me, yes, but stealing money is different from making money; stealing from the poor, from the natural environment, from civic society is not making money" (p.183).

(Note: Socially Responsible Investing: Making a Difference and Making Money is distributed in Australia by Woodslane Pty. Ltd., based in Warriewood, Sydney.)