The recent "What Would Jesus Drive?" campaign has generated a lot of publicity, but a number of pension funds connected with religious organizations, and likeminded religiously oriented money managers, have already been asking essentially that question. Or, as they might rephrase it: What would Jesus invest in?
For example, the Sisters of St. Dominic, Caldwell, N.J., with $10 million in pension and endowment fund assets - along with a number of other religious-affiliated institutional investors and groups - this month filed global-warming shareholder resolutions at General Motors Corp. and Ford Motor Co. The resolutions warn about the contribution of the automakers' passenger vehicles to "greenhouse gas emissions linked to global climate change." Among other things, they ask the companies to come up ways to significantly reduce greenhouse gas emissions from their fleets over the next 18 years.
Some scientists still question the existence of global warming. Others accept global warming but question the importance of human activity in causing it. They say natural phenomena such as intense sunspot activity may be the major cause. But the groups that endorsed the resolution think the evidence of climate change is unmistakable and believe human activities are the major cause, according to a teleconference they conducted.
Ford and General Motors, and other automakers, should respond positively to concerns like those in the resolutions and should continue to work on credible responses and proposals for reducing emissions and improving fuel economy. Despite the groups' firm beliefs, their shareholder resolutions asked the companies to come up with suggestions for solutions. They don't attempt to dictate policy or solutions to the companies.
This suggests there is room for the automakers and these groups to work together. But at the same time, these companies should bear in mind the strength of the social investing movement, which has been growing in assets and sophistication.
Social investment is now a widely accepted investment alternative. In fact, Ford offers at least one social investing option in its 401(k) plan. The social investment movement has made credible efforts to offer academic research on investment performance and the value added to corporations that follow ethical and environmentally sound policies. Although the evidence isn't sufficient to allow for definitive conclusions about how much value is added, it does seem that such policies don't increase costs.
Failing to work with the socially concerned pension funds and other similar institutional investors - which are generally aware that business must balance environmental concerns, consumer preferences and the need to remain profitable - would be foolish. It would alienate groups that could mediate between less socially committed shareholders, who want higher profits, and more radical environmentalists, who would impose higher costs even if it drove the companies out of business.