Morningstar Advisor - June/July 2009 - 35

Spotlight Profit and Progress By Lawrence Jones Two senior analysts offer a glimpse into the workings of Calvert’s SRI strategy. While the investment merits of many mutual funds, including socially responsiblefocused offerings, have long been evaluated by Morningstar and others, less attention has been paid to the social responsibility aspects to these funds’ mandates. That’s despite the fact that this is clearly an important element to investors’ selection of these funds. To address the issue, we spoke to two senior SRI research analysts from Calvert Asset Management Company’s 21-member Social Research Department, Amy Augustine and Lily Donge. At Calvert for nearly a decade, Augustine heads the group’s research in the areas of diversity and international labor relations and, in addition to working at the firm, is active in the leadership of the Social Investment Research Analyst Network’s Steering Committee and Amnesty International’s Stop Violence Against Woman Campaign. Donge arrived at Calvert about seven years ago with a background in investment research at Donaldson, Lufkin & Jenrette and earned graduate degrees in business and development economics from Yale University. My own interest in socially responsible investing stems partly from my research and writing on issues of peace and conflict in scholarly journals such as Duke University Press’ Common Knowledge, where I serve as an associate editor. Lawrence Jones: How do you think about social responsibility and investing? Is there an overarching philosophy or view at Calvert? Lily Donge: One word comes to mind about Calvert: evolution. We are constantly evolving in the way we are thinking. The area of sustainable research and investment is dynamic. You have to stay on top of every topic subjectively, but then also read up on very specific science or legal rulings. How we define a company that is sustainable is an evermoving target. Therefore, the analysts also have to be evolving because we’re chasing that moving target. We’re not analyzing a static balance sheet. Jones: What are some of the changes that you’ve seen in SRI? Amy Augustine: When I started with Calvert nearly 10 years ago, it was much more about companies focusing on compliance and making sure that they were staying within the boundaries of the law. What companies were doing sustainably was often driven by philanthropy or for their reputation. Now, it’s much more about companies integrating sustainability into their business models. They’re seeing the strong bottom-line value of integrating environmental concerns into their businesses. If they factor in diversity in their bottom line, for example, they’re going to see increased innovation or creativity. Today, it’s much more about how to move environmental, social, and governance issues into your larger strategic operating model. As a result, we’ve seen companies being much more innovative in this space. Also, we see more companies positioning themselves for the future. It’s great that they’re structuring their business to not have as many emissions and to reduce their environmental footprint, but we’re seeing that companies also are developing more-sustainable products going forward. Our analysis is much more focused now on the structural frameworks for moving forward. How is the company positioning itself in a new society that is factoring in all of the risks and opportunities that sustainability provides? Jones: When doing this kind of analysis, do you speak with managers and visit companies? Augustine: We talk with management frequently, particularly in companies that have dedicated personnel to issues of sustainability and risk management. Calvert does not usually conduct site visits unless we have been invited as a stakeholder to talk with company management. There are exceptions to that, where analysts go to look at factories and the operational sites, but that’s not a rule. We base the bulk of our investment decision on MorningstarAdvisor.com 35
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Morningstar Advisor - June/July 2009

Table of Contents for the Digital Edition of Morningstar Advisor - June/July 2009

