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Book Reviews
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The Challenge to Power:
Money, Investing and Democracy
by John C. Harrington
(Chelsea Green, 2005)
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John C. Harrington knows a lot about Socially Responsible Investing. He helped start the movement commonly known as “SRI” in the 1980s with a fund called Working Assets. And throughout the last three decades he has continued to be a major player in a rapidly growing and changing movement that seeks to leverage capital for social and environmental change. But although he titles his recent book The Challenge to Power, he also has serious questions about whether SRI is living up to its potential or is merely being co-opted by corporations and funds that seek to cloak themselves in the lingo of “sustainability” while conducting business as usual.
Even people who don’t invest have probably heard something about SRI and the many mutual funds which use inclusionary and exclusionary “screens” to monitor the corporations they purchase stock from. Harrington traces the origins of the movement to the 1970s when ministers promoted divestment from South Africa and the Vietnam War. He got his start in the 1980s with Working Assets and has since worked with other funds. He says that SRI now represents 11 percent of the funds being managed in the U.S.
One reason Harrington believes SRI is so important is that our political system is largely out of our control. And as more emphasis shifts to the economic sphere, he feels individuals should include investing as the “third leg” of a triad of economic activities that includes our consumer spending and charitable giving. Throughout the book, he mentions various funds and indices that may be useful to potential investors.
Despite his enthusiasm, Harrington is quick to point out that the tremendous growth of SRI means there is a need for skepticism and vigilance about the types of corporations being labeled socially responsible. He notes that the Dow Jones Sustainable Index includes companies like Dow Chemical, and more and more corporations are approaching the issue as public relations rather than a change in behavior. As a result, we see corporate “codes of conduct” and talk of “sustainability” without any accountability or definition of what those terms mean.
Just because Harrington manages stock doesn’t mean he’s 100% pro-corporation. He laments the increasing power of corporations over our government and is also critical of giving corporations the same constitutional rights as citizens. He offers up a cautionary tale about some of the socially responsible companies like Ben and Jerry’s who have gone public to raise money and then been subject to hostile takeovers. One possible solution could be socially responsible venture capital that allows businesses to pay back investors without going public. Harrington also touches on the subject of community investment in small businesses and micro-enterprises.
I wouldn’t say that Challenge to Power is solely for the investment community, but it will probably be of more interest to people who are looking for new places to invest or to fund managers who want to know more about SRI. Harrington mentions a lot of funds and includes an appendix describing some of the funds in detail. With more and more Americans owning some form and stock, it’s important to understand this emerging field in which the author has been intimately involved.
Brad Johnson lives in Baltimore and is a regular contributor to HopeDance.
He can be reached at Brad25710@aol.com.
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