March/April 2008

Catholic Health Initiatives Continues Commitment to Socially Responsible Investing


Catholic Health Initiatives’ commitment to socially responsible investing includes the Direct Community Investment Program and shareholder activism.

Direct Community Investment Program The Direct Community Investment Program seeks to achieve the goal of lending two percent of the total Operating Investment Program assets to organizations that promote access to health care, housing and jobs for underserved populations. Catholic Health Initiatives’ Social Responsibility Investment Staff Committee recently approved four direct community investments: Calvert Foundation Bethesda, Md. Investment amount: $10 million The Calvert Foundation offers Calvert Community Investment Notes to individuals and institutions to channel resources to direct investments in community development financial organizations. The Foundation invests in nonprofit organizations with proven track records that demonstrate strong management, effective operations, good financial performance and sound capitalization. With a record of only .02 percent in loan losses, the Calvert Foundation demonstrates that community development investments can yield both consistent financial performance and social returns. The investment in Calvert Community Investment Notes allows CHI to be an active participant in the distribution of the loan funds. Northern California Community Loan Fund San Francisco, Calif. Loan amount: $1 million ($500,000 loan renewal, $500,000 new loan) The primary purpose of the Northern California Community Loan Fund (NCCLF) is to revitalize low-income communities through lending and technical assistance to nonprofit organizations. NCCLF seeks to strengthen the economic base of low-income communities by lending to nonprofit organizations that typically have limited access to financing from traditional lenders. This is the third investment made by Catholic Health Initiatives in NCCLF. This new investment will allow NCCLF to expand its capacity to make direct loans to organizations that meet the needs of low-income communities throughout Northern California. Financing Ozarks Rural Growth & Economy Huntsville, Ark. Loan amount: $500,000 (renewal) Financing Ozarks Rural Growth & Economy (FORGE) is a revolving loan fund that provides loans to farmers, small businesses, home-based business and recent immigrants. The mission of FORGE is to promote and enhance the quality of life and economic sustainability of agricultural communities by linking investors to borrowers, urban communities to rural communities, consumers to producers and low-income groups with basic affordable credit. FORGE’s primary service area is the Ozark region, where poverty in rural counties ranges from 14 to 27 percent of the population. This loan renewal will be used to assist FORGE in expanding its lending into rural housing and small business loans. Northcountry Cooperative Development Fund Minneapolis, Minn. Loan amount: $500,000 (renewal) The Northcountry Cooperative Development Fund (NCDF) is a member-owned financial intermediary that provides loans to cooperative enterprises. Its mission is to promote economic equity and community stability through loans to producer, worker, housing and consumer cooperatives in the upper Midwest. Loans are targeted to low-income communities and used for expansions, relocations, equipment, improvements, start-ups, real estate, home ownership and working capital needs. The loan provided by Catholic Health Initiatives will support the lending activities of NCDF. Shareholder Activism Catholic Health Initiatives also co-filed shareholder resolutions with several pharmaceutical and tobacco companies for the 2008 proxy season. This marks the eighth year of Catholic Health Initiatives’ involvement in shareholder resolutions, which are filed in collaboration with other mission-based investors. The resolutions filed with pharmaceutical firms address Catholic Health Initiatives’ deep concern about the current state of the national health care system and the need for reform. These resolutions were filed with Abbott Laboratories, Bristol-Myers Squibb Co., Johnson & Johnson, Merck & Co., Pfizer, Inc., Schering-Plough Corp., and Wyeth. A resolution filed with Eli Lilly asks that company to establish a policy that separates the roles of chief executive officer and chair. The separation of these roles would help facilitate an independent board structure that could improve the board’s ability to address complex issues, such as access to pharmaceuticals for disadvantaged populations. The resolutions filed with tobacco companies focus on four issues:
  • Stopping youth-oriented ad campaigns. This resolution was filed with Altria Group, Inc. Catholic Health Initiatives believes that tobacco companies have not sufficiently reviewed advertising campaigns to assure they effectively discourage smoking, which the companies claim is the intent. The resolution requests the company’s board to stop these advertising efforts unless they are proven to be effective in reducing teen smoking.
  • Discontinuing marketing that targets African-American communities. This resolution was filed with Loews Corporation. Research has shown significantly higher tobacco use in this population.
  • Reducing the nicotine in cigarettes. This resolution was filed with Reynolds American, Inc. The production and sale of nicotine-reduced or nicotine-free cigarettes for smokers could ultimately reduce smoking health hazards.
  • Endorsing health care principles. This resolution was filed with UST, Inc., which manufactures and markets smokeless tobacco products. Catholic Health Initiatives asked the company to assume the responsibility to advocate for health care reform, given that tobacco products, Including “smokeless” products, contribute to individual health hazards.
The proxy voting for these resolutions will take place in April and May. During the coming months, Catholic Health Initiatives advocacy staff will continue to dialogue with the companies to discuss the issues outlined in the resolutions.