SRI Top Ten Must-Read Books

Here at Socially Responsible Investing, we put together a list of our top 10 books in the field.  Please take a look and feel free to offer your view on the list.  We saved our favorite at #10.  Also, over the next few months, we will be posting book reviews on each of these books.  Happy reading & investing!

  1. Investing for Good – Making Money While Being Socially Responsible (Step-by-step Guide for Doing Well Financially While Doing Good Socially), Peter Kinder, Steven D. Lydenberg, Amy L. Domin
  2. An Investor’s Guide to Ethical & Socially Responsible Investment Funds , John Hancock
  3. The Debate over Corporate Social Responsibility, Steven K. May
  4. Corporate Social Responsibility: Doing the Most Good for Your Company-Your Cause, Philip Kotler and Nancy Lee Kotler and Lee
  5. Green to Gold: How Smart Companies Use Environmental Strategy, Daniel C. Esty and Andrew S. Winston Esty
  6. The Complete Idiot’s Guide to Socially Responsible Investing, Ken Little
  7. Beyond The Bottom Line: Putting Social Responsibility To Work For Your Business, Joel Makower
  8. The SRI Advantage: Why Socially Responsible Investing Has Outperformed Financially, Peter Camejo
  9. The Triple Bottom Line: How Today’s Best-Run Companies Are Achieving Economic, Social and Environmental Success — and How You Can Too, Andrew W.Savitz
  10. Socially Responsible Investing: Making a Difference and Making Money, Amy Domini                                                                        

                    The Bible of SRI, please see our book review for details

SRI Book Review: The End of Overeating

Taking Control of the Insatiable American Appetite

        by David A. Kessler, MD
                copyright: 2009, Rodale Books

      Remember this guy…?

 I vividly recall David Kessler, but not when he was appointed FDA commissioner by Republican president George H.W. Bush (with bipartisan approval no less).  He was later reappointed by Clinton with what produced painful misgivings from Republicans.
Mr. Kessler is one smart guy, having advanced degrees both in Medicine and Law.  Outside private industry, he also worked for Republican Senator Orin Hatch.
The (Dr.) Kessler I remember was trying to regulate the cigarette industry, meaning Americans would have to admit to society, and even worse, to themselves, that smoking was in effect “doing drugs.”  While legislation never got off the ground, it surely left, as they say…a “bad taste” in one’s mouth.  After losing this David vs. Goliath battle, the other David decided to write a book about American eating habits.

This website reviewed his book even though it’s a book about Nutrition.  Because, in reality, it is the story of how Nutrition was hijacked by Food Inc.  This Book Review is geared towards Socially Responsible Investors.   Summary points:
Best For:
  • Individuals who would like to understand how the food industry operates
  • Investment professionals following the food/services industry
  • People trying to change their eating habits that don’t understand why they keep failing
 What I liked:
  • Despite Kessler’s advanced education, the book is very easy to read
  • Well researched: the easy-reading is backed by a vast number of footnotes and personal interviews (amounting to 62 pages!)
  • Provides another angle to health issues in the United States
  • The author provided interesting personal details of his own food issues
What I didn’t like:
  • Portions of material were repeated throughout the book
  • An easy way to control one’s eating habits was not provided
    • (Does one exist?)
  • Solutions to the food industry’s behavior were not examined
  • The author seemed determined to remove personal responsibility to those addicted to food
Biggest Surprises:
  • Hadn’t realized how addictive food is 
  • Solving the industry’s overeating issue may be a larger battle compared to the FDA’s war with the tobacco industry (this is because food, unlike tobacco, is necessary to live)
  • This book makes one wonder why Kessler didn’t do more as FDA commissioner to put a stop to GMOs and substitute ingredients in Fast Food and Processed foods
I purchased this book for my mom in 2009, who’s been overweight (or weight-worried) ever since I can remember.  I recall she was on one diet after another,  and mom attended Weight Watchers-like meetings, which, as a boy, reminded me more of group therapy (aka AA meetings).  My little mind at the time hadn’t realized how close I was to the Truth!
The book starts with Kessler’s personal experiences and love for sweets, especially freshly baked semi-sweet chocolate chip cookies.  It then takes a top-down examination at America’s obesity problem and how the Food industry is contributing to both overweight and sickly Americans.
Essentially, Kessler believes that food, like drugs and alcohol, is addicting.   The food industry knows this and has engineered foods that are highly palatable.  Their recipe is a simple mix of salt, sugar and fat placed into foods.  However, while the ingredients are simple, the proportions to which they’re applied, and the layering thereof are very scientific.  This magic potion of ingredients applied to everything we eat has made food addicting in much the same way cocaine is.  In fact, our bodies play off similar cues and have similar brain (e.g, dopamine) responses to foods.
The food industry, and we’re not just talking Wendy’s here, is responsible for this highly addictive food.  It’s not just Fast Food chains, but sit-down family restaurants, food processors, and supply companies (i.e, ADM, Cargill) that all take part in this.  Dr. Kessler had interesting interviews with food consultants and corporations with in-depth interviews with:
  • Chili’s
  • Cinnabon
The final chapters focus on ways of treating food addictions including emotional learning and negative associations (i.e, telling yourself “food: bad”).  One of Kessler’s solutions is what he calls “planned eating” which is eating just enough to get you through the next four hours.

