Social Investing Doesn’t Mean Sacrificing the Bottom Line

To the Editor:

Once again, Leslie Lenkowsky strikes an artificial “mortal blow” against his conveniently created straw man in his “Endowment Investments Shouldn’t Be Based on Social Goals” (Opinion, February 22).

Using his own “flawed premises and wishful thinking,” Mr. Lenkowsky suggests there is an inherent trade-off between social responsibility and the bottom line. Sorry, Mr. Lenkowsky, even many corporations would disagree with you on that one, as would any number of very large institutional investors, not to mention other academic studies.

Legitimate arguments can be made against investment screening and even divestiture, especially when dealing with large endowments, because of the complexity and large transaction costs involved. In addition, why divest and reward a bad management with a premium, when as an owner you can change a bad management or practice?

Mr. Lenkowsky completely ignores the fiduciary responsibility of stockholders to act like responsible owners, and vote their proxies. They can exercise their stockholder voice against counterproductive corporate practices, while meeting financial goals and fulfilling their foundation’s mission.

This is what we do at the Nathan Cummings Foundation. Does Mr. Lenkowsky really think it is a sustainable business practice to poison people or exacerbate global climate change? Does he really defend different standards of the worth of human beings in the developed world versus the developing world?

It may be that if companies’ conduct becomes too objectionable it would be better for the government involved to step in. But often governments don’t because of the influence and huge resources of large corporations that greatly affect the political context, blocking such needed actions. Change then only comes in a more violent or otherwise counterproductive way, often not in the interest of the business or its owners.

An entity like the Gates Foundation, which holds very large amounts of a stock, could exercise tremendous influence on a corporate management, especially in conjunction with other large holders. The cachet of Bill Gates and Warren Buffett could have an enormously productive influence in ensuring the longer-term sustainability of a highly profitable bottom line while meeting the mission of the foundation. When it comes to voting your stock there are no passive investors. Not voting means supporting corporate management.

Studies showing CEO performance and pay are unrelated should demonstrate the folly of such a position. Owners need to be vigilant, and voting proxies to meet long-term, sustainable business returns can also support a foundation’s mission. It also breaks down the artificial wall between programs and investments and makes them mutually reinforcing and synergistic, rather than contradictory.

Lance E. Lindblom
President and CEO
Nathan Cummings Foundation
New York