Sierra Club explores mutual fund
BY JOHN H. CUSHMAN JR.
New York Times
WASHINGTON -- The Sierra Club, the oldest, largest and most influential environmental advocacy group in the country, wants to start a mutual fund using its well-known name to attract individual investors' money into the shares of companies that meet the club's strict standards for environmental performance.
The move would open a new front on Wall Street in the club's efforts to fight industrial pollution and could raise significant amounts of money for its operations, like lobbying the government for policies it supports.
The fund's manager, an outside financial firm yet to be selected, would choose stocks from a list of companies that the Sierra Club already uses for its own multimillion-dollar portfolio. The club's investment screen uses criteria that are more restrictive than those commonly used by other mutual funds marketed as being environmentally responsible, said Carl Pope, the club's executive director.
The club is adopting an approach pioneered last year by the Humane Society. But the Sierra Club exerts its influence over a much broader political landscape, and its move raises several intriguing questions.
Would the club's board, which is elected by its members, be able to veto the fund's holdings? (Yes, for example, if a company previously on the approved list was named in litigation brought by the club.) How many of the club's 650,000 members would invest substantial amounts in such a fund? (The answer will help determine the club's income, which would depend on how big the fund gets.) And, finally, how would the club spend its earnings?
Pope said the money could pay operating expenses like salaries, rent and phone bills as well as some of its political activities. It could lobby Congress with the money, but not contribute it to candidates' campaigns; it could advertise in favor of energy conservation or against oil drilling in wilderness areas, but not advocate voting against candidates who disagreed.
But several board members remain hesitant, according to minutes of their meetings, and the board will not grant its final approval until it sees what terms financial firms are willing to offer and it surveys members on the idea.
Louis Barnes, the club's chief financial officer, told the board that the fund might earn the club $1 million a year within five years. The club's budget this year is about $60 million, about a third of it spent on influencing public policy. In the year leading up to the 2000 election, the club mounted an $8 million campaign called its Environmental Voter Education Fund.
At a May 2 meeting, board members said they saw several advantages to the fund.
``This can influence corporate behavior, and some corporations might want to change their policies to be part of the fund,'' Larry Fahn, a board member, said, according to the minutes.
Robbie Cox, a former club president who is on the board, emphasized the publicity to the club as well as its need for additional revenue.
But another longtime board member and former president, Phillip Berry, opposed the idea, telling the board at the meeting, ``Selling the club's name cheapens it.'' |
