Dear fellow shareholder,
The publication of our Semi-Annual Report gives us an opportunity to consider an issue of importance. In this report, we discuss some of the opportunities inherent in living and working in a world filled with human diversity, and some of the challenges that arise as we emerge from a more closed society.
Most Americans neither have the ability nor the desire to be a monoculture. We celebrate the foods, religions, exercise routines, fabrics, and cultures – for instance - of many peoples. And yet, in seemingly blind contradiction, we all too often make incorrect and even hurtful assumptions about the cultural sources of these pleasures. Social scientists insist that cultural bias is pervasive. As believers of scientific evidence, your fund managers recognize this fact and attempt to address it. Domini Impact Investments hold as twin goals universal human dignity and ecological sustainability. We cannot sit back and ignore inherent bias.
We have three basic tools at our disposal. First, we use standards to rank investments. These standards specifically address the ways that our investment might help, or harm, differing parties. Second, we engage with companies, through conversation, letter writing, and shareholder campaigns, to encourage behavior that will ameliorate the worst outcomes of specific business practices. Third, we invest directly into entities that, by virtue of their business practices, are a solution to issues of concern to us all. In regard to diversity, we use all three. The existence of a gender or racially diverse board is, in and of itself, indicative that the corporation in question is holding itself out as having moved beyond the norms of yesteryear. The pushing for great diversity by our letters, phone calls and other actions, leads to conversations that often result in such appointments. Some bonds we invest in provide loans to entities that strengthen at-risk communities that can help weaken, and hope to eventually stop, the cycle of poverty.
One of the more remarkable developments over the past two years has been the emergence of CEOs who speak out specifically on the issue. The pharmaceutical company, Merck, is run by CEO Kenneth C. Frazier, an African American who quit President Trump’s Advisory Council after hearing the President’s comments regarding the incident in Charlottesville last year. PayPal CEO Dan Schulman has recently been the subject of numerous spiteful articles as a result of stating, “Probably the most important value to us is diversity and inclusion” and speaking positively of the work done by Southern Poverty Law Center.
This is new. Companies’ leadership did not respond to public events historically. But important as this development is, it is not enough. True behavior change takes not only education but also, generally speaking, exposure. Robert Putnam’s breakthrough 1993 book, Making Democracy Work: Civic Traditions in Modern Italy led the reader through the core necessities to building trust and what he labeled ‘social capital.’ To unfairly summarize a complex subject, the research strongly suggests that meeting people for a common purpose, such as attending church or playing soccer, leads to higher employment, safer streets, and a more livable community.
In 2009 the United Nations published a principal of non-discrimination “to guarantee that human rights are exercised without discrimination of any kind based on race, color, sex, language, religion, political or other opinion, national or social origin, property, birth or other status such as disability, age, marital and family status, sexual orientation and gender identity, health status, place of residence, economic and social situation.” This is a tall order. It takes diligence to guarantee human rights.
Nonetheless the goal is present and the benefits are clear. Your fund management works to remove some of the most evident barriers. As with every challenge that we at Domini Impact Investments face, our first step toward solutions is to search for data. We believe that it takes facts to build knowledge and that with knowledge, effective action can be shaped. This is why we track the diversity statistics of management and boards at corporations. It is why we note with interest products or services provided to potentially disenfranchised populations. Collecting publicly available data is step one of a change-for-the-better agenda.
You will read on the following pages just how the three approaches presented in the third paragraph of this letter have made a difference. Our shareholders do, in fact, join the multitude of voices that strive to make a meaningful contribution to the future. We are proud to be of some assistance in the effort. After all, many voices build a wholesome dialog; prejudice should not be tolerated in the country called a melting pot.
We at Domini Impact Investments believe that the investor has a role to play in furthering the right to living with dignity. We have many initiatives in this work. Thank you for your investment and for the effect is has to help better the lives of others.
Founder and Chair