Laura Berry Interfaith Center on Corporate Responsibility Laura Berry is ICCR's Executive Director, and took up the position in June of 2007. Prior to joining ICCR, she was the Senior Vice President for Philanthropic Service for the Community Foundation for Greater New Haven. Before joining the Community Foundation, Laura served as Community Development Initiative Director for the New London Development Corporation. Prior to that, she managed a $250 million portfolio as vice president at SSB Citi Asset Management, relying on the synergy between faith and socially responsible investing guidelines. Laura, a native of Detroit, Michigan, lives in New Haven, Connecticut. She received her Certified Financial Planner designation from Quinnipiac University and holds an M.S. from the University of Michigan and a B.S. from Michigan Technology University.

1. SRI seems to have joined the mainstream - or at least, it’s now common for corporations to acknowledge SRI concerns. In your opinion, what drove this gradual acceptance? What role do you think KLD’s research and indexes played in this? What world events, consumer preferences, and/or changes in the financial services industry contributed??

I agree with the thesis of the wonderful book “How: Why How We Do Anything Means Everything in Business (and in Life).”  Its author, Dov Seidman, is the CEO of LRN, a consulting firm focused on corporate ethics.

Seidman’s thesis is much more than the notion that transparency increases the likelihood that corporations who behave badly might “get caught.”  It is rather the idea that management practices such as “just-in-time” inventory control as well as the reality of global labor markets make the transmission of adaptations (both good and bad) far more dramatic and consequential, particularly when amplified by the rate at which capital and information flow.

When moving from arithmetic to calculus, investors cannot afford to ignore the “how.”  This is dramatically exemplified by the current meltdown in global capital markets.

Thomas J. Friedman’s work in the New York Times has also reminded us that the interconnectedness and transparency of our world has driven the acceptance of a broadened sense of social responsibility.  George Soros proposes a complementary point of view with his “Reflexivity” notions.

KLD is a part of this. They were among the first organizations to convert observation of corporate activity into an analytically sound data framework.  The progression of SRI – from philosophy to social science to analytical tool – could not have happened without KLD’s approach. 

One example is SOCRATES, KLD’s research platform. Long before Web 1.0 – let alone 2.0 – this framework was pushing corporations to review social performance benchmarks in a sound and truly useful way.

I do not think one can isolate a particular event or trend that led to this evolution.  I think it’s come from the general “flattening” of the world, especially through open architecture for intellectual property and the growth of computational capacity.  As has been true throughout the history of mankind, evolution has been driven by tool development.  KLD has been at the forefront of that effort for SRI.

2. In an interview with Bill Baue and Francesca Rheannon, you said that “when you look at corporate behavior through eyes that are guided first by notions of justice and sustainability, you see things differently.” What could those investors who are not driven by faith learn from your perspective?

 Investment is no more than believing that actions one takes today – buying and selling – can make for a better future.  Most faith traditions share that belief, although their actions and beliefs have traditionally been tied to social or natural capital, rather than financial capital.

Fundamentally, I believe the most successful investors see things others do not see.  At ICCR, our members tend to be driven by principles that grew out of the world’s great faith traditions.  This leads our members, institutional investors who take their role as financial fiduciaries very seriously, to look very closely at the “how,” as in, “How does a corporation create wealth for its investors?”

Our principled approach leads us to insights that are frequently missed by more traditional investors.  Secular investors viewing portfolio theory from a traditional growth or value perspective would do well to pay attention to these observations.  In today’s interconnected, high-speed capital markets, knowing “how” is increasingly essential to good investment practice.

3. On what issues do you believe social investors have had the greatest impact? Are there issues that haven’t received enough attention, in your opinion?

Most faith-based institutional investors incorporate some notion of “creed” into their social parameters. In the simplest articulation, these creeds direct us: “Love your Creator.  Love each other.  Love Creation.”  

In the early days, this allowed us to express concern about the environment long before “global warming” was part of the lexicon.  Creed allowed us to step up and work together to examine the role of capital in allowing Apartheid to continue in South Africa.  Creed allowed us to predict the catastrophe of predatory lending, inappropriate underwriting standards and the catastrophe of securitized sub-prime debt. 

Supply chain issues, off-balance sheet liabilities, social performance enhancement are some areas that need significantly more attention.

4. Where do you see the industry heading in the next twenty years?

If the industry makes an authentic investment of intellectual and financial capital to lead tool development, as KLD did 20 years ago, I believe we will create an analytically sound “style” framework that will be mentioned as frequently as “value, growth and momentum.”  There is a Nobel Prize or at very least a PhD thesis in creating this framework. 

As an industry, I believe we cannot afford to continue to rest on our past successes or our “moral authority.”  We need to open up our work and create SRI 2.0.  If we do, we will have demonstrated the authenticity of our analysis as soundly as we have demonstrated the soundness of our righteousness.

“In a connected world,” Dov Seidman has said to me, “countries, governments and companies also have character, and their character — how they do what they do, how they keep promises, how they make decisions, how things really happen inside, how they connect and collaborate, how they engender trust, how they relate to their customers, to the environment and to the communities in which they operate — is now their fate.”