A quick history of values-based investing

The idea of basing investment decisions on social values dates back at least as far as the 1600s, when Quakers shunned companies that profited from slavery or war. By the early 1900s, various religious groups were urging people to steer clear of not just those institutions, but also those who supported gambling or alcohol, and lenders who charged excessive interest. But it was not until well into the 20th century that the idea began to gain wider acceptance. Here are some key dates in the its evolution:

1960s: Social activism creates an environment in which more people want to align their investments with their values. What would later become known as the socially responsible investing (SRI) movement starts to jell.

1967: A group pushes for better treatment of black employees at the annual meeting of Eastman Kodak. It's an early example of shareholder advocacy - one method of using the power of investment to create social change.

1969: A shareholder resolution challenges the morality of Dow Chemical's production of napalm and Agent Orange, toxins used in the Vietnam War.

1970s: Activists begin pressuring institutions to take their investments out of companies that do business with South Africa because of its oppressive apartheid policy.

1970: The Project on Corporate Responsibility, backed by consumer advocate Ralph Nader, embarks on "Campaign GM." The series of shareholder resolutions includes a call to place public representatives on General Motors' board of directors. Although they don't pass, GM responds to the pressure and appoints to its board the Rev. Leon Sullivan, a politically active African-American community leader (see 1977, below).

1971: The Interfaith Center on Corporate Responsibility forms. Its members are faith-based institutional investors who sponsor resolutions on social and environmental issues. Also that year, Pax World Fund screens out defense stocks. Its Methodist founders are prompted by a letter from a woman asking if there are any mutual funds that wouldn't contribute her money to war.

1977: Mr. Sullivan creates the Sullivan Principles. By promoting economic justice and human rights in South Africa through corporate codes of conduct, he is later credited with helping to dismantle apartheid. Eventually the principles are applied to corporations' global operations.

1982: After attending a Buddhist-sponsored conference, Wayne Silby renames his company the Calvert Social Investment Fund. It's the first to screen for multiple issues - including defense, South Africa policy, the environment, human rights, and companies' treatment of indigenous peoples.

1987: Venture capitalists and entrepreneurs in socially conscious businesses (including Ben & Jerry's) come together in the first conference of the Social Venture Network. Later, some of these same people will form Business for Social Responsibility, giving tools and advice to large companies who want to adopt a new value system.

Late 1980s: Skeptics say SRI is just a feel-good phenomenon and that investors won't get returns as high as they would with traditional investing. But research starts to show that SRI investments are doing well. By now, SRI has a notable presence around the world, in places such as Japan, Europe, and Australia.

1990s: New types of screens for SRI gain popularity, such as attention to the representation of women and minorities on corporate boards, treatment of workers in global factories, and issues of corporate governance and executive pay.

1990: The Domini 400 Social Index is launched - the first index to select companies based on social and environmental factors. A year later, the Domini Social Equity Fund enables individuals to invest their money in the index.

1992: A study shows that about one-quarter of social investors are motivated by religion, another quarter by political views.

2003: Some 200 mutual funds use some form of social screening. Using the broadest measure, about $2.16 trillion in professionally managed portfolios are using at least one of the three main SRI strategies - screening, shareholder advocacy, and community investing.

Information drawn from "What Matters Most" by Jeffrey Hollender and Stephen Fenichell and a variety of educational and SRI fund websites.

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