Applying this book to Socially Responsible Investing:
When analyzing potential investments in the food industry, there has to come some point (this is for the investor to decide) at which a food company is held responsible for the ingredients it is using and the affects its food is having on  customers/society. Should candy, desert and fast-food companies be screened-out of SRI lists?

But maybe, say a Chipotle should be included in a  positive SRI screen given its “food with integrity” program.

How about Starbucks?  You can’t get much more socially responsible than Starbucks.  But did you know their Strawberries & Creme Frappucino with whipped cream has 18 teaspoons of sugar? So now then, what do we do with Starbucks?

That is the question…

Book Review: Socially Responsible Investing: by Amy Domini

Socially Responsible Investing: 
Making a Difference and Making Money

by Amy Domini
 copyright: 2001, Dearborn Trade

 Amy in action…

In “my book”, Amy Domini is one of the modern founders of Socially Responsible Investing (“SRI”).  I bought her book thinking it was a must-read to increase my knowledge of the subject.  However, what fascinated me more was the author herself.  People that change the world have a special “recipe” to their genetic makeup.  Their spirit entwines itself, becoming the very subject they’re specializing in.  Domini is just that – sprinkle in a bit of healthy disrespect for conventional wisdom with an intellectual curiosity of Einstein and moral authority of Reverend Martin Luther King.

Amy Domini is a preacher in her own right with a powerful message of corporate responsibility and human dignity.  In 1989, Domini founded KLD Research, along with her ex-husband Peter Kinder and Steve Lydenberg.  Domini helped create what was originally called the Domini 400 Social Index. She later founded the money-management firm Domini Social Investments.  The firm’s Social Equity Fund was the first to publicly post its Shareholder proxy-voting record (in April 1999).

Best For:
  • Corporate Stakeholders (e.g., suppliers, shareholders, employees).
  • Investors looking to become more familiar with SRI.
  • Equity/Credit Analysts.
  • Corporations wondering how the “other side” views them.
 What I liked:
  • The Case Study (comparing American Home Products with Johnson & Johnson) was interesting and insightful as it compared what at first appeared to be two similar companies.
  • Ms. Domini gives several examples of companies that are socially responsible.
  • The book is filled with reference material and Appendices.
  • The reader gets a feel of Domini’s personality, spirit & spunk.
And not so much…
  • The case is made for the outperformance of investments in socially responsible companies.  However, I believe the verdict is still out on this.  (Though note that the KLD (Domini) 400 has outperformed the S&P500 since its 1990 inception.)
  • A small number of recommended foreign companies’ shares could not be purchased in the U.S.
  • The book should be updated, especially in light of the new corporate charter (called Benefit corporation: see B Labs). Also, the profile of cited companies likely has changed.
Note: recent data not available.  Source: KLD Research & Analytics.

