Ethical Performance
inside intelligence for responsible business


Calvert turns mirror on itself

February 2005

One of the best-known SRI asset managers in the US has practised what it preaches by publishing its first sustainability report.

Maryland-based Calvert has tabled 14 shareholder resolutions in the past financial year asking companies to report on their economic, social and environmental performance – but until now had not done so itself.
It says the release of its 44-page web-based report last month was essential, in view of its enthusiastic use of shareholder resolutions on the need for social reporting at annual company meetings over the past four years.

‘Given our history and our commitment in this area, we felt it was important to rise to the challenge we have set for others, even though we are a much smaller organization than they are,’ it said. Calvert manages $10billion (£5.4bn) on behalf of more than 300,000 investors – $3.4bn on an SRI basis.

Chief executive Barbara Krumsiek said Calvert’s venture into sustainability reporting would allow it to counter the charge of hypocrisy and was a ‘natural progression’. The asset manager would also ‘gain a deeper understanding of the challenges other companies face in producing sustainability reports’, and be able to ‘more carefully scrutinize others’ reports in the future’, she added.

SRI fund managers on both sides of the Atlantic have come under increasing pressure to reveal more details of their social and environmental impacts. In the US, the SRI industry was recently criticized by Paul Hawken, the influential head of the Natural Capital Institute think tank, for being ‘closed, proprietary and secret’ and failing to live up to the standards it expects companies to meet (EP6, issue 7, p3).

In Europe, as a response to similar criticisms, the European Sustainable and Responsible Investment Forum late last year produced transparency guidelines on the information SRI funds should disclose, including how they research and evaluate companies, their sources of non-financial research, their voting policies and the CSR policies of their parent companies.

Calvert’s report outlines how it assesses and rates companies on their social and environmental performance, as well as giving a breakdown of the diversity of fund boards and managers, details of executive pay and data on recycling, energy efficiency, donations and volunteering.
The report is divided into the seven ‘issue areas’ used by Calvert to analyse the performance of companies in which it holds stock, among them workplace, environment, human rights and community relations. Krumsiek said this was to ‘turn the mirror on ourselves’.
The document has been drawn up in accordance with the Global Reporting Guidelines, a key demand Calvert has made in shareholder resolutions. It claims to be the first US-based SRI asset manager to publish a report following the guidelines.

A worldwide ethical code for asset managers should be finalized this month by the US-based CFA Institute, which runs the Chartered Financial Analyst qualification. The draft of the voluntary Asset Manager Code of Professional Conduct, which was out to consultation until the end of last year, sets out guidance in six main areas and says asset managers should shun business relationships and gifts that could ‘reasonably be expected to affect their independence, objectivity or loyalty to clients’.

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