SRI Notes

File Under: Stakholder Relations

With corporate balance sheets flush and housing affordability low in many developed countries, it was only a matter of time before someone started building homes for their workforce.  The UK retailer Tesco is subsidizing an affordable housing development intended to benefit its staff.  Expect to see more of this if both housing and labor markets remain tight.

Housing affordability is becoming a major constraint for businesses in California, where only about 24% of people have enough income to buy the median-priced home, down from 49% at the start of 2003.  Data from the California Association of Realtors is here - these numbers used to look even worse, but they appear to have changed the method of calculation and have moved to quarterly, rather than monthly reporting. 

A Strong Study on Corporate Philanthrophy

I was happy to see Barron's this week recognize (link here, sub required) a strong study of corporate charitable giving from NYU that won an Honorable Mention in this year's Moskowitz Prize competition. 

This is one of those topics that raises all sorts of interesting questions, but where there has been virtually no empirical work (the only other decent study I'm aware of is Navarro's 1988 paper).  One of the most important aspects of this paper is the work they did trying to sort out causality.  Of course rich companies give money to charity - but do they derive a business benefit from doing so?  Consistent with Orlitzky, they find the answer is 'yes'. 

Does that flow through to stock prices?  Don't know.  More work is needed!  But this team is to be commended for exploring this neglected but important area.

A full copy of the NYU study is available here.  My sristudies.org abstract of it is here.

A Great Day for Social Investing

"Bangladeshi economist Muhammad Yunus, whose system of micro-credit loans reshaped development efforts in poor nations, won the Nobel Peace Prize today, along with the bank he founded." - Washington Post (link)

The Wikipedia article on Grameen Bank is here, and a recent briefing paper from Columbia's Chazen web journal is here.  I have not seen much academic work on Grameen, except for this paper from 1999.

(The Economist is disappointed, and thinks the prize should have been withheld.)

ShoreBank's Biggest Job

CrainsDetroit has an excellent article on ShoreBank's involvement in helping Detroit recover from what must be considered the worst urban planning disaster in American history.

If you live on the coasts it's hard to conceive of what has been happening in Detroit.  AFP reports that there are over 12,000 abandoned homes, and a vacated area the size of San Francisco.

An online tour of the ruins of Detroit is here.

"We Are on the Side of the Poor"

I finally tracked down a quote I first heard a few years ago at a conference of financial leaders of religious institutions. A nun was giving a speech on the Church's role in economic life, and said, with heavy emphasis: "we...are on the side...of the poor."

I have wondered about this phrase. Her delivery suggested that she was quoting, but I didn't know the source. The earliest use of it I can find is from an article by Dorothy Day from 1950:

"It is not avoiding the question, and it is being eminently realistic and practical to repeat, to affirm, that we are on the side of the poor. And who would not want to be?"

In 1999 Duncan MacLaren, secretary-general of the Catholic charity Caritas Internationalis, echoed Day's line:

"You are unlikely to find a government or International Monetary Fund official who would be able to distinguish scripture from a Morris West novel, but those values we stand for say something truthful about the human condition which resonates with everyone. It also says whose side we are on - the side of the poor and marginalised, the ones excluded by society but loved by God. A major reason why we are taken seriously by what people in the World Bank like to call the 'real world' is because they know what we stand for."