    Biggest Surprises:
    • Despite Domini’s big following, the book had only one review on
    • SRI’s main weakness is cited (you must read the book to discover it !)
    • Social Investing actually stimulates Investors to become more actively involved in SRI via their purchasing behavior, voting, etc.
    • The book has much more depth than I expected from its cover.
         In her book’s first page, Domini tells a resonating story about a little girl on the beach trying to save all these Starfish by throwing them back in the water.  Her mother said, “Don’t bother, dear,.. it won’t make a difference.”  The girl thought for a moment, looking at the Starfish in her hand and said, “It will make a difference to this one.”
      That little story’s a great thought-provoking start to a book which covers:
          • Why SRI investing matters
          • A short history of SRI
          • Screening methods
          • Shareholder Activism
          • Community Investing
          • How Global Finance affects economies
      What’s special about that story wasn’t just that everyone’s action (and vote) counts, but that this little girl (Amy?) was already thinking independently and questioning her world.  Perhaps we can all do the same by thinking things through.

      According to Ms. Domini, global commerce has destroyed the ability of governments to either protect its citizens from harmful business practices such as sweatshops (see below) or to benefit from taxing, since a company can move elsewhere in the world.

      In 1996, CBS News’ 48 Hours ran a piece detailing the abuse of Nike’s workers in Vietnam.  Nike became an overnight symbol of what’s commonly known as “sweatshops.” The company’s come a long way since, but stakeholders must remain vigilant on Nike (see our Posting).  A more recent expose is Here.

      In my opinion, we all have blood on our hands.  If we don’t ask the hard questions, someone will pay the price. Unfortunately, that someone will likely be an innocent bystander in an Emerging Economy…or You…


      INVESTING FOR CHANGE:  Profit from Responsible Investment
      by Augustin Landier, Vinay B. Nair
      copyright: 2009, Oxford University Press

      Just started reading Investing For Change – actually, just finished reading it too.  I was drawn to this book for a few reasons:

      • The book is a quick read, but the authors have a substantial body of knowledge to pull from.
      • Authors have “hands on” experience in the investment management business, and they aren’t just theorists
      • Back of the book has an Appendix and, several pages of biographies for its footnotes.

      Best For:

      • Individual investors (uses little math)
      • Investment professionals (though limited in scope)

       What I liked:

      • I liked the historical background of SRI and the way the authors tied this with global investing trends (this info is difficult to synthesize from the gobs of texts on the Internet).

      What I didn’t like:

      • The last chapter was, to put it simply, confusing, complex and poorly written.

      Biggest Surprises:

      • Hadn’t realized how pivotal SRI was towards ending apartheid in South Africa.
      • Increased Self-Awareness: hadn’t realized how aligning ones values w/ investments would make oneself more authentic (as in Existentialist Philosophy).
        • Authenticity is the degree to which one is true to one’s own personality, or character, despite outside influences.

        Our Notes:
        The authors use sharp analogies to grapple around an investing concept that could be confusing not only for novice investors but experts alike.  Today, professional pension fund managers are battling their consciences to determine whether SRI is even legal under ERISA (Employee Retirement Income Security Act of 1974) and the infamous Prudent Man Rule.

        While superficially simplistic, the authors’ intellectual curiosity shine with their pragmatic questioning of Socially Responsible Investing.

        They ask, for example, “Is it really possible to express our moral values through our investments?” 

        • Does SRI imply taking more financial risks
        • Does SRI force less virtuous companies to improve their behavior?”

        One of my favorite analogies utilized was describing how the motives for various responsible investors are different.  The authors compare the different motives for vegetarians with that of SRI.  For example, some vegetarians are motivated by health reasons, others do not want to be accomplices in the killing of animals.

        Similarly, some investors avoid “sin stocks”, others seek investments in responsible companies, so long as they don’t limit financial returns that much.  And still others, are using SRI as a quantitative metric to boost returns.  The latter has no morality involved.  The authors then go on to answer the questions mentioned above.

        This “quick-read” has an interesting take on SRI.  Though, may leave some readers asking for more as the authors breezed over certain points.

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