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By Ian Chan Hodges

Saturday, February 24, 2001

Summit to examine
investing with pono

We've all heard some version of the saying, "Money talks." The tens of billions of local dollars in our labor pension funds and Hawaiian trusts do a lot of talking. The question is what are they saying. How do the investments of these institutional funds speak about the rights of working people and the Hawaiian values that unite the people of our islands?

The 'Aha Ho'opuka Pono summit will seek answers to these questions at the state Capitol starting on Monday.

Investments that provide competitive returns and speak to our most important values are increasingly becoming a viable option for both individual and institutional investors.

Socially responsible investing (SRI) -- as the approach of incorporating values in one's investments is commonly known -- has its roots in the American colonial era when abolitionist Quakers refused to invest in any business associated with slavery.

There are four related aspects involved in a socially responsible investment strategy: avoiding companies whose records conflict with the investor's values; seeking companies that are consistent with those values; investing directly into the community with targeted investments; and taking an active role as a shareholder in influencing corporate policies.

SRI is a rapidly growing segment of the investment world. About $1 of every $8 under professional management, or some $2 trillion overall, was involved in SRI in 1999, up 82 percent from 1997.

An article titled "SRIs Seem to Pummel Peers in the Long Run" appeared two weeks ago in Investment Management Weekly. The article states that, according to data from financial reporting institutions, those who include SRI in their overall portfolio "tend to rake in more returns" than those who limit themselves to traditional investment vehicles.

Up until now, most major institutional investors have kept to the sidelines when it comes to SRI, but they are beginning to take a serious look at the strong "double bottom line" benefits of the approach.

If we make investments that are sound from a fiduciary standpoint and if those investments also benefit working people, promote economic development and provide for environmental protection, we will have what California Treasurer Philip Angelides calls a "double bottom line" return.

Angelides has pointed out that it's not a matter of a choice between investing to make money or investing to do the "right" thing. It's a matter of taking the time and making the effort to find investments that do both. Working with Angelides, the California Labor Federation won an important victory in November as CALPERS agreed to consider workers' rights as a condition for new global investments.

Recently, there has been a growing movement throughout Hawaii to explore the possibilities of achieving "double bottom line" returns with our institutional investments.

A breakfast meeting held in December was attended by approximately 25 leaders from Hawaii unions. The meeting resulted in increased interest in "double bottom line" investing among the participants and a commitment to move forward with the 'Aha Ho'opuka Pono summit.

This summit will provide an interactive venue to explore and weigh strategies for investing local capital in ways that include social, cultural and environmental factors within the context of financial performance and fiduciary responsibility.

The goal of the summit is to develop a "double bottom line" approach to investment that capitalizes on Hawaii's future economic opportunities while preserving what is special about our islands and communicating the values of our local people to the world.

Members of the public are welcome to participate in the summit during the opening day at the Capitol auditorium. There is no charge for the event.

The Hawaiian community is already recognizing the importance of making investments that result in more than just financial returns. A clear example of this wisdom can be found in Kamehameha Schools' new strategic plan, which includes the specific goal to "manage the portfolio of resources to derive an overall balance of economic, educational, cultural, environmental and community returns."

Because this investment approach has historically been supported by constituencies that are often at odds with each other, 'Aha Ho'opuka Pono should serve as a unifying event for Hawaii.

Labor unions, native Hawaiians, environmentalists, public officials and small businesses can all get positively enthused about the economic, social and environmental benefits of double bottom line investing, and have an opportunity to work together in implementing the various opportunities that this comprehensive approach to investing provides.

The 'Aha Ho'opuka Pono summit seeks to serve as a catalyst for shaping a common vision of shared values that will reconnect Hawaii's people to our rich heritage and inspire a desire to make positive contributions to a sustainable economic future. Ultimately, when our money talks, we want to be proud of what it has to say.

For more information on the summit, call 1-808-573-1000 on Maui.

Ian Chan Hodges is managing
director of Responsible Markets.

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