Monday, July 17, 2006

TIAA-CREF's Selective Perception: Socially Responsible Investing

TIAA-CREF does not follow the Principles for Responsible Investing.  It fails to do so on the grounds that it offers a social choice account and for other accounts it believes the sole investing principle is maximizing financial return. Interestingly enough, it just released a participant survey on socially responsible investing.  The survey appeared designed to (1) ratify the organization's refusal to incorporate responsible investing principles into its mainstream investment decisions and (2) suggest that all TIAA-CREF really should do is inform its participants about the social choice option.  I read the results differently.  Most participants want to incorporate social and environmental values into their investing (including 67% of those who do not participate in the social choice account).  Adopting the Principles of Responsible Investment would do just that. 

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TIAA-CREF, the financial services organization and leading provider of retirement plans in the academic, medical and cultural fields, today released results of a comprehensive survey of participants on issues related to socially responsible investing.
"This survey affirms that our participants want a secure retirement and investment decision making that is driven by financial returns," said Scott C. Evans, Executive Vice President and Head of Asset Management.  "It also illustrates that many participants think about the environmental and social impact of their investments."

The survey sought to examine participants' attitudes around Socially Responsible Investing (SRI), to gauge their knowledge of and commitment to TIAA-CREF's SRI strategies, and to inform the company's SRI strategies moving forward. 

Washington-based Greenberg Quinlan Rosner Research conducted the research in February 2006.  A total of 1002 interviews were conducted with TIAA-CREF Participants: 501 with those who invest in the CREF Social Choice Account (SCA) and 501 who do not invest in the CREF SCA. There is a margin of error of +/- 4.4%.

Among the findings:

  • Financial return is a strong priority for TIAA-CREF participants. 42% of participants who are not invested in the CREF Social Choice Account (SCA) and 34% who are invested in it strongly agree with the statement that financial return is most important when making investment decisions. A total of 91% of non-SCA participants and 85% of SCA participants agree with the statement (somewhat agree and strongly agree).
  • TIAA-CREF participants also want their social values reflected in their investments.  Over a quarter (27%) of SCA participants strongly agree and a total of 83% agree with the statement that "ensuring that my investment decisions reflect my personal values about social and environmental impacts" is most important when making investment decisions.  Just 15% of non-SCA participants strongly agree with this statement, but a total of more than two-thirds (67%) agree with the statement.
  • TIAA-CREF participants have a deep need for more information about SRI strategies and accounts, and there is room to attract more interest in socially responsible investing.  60% of non-SCA investors describe themselves as unfamiliar with the CREF Social Choice Account and just 24% of SCA participants say they are very familiar with it.
  • SCA and non-SCA participants have slightly different views on SRI investment strategies.
    • Among SCA participants, social screening is most important (81% said it was important, 38% very important), followed nearly equally by community investing (74% important, 21% very important) and shareholder activism (70% important, 26% very important).
      • Non-SCA participants rank all three strategies about the same, though slightly lower than SCA participants (67% said shareholder activism was important, 23% very important; 65% said social screening was important, 19% very important; and 66% said community investing was important, 17% very important)

    "There is an opportunity to educate participants about socially responsible investing generally and about opportunities that TIAA-CREF offers," said Amy O'Brien, TIAA-CREF's Director of Social Investing. "We now have a baseline of information of how our participants view socially responsible investing and the issues and strategies they currently find most appealing."

    Last month TIAA-CREF announced the formation of a new Social and Community Investing Department within its Asset Management area. The CREF Social Choice Account is the world's largest social screened investment fund for individual investors with just over $8 billion in assets (3/31/06).

    "TIAA-CREF's in-depth participant survey provides a fascinating snapshot of the views of its investors about social investing at present and their expectations for the future," said Tim Smith, President of Social Investment Forum and Senior Vice President of Walden Asset Management. "The TIAA-CREF survey is a signal of what many other investors will expect of their investments in terms of screening, shareholder advocacy and community investing. Its findings are also a significant statement for the whole social investment industry."

    The survey also found that majorities of SCA and non-SCA participants buy organic food (61 percent SCA, 48 percent non-SCA) and would consider buying a hybrid car (76 percent SCA, 69 percent non-SCA).  They also say that they try to purchase products from companies where they approve of corporate practices (71 percent SCA, 59 percent non-SCA) and boycott products where they disapprove of corporate practices (77 percent SCA, 67 percent non-SCA).

    "The survey also indicates that our participants take other opportunities to express their values through purchasing and other consumer behavior, when it comes to spending their own money on socially responsible products and services," said O'Brien.

    For a report on the findings from the survey, please visit http://www.tiaa-cref.org/newsroom/pdf/sri_memo.pdf.

    http://lawprofessors.typepad.com/environmental_law/2006/07/tiaacrefs_selec.html

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