E-mail a friendAmy Domini
airdate May 24, 2005
One of the '2005 Time 100' most influential people in the world, Amy Domini mixes morals and money. She's a trailblazer who created Domini Social Investments with the goal of sparking social change. Domini grew up during the civil rights movement, Vietnam War protests and the first Earth Day. Leaving her radical roots behind, she went to work in the brokerage industry and eventually turned her Wall Street career into a mission for corporate responsibility. She's the author of Ethical Investing and Socially Responsible Investing.
Amy Domini
Tavis: As we continue our 'Road to Wealth' series, I'm pleased to welcome Amy Domini to this program. In the early 1980s, she introduced the notion of socially responsible investing. That is putting your money behind companies that meet specific ethical criteria. Last month, Time magazine named her to its list of the 100 most influential people. Her latest book is called 'Socially Responsible Investing: Making a Difference and Making Money.' Amy Domini joins us tonight from Boston. Amy, nice to have you on the program.
Amy Domini: Thanks for having me.
Tavis: And congrats on the Time magazine list.
Domini: It was pretty impressive to me, too.
Tavis: It was very impressive. What's even more impressive, though, 'cause Time magazine just put you on a list, with all due respect, what's more impressive is how you came up with this idea some years ago and the fact--pardon the pun here--that your idea has had a domino effect in that everybody now pays attention to what it is that you do and what you say and this issue of ethical investing. Take me back a few years ago and tell me how you came up with this idea.
Domini: Well, it was, in fact, listening to other people. I did work as a stockbroker for a number of years, and a number of people would say to me, 'Oh, don't show me a coal company. I'd never invest in a coal company,' or they'd have some kind of a line they'd draw. But I really heard it one day when a woman came in very upset. She had stock her father had bought her. Her father was dead. She wanted to keep the company. She liked things her father had done for her. It was a paper company, and she was an avid bird watcher. She had just read about how the defoliation of trees in order to timber the land has been killing songbirds. And that hit me somehow. I sort of thought, 'Hmm, there's something in this.' After that, I got very curious and started looking around. It was during a period when South Africa was really getting more and more noticed in the early 1980s. And the South African debate was really a flashpoint in investing with values. It kind of changed the landscape for everybody. So at that point, I knew I was on to something.
Tavis: We talked to Archbishop Desmond Tutu on this program just last night, as a matter of fact.
Domini: No kidding.
Tavis: Indeed. Delightful conversation, as always, with him. Let me ask you, what kind of resistance or-- I don't know. It might not have been resistance. It might've been an open-armed welcome you received when you first started talking about this notion of socially responsible investing. Again, take me back and tell me how you were received when you first started talking about this publicly.
Domini: Well, one of the more interesting things is how the companies themselves received me. I would call, you know, the regular hotline that you would call as a shareholder and say, 'I've got some unusual questions I'd like to ask. Can you tell me about diversity on your board of directors? How many women and how many minorities serve in directorship?' And I'd get told by some very nice female that some very nice male would call me back. As I got bounced to the treasurer's office or the legal department or something, I knew I was going up the food chain. And then I would get that call back, and they would want to know immediately why I was asking. Was I a troublemaker, was kind of lying behind that question. And I told them I was working for clients that wanted to integrate values into the investment process. And at first they were quite stunned by that, but then they'd open up and they'd say, 'well, you mean like that gym we've got for employees down in the basement?' I'd say, 'yeah, like that. Do you do other things for your employees?' now, never happens. They know exactly what I'm talking about. They know exactly what we're looking for. Over 1,500 companies publish social responsibility reports globally today.
Tavis: Speaking of those socially responsible issues that they cover or brag about in these reports, to their credit, some of the kinds of things we're talking about here. What are you looking for when your investors want to know how they can invest socially in a responsible way?
Domini: Yeah, we really look at what we call the stakeholders, that being any kind of a touching of the company. Customers are obvious. Is it a safe product? Shareholders are obvious. Are they well-treated by the management at the company? There's the community in which the company operates, the suppliers to the company, employees of the company, and the natural environment. And some of those may have different opinions of how that corporation behaves than others do: so then you get into a balancing act. We're very strict about trying to find information that's cross-company, so that we can compare one company and one industry to a different company in a different industry, but at the end of the day, you're really saying, overall, does this company notice its shareholders, as well as its stakeholders, in a balanced fashion? And we, at Domini, try to pick from the better half.
Tavis: Tell me whether or not this strategy actually makes money? I suspect it does since Time magazine has you on that list, but it's one thing to want to do the right thing, but sometimes, I've learned over the years, doing the right thing doesn't always pay.
Domini: That's exactly why the Domini 400 Social Index got started in 1990. We did want to track whether or not you could make money this way, and fortunately, it has made money this way and pretty much in line with the Standard & Poor's. But another way of looking at it is the Morningstar rating of mutual funds. And if you look across all mutual funds, about 32% of those funds have a 4- or a 5-star, that being the top 2 categories at Morningstar, and the field that I operate within, the socially responsible investment field, which Morningstar designates separately, that figure is also at 32%, so it's pretty much on line with any other mutual fund.
