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March 20, 2009

Human Trafficking and Abortion Are Top Areas of Concern for Catholic Investors
    by Robert Kropp

Survey of institutional investors by Christian Brothers Investment Services helps guide an investment strategy that includes stock screens and shareowner activism. -- Christian Brothers Investment Services (CBIS), a Catholic socially responsible investing (SRI) adviser with more than $4 billion in assets under management, has released the results of its 2008 Socially Responsible Investing Survey.

CBIS asked the Catholic institutional investors that are its participants to name the issues that are top priorities for their investment decisions. The top issues of concern for the investors surveyed were human trafficking, abortion, and companies that support governments engaged in genocide or terrorism.

Human trafficking, which exploits humans for purposes of sex and forced labor, was a new issue in the 2008 survey. CBIS intends to address the issue by engaging with the hotel sector to learn how these companies are combating human trafficking.

Among the guidelines used by CBIS in developing its screening criteria for socially responsible investing are those of the United States Conference of Catholic Bishops (USCCB). According to the USCCB, "Socially responsible investment involves investment strategies based on Catholic moral principles." Therefore, CBIS excludes from its investments companies whose products or services violate the Catholic Church's stand on abortion. Companies excluded include those engaged in the production of contraceptives.

In support of investors' concerns regarding humans rights violations and genocide, CBIS asks companies to review their operations to ensure that they maintain high standards of human rights. CBIS also encourages companies to apply pressure for positive change in oppressive regimes.

Catholic investors also rated environmental justice, human rights in supply chains, and responsible use of water resources among their top priorities. The other top priorities are military weapons contractors, climate change, pornography, and pharmaceutical prices and universal access to healthcare.

While CBIS employs limited stock screens to exclude companies that violate the core principles of its participants, doing so has resulted in the exclusion of only 31 of the companies listed on the S&P 500 Index. CBIS contends that active ownership, rather than screening, is the focus of its SRI program.

In its press release on the results of its survey, CBIS detailed some of the successes of its program of shareowner activism.

A resolution to form an independent panel to advise Newmont Mining in the preparation of a report addressing community-based opposition to its operations in the US and around the world was supported by the Newmont board and approved by 94% of shareowners.

Ford became the first US auto company to set emissions reduction targets when it responded to a shareowner resolution co-sponsored by CBIS by agreeing to reduce emissions by 30%.

CBIS withdrew a shareowner resolution on executive pay when Cisco Systems agreed to issue a report on allowing shareowners to vote on the issue.

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