Living Arts
The War on Poverty: The Social Investment Approach
by Pietro Grieco
Poverty has been considered a form of violence against human dignity. To eradicate poverty is one way to have peace on earth. Think of Darfur in Africa, or the situations of people in Nicaragua, Bolivia or Colombia. “Poverty Is a Threat to Peace” was the title of Muhammad Yunus’ 2006 Nobel Prize Lecture and the conclusions he made contained some relevant concepts.
“We get what we want, or what we don’t refuse,” says Yunus. “We accept the fact that we will always have poor people around us, and that poverty is part of human destiny. This is precisely why we continue to have poor people around us…We can reconfigure our world if we can reconfigure our mindset (from Creating a World Without Poverty).”
The remarkable aspect of this statement is that the mindset of social consciousness is changing. The practice of micro lending—for which Yunus and his Grameen Bank received the Nobel Peace Price—is being used successfully to fight against poverty. In addition, new approaches like “Social Business” and the “Social Responsible Mutual Funds” are producing a new investment trend.
Suppose you can invest in project “A” and earn a hundred percent a year or in project “B” and earn fifteen percent per year. Which would you choose? If you are a traditional investor looking for higher returns, you will probably invest in project “A.” But if you are a socially conscious investor, you will ask what kind of investment it is, what country or countries it will effect, how laborers are paid and how they are treated, the effect of the investment on the community where the project is taking place, and what kind of impact it has on the environment. The socially conscious investor has a vision of social business. He or she not only considers what can benefit him or her, but also the planet and humanity at large.
In a world of great imbalances and unjust economic opportunities, the social business approach is generating changes among the poorest and the richest in society. The approach merges financial profit within the capitalist system with the idea of social profit. This means that investments must consider the benefits for communities as well as for the investor. More investors are realizing that the search for profits alone, which contaminates the air, water and soil and which can threaten human life, is not the best solution. Wall Street firms like Morgan Stanley, ING, and Deutsche Bank are now assisting even small investors in channeling their savings to help individuals, especially women, in African and Latin American countries.
Yunus tells the story of how one of the most important worldwide food companies, the Groupe Danone of France (whose United States brand name is Dannon), formed a joint venture with Grameen to produce healthy, nutritious food for the poor in Bangladesh. This venture resulted in numerous food and beverage products that the children of Bangladesh would enjoy and which would meet their daily nutritional needs. The Groupe Danone/Grameen economic model has three specific objectives: to provide daily nutrition to the poor, to create a proximity business involving local communities, and to reduce poverty. This social business launched in 2006 supports local farmers and their suppliers. At the same time, it is creating new jobs in manufacturing and distribution.
While Yunus has been generating new ideas since the seventies to eradicate poverty in the Third World, in developed countries, conscious investors are creating new ways to invest billions of dollars through “Socially Responsible Mutual Funds.” These instruments channel the savings of millions of conscious individuals who feel they have a responsibility to avoid polluted waters, contaminated air, and global warming. These are investors with a mind to doing good, who respect nature and who also wish to make a profit. According to the December 2007 issue of Smart Money, the magazine of the Wall Street Journal, this sector has ballooned in recent years, creating a $50 billion business.
Believe it or not, some of these funds have been doing better than many of the traditional funds. For example, Winslow Green Growth (WGGFX), a fund investing in clean and green companies with low debt and a potential high growth, had a twenty-seven percent average annual return for the last five years. This is highly superior to the Russell 2000 index. A suggestive portfolio named Pax World Balanced (PAXWX), which has a zero tolerance policy on alcohol and gambling and invests in fast growing companies, obtained a twelve percent average return during the last five years. This is superior to the Dow Jones Moderate Portfolio. The fund Portfolio 21 (PORTX) looks for companies that have a policy aimed at preserving the environment. During the last five years, it had an average return of twenty percent per year, quite superior to the MSCI World index.
Not only millionaires can participate in social responsible investments. Dyan Machan’s article, “Take a Note: A Little Goes a Long Way,” in the same issue of Smart Money, explains how the philanthropic trend can embrace small investors. Starting with Kiva.org, it is possible to invest $25; MicroPlace.com offers investments beginning at $100; and the Oikocredit cooperative offers the possibility to invest $1000. VillageBanking.org is a social community business with an activist/philanthropic approach. All of these companies pay a small interest of between two and three percent for a period of about five years and repays the capital. These and other organizations offer practical social investment possibilities. New, innovative ways to invest in the most precious project—the well-being of the earth and the humans who live here—will continue to emerge.
As more noticeable results are realized through micro lending, micro-investment, social business, and socially responsible funds, the social investment approach will gain more and more followers. Further positive results are going to be manifested when the general public understands what Yunus means when he says, “We get what we want, or what we don’t refuse.” We want a world without war and without poverty and we won’t refuse to “reset our mindsets” to accomplish this goal. Practical ways of investment satisfy people’s immediate needs and are generating a self-sustaining force for the war on poverty. They can bring hope for peace and justice throughout the world.
For additional information on socially-responsible investing, visit www.kiva.org, www.microplace.com, www.calvertfoundation.org and www.villageBanking.org. Pietro Grieco is a professor at Cal State University, San Marcos and the president of The Foundation for Development of Spiritual Thinking.