Tavis: Mm-hmm. Let's talk about some of these screens that you use--some of these screens that you use to decide who is, in fact, doing the right thing. Talk about that screening process that you engage in.
Domini: Right. Well, we did start from a place, and the place was that there was a historic, I would say pretty much a faith-basis, for investments that had taken place. The Methodist Church had as a creed that you didn't smoke or drink if you were a Methodist, and you didn't invest in those kinds of things, so there was some history of avoiding certain things--alcohol, tobacco, gambling, weapons were all basically faith screens. South Africa was a divestment campaign, but it was the last divestment campaign. Since then, the focus has been an acknowledgment that we are not divestors at heart. We are investors at heart. We are looking at a way to introduce into the world of finance goals of people and the planet, so that going forward, I don't think you're going to see a lot of things that we don't do. We're gonna say, how does an investment in this company forward the dialogue about what's good for people and the planet?
Tavis: On the other hand, though, with all due respect to that philosophy, on the other hand, had there not been a divestment strategy in South Africa, things, uh...Nelson Mandela wouldn't have been released as early as he was, and that ain't early, after 27 years, but things might not have moved at the pace that they did start to move in around the early and mid-eighties had there not been a divestment strategy, yes?
Domini: And you're bringing up the second important link to social investing. That's direct dialogue with corporations. In 1971, the Episcopal Church in America went to the General Motors annual meeting and asked that company to leave South Africa. It took 15 years of shareholder dialogue. And the Sullivan principles, which the Reverend Leon Sullivan put into place and got companies to adhere to and report on, before civil society had the data it needed to take some more meaningful action--states divesting of companies doing business in South Africa, cities refusing to buy IBM typewriters or Ford motor cars because they were doing business in South Africa. But that is the logical chain. First you need the data, then you get the action. And 15 years was a long time to wait, but it came, and it worked, and 27 million people got the vote.
Tavis: Indeed, they did. Looking back on that debate, speaking of the debate around the Sullivan principles, it's easy in retrospect to romanticize those principles. Dr. Sullivan was a dear friend of mine. I miss him dearly, but there was a great debate about those Sullivan principles, as you may recall, even inside of black America. There were a lot of folk who said, we don't need rules of engagement in South Africa. These American companies ought not to be there, period, no matter what the rules of engagement are. What was your position at the time on the Sullivan principles specifically?
Domini: Well, I did come to the conclusion that it was time to get out of South Africa, but the Sullivan principles gave me the knowledge I needed to do that. Those principles collected pretty straightforward data. How many blacks supervise how many whites and how many 'coloreds,' to use the vocabulary of South Africa at the time. After a few years of seeing discouraging numbers that were so clear-cut, it was obvious to any observer that we were not creating a better apartheid there. We were strengthening apartheid to do what it was meant to do, which was to disenfranchise the majority in that nation. That is really the eye-opener that got the mobilization of civil society. And that was all due to those Sullivan principles. So I never would underestimate the importance of first getting involved in engagement.
Tavis: Fair enough. That was then. This is now. Give me, and I'm sure somebody right now watching is waiting for me to ask this question--give me some examples of the kinds of companies that rate highly on your scale.
Domini: Well, we don't do it that way. We say they're good enough, or they're not good enough. But we do own a number of very large companies. They're controversial in one way or another. One that we own, The Gap stores, recently did publish a responsibility report in which they listed each of the factories that supplies them and how they think those factories are doing and where they can see improvement. That led to a company we do not invest in, Nike, publishing a similar kind of report, using the similar kind of a grid. So, the reason I raise The Gap is they not only did something important, but they provided a leadership role to other companies by taking that step. Another company that's in the portfolio that's kind of a smaller company would be a Whole Foods. Now, I've also been in dialogue with them over labor negotiations in that company. But I do think that to create an environment within which organic farming can survive and be actually encouraged, knowing that the great environmental degradation that takes place with conventional farming techniques is going on is a very important role, and here's a corporation that's made that possible for organic farmers to survive. I've also educated the consumer. So that's a nice, full circle. The consumer now is making decisions for healthier lifestyle choices.
Tavis: I could do this for hours. I--I gotta run. Let me ask you right quick. Other than reading your book, which I already mentioned, what do you suggest people as a first step to understanding more about how to invest in social responsible ways?
Domini: We do have a couple websites--socialinvest.org and socialfunds.com. Those are pretty good basic starts. My own Domini.com, I think. But the key thing is to think about the fact that the way you invest builds the world that your children are going to live in, that your grandchildren are gonna grow up in, and to think about, is it really all about making the most money right now, or is it really about building wealth for all of us and having a better tomorrow for all of us?
Tavis: I've been delighted to have you on the program, Amy. We must do this again some time soon.
Domini: Thank you.
Tavis: Glad to have you, and all the best to you.
Domini: Thank you.
Tavis: Up next on this program, from the hit ABC series 'Lost,' actor Matthew Fox. Stay with us.
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