Barbara Krumsiek, President and CEO of Calvert Investments, has led the company for 15 years.
Two summers ago, I had the pleasure of working at Calvert Investments, a Bethesda-based socially responsible investing (SRI) firm. The words “socially responsible investing” would often raise eyebrows as I attempted to concisely describe to other hotelies at Cornell what exactly Calvert does. Socially responsible investing is broadly defined as a holistic approach to investing that considers both the economic and social/environmental returns of your money. Although SRI accounts for less than five percent of all general investment funds, it is a growing field with potential. Cornell’s business school has had some interesting takes on this asset class.
So what does SRI look like? There are many different approaches, so I’ll just describe what Calvert tries to do. From Calvert’s view, it is an extensive process of research, indexing, and investing. First, we perform research on firms that we potentially want to invest in or that our clients are asking us to invest in. The research is comprehensive and looks primarily at environmental, social, and governance (ESG) issues for a specific company. For example, imagine that we’re considering to invest in BP. Some of the research we might do would ask these types questions (again, these are hypothetical, and they only skim the surface):
- Environmental factors: How many oil spills have there been in the past year? What environmental remediation plans are in place? Is in-depth environmental training provided for employees? Does the firm mine/drill in high-risk areas?
- Social factors: Are workers paid a living wage? Does the firm employ child labor overseas? What human rights violations has the company committed?
- Governance factors: What proportion of women make up the board of directors? Has the company been investigated for anti-competitive activities? Has the firm been investigated by the SEC for trading violations? Have there been attempted hostile takeovers?
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