It is time to shine a spotlight on a lesser-known aspect of the campaign against Israel’s legitimacy, one that has potential for significant negative financial impact: the abuse of Socially Responsible Investing.
For many financial professionals, focusing exclusively on achieving maximum return on investment for their clients is their fiduciary responsibility. SRI represents the proposition that investments are intended not only to maximize financial return, but also to serve as vehicles for advancing the investor’s ethical values and interests. Investments can be negatively screened — investments inconsistent with the investor’s values are excluded from the portfolio — or positively screened — investments consistent with the investor’s values are included in the portfolio.
Last year in the United States, the USSIF (The Forum for Sustainable and Responsible Investment), an NGO that bills itself as “the leading voice advancing sustainable, responsible, and impact investing across all asset classes,” reported that some $8.72 trillion was invested in strategies focused on environmental, social, and corporate governance causes, known as ESG strategies. This amount is double what it was in 2012.
Corporations, pension funds, universities, and many other institutional and individual investors clearly are gravitating to SRI and ESG. There now are thousands of professionals with expertise in the SRI field who guide these investors. The younger generation seems especially attracted to SRI, my sources tell me, which virtually guarantees that this phenomenon will continue to expand. The USSIF has identified human rights as one of SRI’s major ethical concerns.
These developments have not gone unnoticed by Israel’s detractors, who see a potential opportunity to disrupt investment in certain Israeli companies and American companies doing business with Israel. Their objective: to persuade institutional investors and multinational companies to avoid business ties with Israel by attaching to the Jewish state the same kind of moral repugnancy previously associated with apartheid South Africa.
Divestment can be considered a form of SRI. In recent years, many mainline Protestant denominations have debated resolutions calling for divestment from certain American companies doing business in Israel, based on the accusation that they materially contribute to Israel’s occupation of the Palestinians. Among the denominations that adopted such resolutions are the Presbyterian Church (USA) and the United Church of Christ.
The Quakers, through its American Friends Service Committee, has been among the most aggressive churches to use SRI as a weapon against Israel. The AFSC’s Investigate is an investment screening tool that addresses a variety of ethical concerns. With respect to Israel/Palestine, Investigate indicts U.S., Israeli, and international companies accused of engaging in human rights violations and supplying weapons used in the commission of war crimes. There are some 29 companies on the AFSC’s “blacklist.”
When it comes to “blacklists,” a database that may be compiled by the United Nations of companies doing business with Israel in the West Bank is potentially more dangerous. This project was initiated by the Palestinians at the UN Human Rights Council, and is making its way slowly through the world body’s bureaucracy.
Closer to home, we live in a state with robust economic relationships with Israel and with leadership that unequivocally rejects the Boycott, Divestment, and Sanctions movement. Yet we are not exempt from the obligation to better understand these issues. The New Jersey Investment Council is responsible for investing the state’s pension fund, valued at over $70 billion. The state legislature has mandated that the pension not be invested in companies doing business in Sudan and Iran and, more recently, a law was enacted to prohibit investing in companies that boycott Israel — all examples of negative screens.
Last year, NJ resident Gregg Sgambati appeared before the council to argue in favor of utilizing SRI/ESG more broadly. Sgambati, who works at the Manhattan-based S-Network Global Indexes, told me, “The clock is ticking, the ESG strategy already is mainstream, and it is just a matter of time until the council adopts it.”
There will be a gubernatorial election this year in the state, he observed, “and depending on who wins, this could result in a change in the council’s approach.” If the NJ Investment Council starts using SRI, it is hard to imagine Israeli companies and U.S. companies doing business in Israel being excluded from the state pension’s portfolio. Nevertheless, the council’s decision-making is worth watching.
The Catholic community has a big SRI footprint in New Jersey through the Tri-State Coalition for Responsible Investment, which works in partnership with a national body, the Interfaith Center on Corporate Responsibility. The ICCR began with the movement of faith-based investors in the 1970s to address apartheid South Africa, and human rights is one of its major issues of concern.
Unlike other parts of the country, especially California, New Jersey has not seen many student government resolutions calling for divestment from companies doing business in Israel. The two exceptions: Rutgers/Newark in 2016 and Princeton University graduate students in 2015. These resolutions, in our state and elsewhere, have not affected university investment policies, but they do contribute to an atmosphere of controversy, and it is well-known that the investment community, in general, is controversy adverse.
These developments suggest that, to effectively protect our distinctive interests, Israel’s supporters ought to be seriously engaged and visible in the SRI universe. Beyond self-interest, however, as a community of moral and ethical values, Jews should be at the forefront of advancing social justice and human rights through our investment approaches. But are we?
Guided by tikun olam (repair of the world) and tzedek (justice), the Reform movement’s pension board is committed to “Jewish values investing, with particular focus on the environment, social issues, such as the health and safety of employees, good corporate governance, as well as support of Israel.” (Policy statement approved June 2014, revised April 2015)
No doubt, more research would turn up additional examples of Jewish SRI involvement. Overall, however, compared to other religious groups, Jews are significantly underrepresented in this space. That is the assessment of Julie Hammerman, founder of JLens, a network of over 9,000 individual and institutional investors who seek to filter their investment decisions through the lens of Jewish values. JLens is a member of the ICCR and other coalitions.
Hammerman also believes that “SRI provides a wonderful opportunity to engage younger Jews.”
There is movement. The Jewish Council for Public Affairs, the community’s national public affairs coordinating organization, plans to consider a resolution later this month calling for greater Jewish involvement in the SRI field.
To its credit, the Jewish community has cultivated relationships with minority groups and civic leaders to advance our shared social justice goals. Now we also must reach out to leaders in the SRI field and sit around investment tables where important policy discussions are taking place.
As I have riffed before, doing the right thing and defending Israel often go hand in hand.
Martin J. Raffel of Long Branch is former senior vice president at the Jewish Council for Public Affairs and a frequent contributor to NJJN.