Smut. Many investors don't like it, yet unwittingly support it - by owning stock of some big, mainstream companies.
For example, General Motors' satellite-television subsidiary now sells more graphic sex films than Larry Flynt, who publishes Hustler magazine. Hilton, Marriott, and other major hotel chains sell millions of dollars worth of pay-per-view porn films every year. AT&T offers pornographic television services to its digital cable customers.
So if you are building a portfolio that reflects your ideals, investment advisers say, look carefully at your holdings. Most socially responsible mutual funds don't screen out pornography explicitly. Know where you'll compromise and where you won't. And be creative. Sometimes good companies do things that call for a response rather than a rejection.
"It's difficult to be a purist in this," says Gary Moore, author and founder of an investment advisory firm for ethical and spiritual investors in Sarasota, Fla. "You can draw your lines so sharply that all you invest in are environmentally friendly factories where nuns make choir robes."
For many investors, AT&T remains a symbol of corporate propriety. It boasts a solid record on community outreach, environmental reporting, and hiring and promoting women and minorities. But when it acquired the nation's No. 1 cable network a few years ago, it took over the distribution of soft-porn offerings such as the Playboy Channel. Last year, it signed an agreement to distribute the more graphic Hot Network.
"We saw a company with a somewhat stellar record to its commitments to social responsibility and ... all of a sudden it was connected to this [porn] movement with frightening speed," says Mark Regier, social research and advocacy coordinator for MMA Financial Services, one of eight groups sponsoring an AT&T shareholder resolution on the matter. For the first time, "what has been relegated to the back of the book shop or the magazine rack is going to be brought to our cultural consciousness."
Instead of dropping the company, the group decided to use its more than 1.6 million shares of AT&T stock to force change. Its resolution calls on the company to issue a report reviewing its policies for involvement in the porn industry and an assessment of the potential liabilities. Mennonite Mutual Aid, which runs MMA Financial Services and the MMA Praxis Mutual Funds, is joined in the resolution by seven other religiously affiliated financial groups, including the General Board of Pensions and Health Benefits of the United Methodist Church, Christian Brothers Investment Services, and the Sisters of Saint Joseph in Philadelphia.
AT&T, meanwhile, argues it is merely catering to an existing audience. And as a pay-per-view option, the Hot Network's shows have to be ordered specifically.
"We have a wide-ranging, varying audience that has differing interests," says Steve Lang, spokesperson with AT&T Broadband. "Customers have choice and control over what people watch in their homes. We trust our customers to make decisions that are right for them."
AT&T isn't the only or even the first company to air the controversial network. General Motors' satellite-TV division and the Dish Network also offer the Hot Network as a pay-per-view option. Large media corporations find pornography hard to avoid because of its easy profits. The shows are cheap to make and have grown into a $10 billion-a-year industry.
Critics contend porn's mainstreaming creates not only moral hazards but also business risks. For example: Will the company's transmission of such material violate local obscenity laws? Does the company open itself up to lawsuits for, say, distributing pornography to minors? And what impact does it have on AT&T's own workplace, whose code reads in part: "We treat each other with respect and dignity, valuing individual and cultural differences."
"Can you imagine being a woman in the company when down the hall a growing division is ... trying to pick the best 'backsides?' " asks Mr. Regier. "It's some of those issues that we want AT&T to think about."
While the religious coalition has chosen to keep its AT&T shares, some mutual funds, usually Christian-based, have dumped them.
"How much is OK to have invested in these companies? 'Not a penny' is our answer," says Art Ally, president and founder of the Timothy Plan family of funds, based in Winter Park, Fla. "If people didn't own them, you'd see some of these companies change in a heartbeat."
Sometimes, the strategy depends on a fund's size, adds Bill Van Alen, founder and president of the Noah Fund. The $15 million fund in Edgemont, Pa., screens out companies that produce pornography. But when it gets big enough to attract firms' attention, "I think we'll get into the other approach" of keeping shares to advocate for change, he says.
One way to find out if your mutual fund invests in pornography - and definitions vary, to be sure - is to log onto Crosswalk.com (money.crosswalk.com). The conservative Christian site rates the degree of "cleanliness" of mutual funds. Many users, however, may take issue with the site's political agenda.
(c) Copyright 2001. The Christian Science Publishing Society