Domini Social Investments

After her clients expressed concern about investing in defense contractors, tobacco firms, and other types of companies, stockbroker Amy Domini realized the opportunity and importance of screening firms for environmental, social, and ethical concerns. It was the early 1980s and, at the time, there was only a small group of professionals and investors dedicated to this area. In 1984, Domini coauthored Ethical Investing, one of the first books to summarize and popularize the strategies for linking values and beliefs with investment portfolios. More than two decades later, Domini's name is synonymous with socially responsible investing. Time magazine named Domini one of 2005's 100 most influential people.

In 1989, Domini, Peter Kinder, and Steve Lydenberg launched the Domini 400 Social Index, a market capitalization–weighted common stock index. The Domini 400 index serves as a benchmark for examining the performance of firms that pass broad social screens on diversity, the natural environment, employee relations, and product safety. Companies included in the index are, on the whole, relatively strong in these areas. Firms that generate more than 2% of sales from military weaponry, receive any revenue from alcohol or tobacco products, use nuclear energy, or engage in gaming activities are ineligible for the index. Since its inception, the Domini 400 Social Index has provided evidence that social and environmental screens do not limit financial performance.

After launching the index, Domini and her colleagues introduced the Domini Social Equity Fund to track the index. The fund uses a full replication strategy, which means it invests in the 400 public companies found in the index. Investors in the fund can expect a return just short of the index's performance, since operating expenses must be covered for the fund. In addition to social screens, the fund also advances its social and environmental goals through a variety of strategies. Domini strives to create an open dialogue with top executives and other stakeholders in order to advance its goals and create corporate change. When dialogue stalls or management is unresponsive, fund representatives will often file shareholder resolutions, usually in conjunction with other social investment groups. Domini has filed nearly 100 shareholder resolutions on a variety of issues, including recycling, human rights, sweatshop labor, diversity, global warming, and sustainability reporting. Domini considers these resolutions a success when they are withdrawn because the company has agreed to pursue some or part of the request. Domini was also the first fund to disclose its proxy voting guidelines and actions to investors.

In addition to the index and fund, Domini has introduced the Domini Social Bond Fund and the Domini Money Market Account. These products support community economic development loans and initiatives. Domini is also affiliated with KLD Research & Analytics, Inc., a firm that specializes in corporate accountability research. In all its activities, Domini focuses on the three pillars of social investing, including (1) social and environmental screening, (2) shareholder advocacy, and (3) community investing.