The Calvert Group became the first US-based socially responsible investment (SRI) mutual fund firm to issue a report on its social and environmental performance based on Global Reporting Initiative (GRI) Sustainability Reporting Guidelines. While Calvert Group operations may not have major environmental and social impacts relative to large publicly traded companies, the report is noteworthy because of its symbolism.
SRI firms routinely ask corporations held in their portfolios to issue sustainability reports. This fall Calvert signed a joint statement with 16 other SRI firms urging companies to issue GRI-based sustainability reports, and last proxy season Calvert filed shareowner resolutions at 14 companies asking them to issue GRI-based sustainability reports. So Calvert is "walking its talk."
"For years, Calvert has advocated greater disclosure and transparency on the part of the companies we invest in," said Barbara Krumsiek, president and CEO of Calvert. "As so much of our business involves assessing the social and environmental performance of others, it was a natural progression for Calvert to turn the mirror on ourselves."
Second (and perhaps more significantly), while Calvert is the largest US-based SRI firm with 174 employees, it is still a small-to-medium-sized enterprise (SME), few of which have issued sustainability reports (GRI-based or otherwise). However, Calvert may be on the cusp of a change in this trend. Just last month, GRI released a sustainability reporting handbook for SMEs that outlines a business case and provides tips to help alleviate the pressures of time and resources that sometimes prevent SMEs from reporting.
Calvert is not the first US-based SRI firm to issue a sustainability report. Trillium Asset Management has issued three, though they are based not on GRI but on the CERES Principles, named after the Coalition for Environmentally Responsible Economies co-founded by Trillium President Joan Bavaria. ShoreBank reports according to GRI guidelines, though it is a community development bank, not an SRI mutual fund firm.
Although Calvert’s report is "based on" GRI, with an index mapping the report against specific GRI guidelines, it does not fulfill the much more rigorous category of "in accordance" with GRI.
"We are not in a position to meet GRI requirements at the present time," the report states. "We intend to incrementally build on this framework in future years, however, with the ultimate goal of producing a sustainability report ‘in accordance’ with the GRI."
The report also includes an index mapping its contents against the ten principles of the UN Global Compact.
More significantly, the report organizes itself around the major social and environmental areas that Calvert assesses companies for inclusion in (or exclusion from) its portfolios. This structure symbolically underlines the fact that Calvert seeks to hold itself to the same accountability that it holds the companies evaluated by its social research team.
As with many of the companies it evaluates, Calvert found "gaps and weaknesses" in its management of sustainability issues.
"We strive to be socially responsible in the way we conduct our business," the report states. "However, we also recognize that we are stronger in some aspects of corporate social responsibility than in others."
"In some areas, for example, we have less defined formal management systems, and we are committed to strengthening these in the years ahead," the report continues. "In particular, we are committed to better identifying and articulating our direct and nondirect social and environmental impacts while developing improved strategies for managing them."
For example, while Calvert advocates for corporate board and staff gender and racial diversity, the report reveals that Calvert has room to improve its own board and staff diversity. The Calvert Social Investment Fund Board has strong diversity, with one African-American woman, one African-American man, one American Indian woman, two White women, and five White men. The Calvert Multiple Funds Board, on the other hand, consists of eight White men, one White woman, and one Hispanic woman, according to the report.
Staff diversity is strong in some areas, such as a 52-to-48 percent male-to-female ratio, and weaker in others, with no American Indians employed and no Asian representation in management. In keeping with the Calvert Women’s Principles, which advocate for corporate gender parity, the female-to-male salary ratio for minority sales workers, technical workers, and clerical/office workers is tipped slightly in favor of women.
Preparing the sustainability report forced Calvert to stand in the same shoes as companies who struggle with sustainability reporting.
"We have gained a deeper understanding of the challenges other companies face in producing sustainability reports and moving toward corporate sustainable development," the report states.