Morningstar Advisr - June/July 2009
Contents
New on MorningstarAdvisor.com
Letter from the Editor
Contributors
Is SRI a Relevant Investment Strategy?
A Head for Numbers
Building a Business on SRI
Investment Briefs
The Liquidity Premium
Navigating the SRI Patchwork
Profit and Progress
How the Fed Contributes to Crises
Holding Steady
Appleseed Adds Value to SRI Formula
Four Picks for the Present
Long-Term Investors Can Find Value among Industrials
Higher Yields, Hold the Risk
Bargains in U.S. Industrials
Mutual Fund Analyst Picks
50 Most Popular Equity ETFs
Undervalued Stocks
Most Popular Variable Annuities
New at Morningstar
Talkin’ ‘bout a Revolution
Morningstar Advisor - June/July 2009 - 47
Morningstar Advisor - June/July 2009 - Morningstar Advisr - June/July 2009
Morningstar Advisor - June/July 2009 - Cover2
Morningstar Advisor - June/July 2009 - Contents
Morningstar Advisor - June/July 2009 - 2
Morningstar Advisor - June/July 2009 - 3
Morningstar Advisor - June/July 2009 - New on MorningstarAdvisor.com
Morningstar Advisor - June/July 2009 - 5
Morningstar Advisor - June/July 2009 - 6
Morningstar Advisor - June/July 2009 - Letter from the Editor
Morningstar Advisor - June/July 2009 - Contributors
Morningstar Advisor - June/July 2009 - 9
Morningstar Advisor - June/July 2009 - Is SRI a Relevant Investment Strategy?
Morningstar Advisor - June/July 2009 - 11
Morningstar Advisor - June/July 2009 - A Head for Numbers
Morningstar Advisor - June/July 2009 - 13
Morningstar Advisor - June/July 2009 - 14
Morningstar Advisor - June/July 2009 - Building a Business on SRI
Morningstar Advisor - June/July 2009 - 16
Morningstar Advisor - June/July 2009 - 17
Morningstar Advisor - June/July 2009 - Investment Briefs
Morningstar Advisor - June/July 2009 - 19
Morningstar Advisor - June/July 2009 - 20
Morningstar Advisor - June/July 2009 - 21
Morningstar Advisor - June/July 2009 - 22
Morningstar Advisor - June/July 2009 - The Liquidity Premium
Morningstar Advisor - June/July 2009 - 24
Morningstar Advisor - June/July 2009 - 25
Morningstar Advisor - June/July 2009 - 26
Morningstar Advisor - June/July 2009 - 27
Morningstar Advisor - June/July 2009 - 28
Morningstar Advisor - June/July 2009 - 29
Morningstar Advisor - June/July 2009 - Navigating the SRI Patchwork
Morningstar Advisor - June/July 2009 - 31
Morningstar Advisor - June/July 2009 - 32
Morningstar Advisor - June/July 2009 - 33
Morningstar Advisor - June/July 2009 - 34
Morningstar Advisor - June/July 2009 - Profit and Progress
Morningstar Advisor - June/July 2009 - 36
Morningstar Advisor - June/July 2009 - 37
Morningstar Advisor - June/July 2009 - 38
Morningstar Advisor - June/July 2009 - 39
Morningstar Advisor - June/July 2009 - How the Fed Contributes to Crises
Morningstar Advisor - June/July 2009 - 41
Morningstar Advisor - June/July 2009 - 42
Morningstar Advisor - June/July 2009 - 43
Morningstar Advisor - June/July 2009 - 44
Morningstar Advisor - June/July 2009 - 45
Morningstar Advisor - June/July 2009 - 46
Morningstar Advisor - June/July 2009 - 47
Morningstar Advisor - June/July 2009 - Holding Steady
Morningstar Advisor - June/July 2009 - 49
Morningstar Advisor - June/July 2009 - 50
Morningstar Advisor - June/July 2009 - 51
Morningstar Advisor - June/July 2009 - Appleseed Adds Value to SRI Formula
Morningstar Advisor - June/July 2009 - 53
Morningstar Advisor - June/July 2009 - 54
Morningstar Advisor - June/July 2009 - 55
Morningstar Advisor - June/July 2009 - Four Picks for the Present
Morningstar Advisor - June/July 2009 - 57
Morningstar Advisor - June/July 2009 - Long-Term Investors Can Find Value among Industrials
Morningstar Advisor - June/July 2009 - 59
Morningstar Advisor - June/July 2009 - 60
Morningstar Advisor - June/July 2009 - 61
Morningstar Advisor - June/July 2009 - Higher Yields, Hold the Risk
Morningstar Advisor - June/July 2009 - 63
Morningstar Advisor - June/July 2009 - Bargains in U.S. Industrials
Morningstar Advisor - June/July 2009 - 65
Morningstar Advisor - June/July 2009 - Mutual Fund Analyst Picks
Morningstar Advisor - June/July 2009 - 67
Morningstar Advisor - June/July 2009 - 68
Morningstar Advisor - June/July 2009 - 69
Morningstar Advisor - June/July 2009 - 50 Most Popular Equity ETFs
Morningstar Advisor - June/July 2009 - 71
Morningstar Advisor - June/July 2009 - Undervalued Stocks
Morningstar Advisor - June/July 2009 - 73
Morningstar Advisor - June/July 2009 - 74
Morningstar Advisor - June/July 2009 - 75
Morningstar Advisor - June/July 2009 - Most Popular Variable Annuities
Morningstar Advisor - June/July 2009 - 77
Morningstar Advisor - June/July 2009 - 78
Morningstar Advisor - June/July 2009 - New at Morningstar
Morningstar Advisor - June/July 2009 - Talkin’ ‘bout a Revolution
Morningstar Advisor - June/July 2009 - Cover3
Morningstar Advisor - June/July 2009 - Cover4
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