Now is the time that should try the ideals of socially responsible investors, specifically those that ban investments in weapons-related companies and even U.S. government securities, used to finance defense spending.
Since the Sept. 11 terrorist attacks, Citizens Advisers Inc., Portsmouth, N.H., and Calvert Group Ltd., Bethesda, Md., two prominent social screening money managers, have discussed changing their policies of avoiding all investment in U.S. Treasury securities - that is, bills, notes, and bonds - in objection to the U.S. government's budgetary spending on defense weaponry.
Citizens, indeed, lifted its prohibition in October. Calvert is in the process of re-evaluating its ban.
"It's not a patriotic move," said John Shields, president of Citizens. "I don't want to make it sound like we did a patriotic thing" when Citizens removed its ban on investing in Treasuries. "This (change in policy) is something we were discussing since January 2001." The timing of the end of the ban was coincidental to Sept. 11, he added.
Calvert's re-evaluation "was absolutely prompted by Sept. 11," said Elizabeth Laurienzo, director-corporate communications. "Sept. 11 gave us reason to re-evaluate our social policy."
The Citizens' Treasury ban, put in place some years ago, was an outgrowth of its avoidance of investing in corporations involved in armaments.
Citizens - which manages $1.5 billion, including a $150 million money market fund and a $100 million intermediate-term fixed-income fund - hasn't yet invested in any Treasury securities because market conditions haven't been ripe, despite an end to the ban, Mr. Shields said.
The thought of lifting the ban was motivated by Citizens' decision late last year to end its subadvisory relationship with Seneca Capital Management LLC, San Francisco, which managed fixed-income funds.
"We determined we had the capability to manage the funds ourselves," Mr. Shields said. Once internal management began, it took almost a year to resolve the issue of whether Citizens would invest in Treasuries, he added.
Citizens ended the prohibition after deciding the U.S. government spends enough on social, economic and environmental programs Citizens supports to override the weapons issue, he said.
The firm is keeping its ban on investing in corporations involved in weapons.
"There was no talk of changing our (corporate) defense-related policies in light of Sept. 11," Mr. Shields said. "We are not opposed to defending the U.S. But we don't want to invest in companies that profit from war."
Calvert - which manages $2.5 billion in socially screened investments, including $738 million in fixed income - has had the ban on Treasury securities for these assets since 1982. Its board is expected to decide in December whether to change the ban on investing in Treasury securities, said Ms. Laurienzo. The rationale for considering an end to its ban is similar to that used by Citizens, that social outlays may outweigh concern about budgetary spending on armaments.
Social investors see weapons as instruments of death and destruction. Others see them as instruments of peace and security. A weapon need never be fired to accomplish these latter objectives. To what means weapons are used depends on the intent of leaders who have them. Box cutters proved deadly Sept. 11. In this light, one can see the 11th Armored Division as a great peacemaker, financed by Treasury investors.