Unitarian Universalists have a history of putting their money where their values are. So perhaps it’s not surprising that support for ethical investment practices among UUs is overwhelming.
The UU Common Endowment Fund (UUCEF) manages about $265 million in UU assets, of which about half are Unitarian Universalist Association funds and half are investments by local UU congregations. Since 2009, the endowment has filed fifty-five resolutions at corporations it holds stock in, seeking climate commitments, protecting LGBTQ+ rights, requesting disclosures of data on race and employment, and more.
With this fund, the UUA seeks both to earn a positive return on investment and advance core UU values through three main strategies: investment selection, corporate shareholder engagement, and community investing. The service enables congregations to build a diverse portfolio rooted in UU ethics that would be financially impractical to achieve individually.
“We try to take a comprehensive view of what it means to be a socially responsible investor.”
“We try to take a comprehensive view of what it means to be a socially responsible investor,” says Andrew McGeorge, the treasurer and chief financial officer (CFO) of the UUA. “We seek to invest in values-aligned companies, screen out those whose practices don’t match UU values, and exert pressure through shareholder activism to improve corporate practices. Our endowment also works to advance equity by investing in communities where our capital is used to advance entrepreneurial opportunities for businesses owned by women and people of color.”
The endowment’s largest investment is a positively screened index fund called RhumbLine, which attempts to track the performance of the Russell 1000 Index (a diversified market index that tracks some of the highest-ranking stocks and is managed by a subsidiary of the London Stock Exchange Group) while investing only in corporations that score well on environmental, social, and governance (ESG) criteria.
Going beyond selection criteria, shareholder activism is enjoying an uptick in success, says Tim Brennan, former treasurer and CFO of the UUA, and former CFO of the UUCEF. “The last eighteen months have been a wild ride” for such activism, Brennan says. Resolutions like calls to set emissions targets aligned with limiting global temperature increase to 1.5°C were previously seen as measures to get companies to the table. Yet many environmental proposals (mostly involving climate impacts) now win majority support. According to international law firm Slaughter and May, average shareholder voting support for environmental measures at U.S. firms increased from 36 percent in 2020 to 55 percent during the first half of 2021.
Shareholders also employ resolutions to address other UU justice priorities such as LGBTQ+ rights, racial justice, and economic justice.
Within UU communities, tactical preferences vary. A 2014 business resolution set the UUA’s policy of both divesting from fossil fuels and engaging with fossil fuel companies through shareholder advocacy. This twin approach was affirmed in the 2020 business resolution on Embodying Human Rights in Investing Decisions (PDF), which the UUCEF is currently implementing. In 2021, the UU Young Adult Divestment Caucus successfully promoted a General Assembly responsive resolution supporting additional divestment from banks financing fossil fuel projects. The Investment and Socially Responsible Investing Committee members, however, are first pursuing engagement with these banks rather than divestment.
“Engagement gives us the opportunity to change the business.”
“When an investor divests from a position, it simply represents a change in ownership of the shares,” says McGeorge. “The underlying activity of the corporation continues unabated. Engagement gives us the opportunity to change the business.”
Yet McGeorge recognizes “the threat of divestment must underpin an effective engagement strategy” in the event a corporation is unresponsive to its shareholders.
The goals and tactics of Socially Responsible Investing (SRI) continue to evolve.
Community investment innovations are at the forefront, working to create solutions to pressing problems and offer people the chance to invest in their own neighbors.
Community investment innovations are at the forefront, working to create solutions to pressing problems and offer people the chance to invest in their own neighbors rather than in Wall Street. For example, the disappearance of housing and commercial real estate that local residents can afford damages communities of all sizes. In response, real estate investment trusts are emerging to serve a dual purpose of enabling investors to profit while preempting absentee-owned corporations from taking over property and displacing locals.
McGeorge notes the UUA Investment and SRI Committees, which advise staff, review engagement priorities annually and invite new approaches (meetings are open to concerned UUs for observation). UUCEF believes strategic investing—in coordination with the democratic action that is central to Unitarian Universalism—can be an integral component of realizing our principles.
Fifty-five years ago, a UUA General Assembly resolution called on trustees who managed the UUA’s funds to “exercise the power represented by the Association’s ownership of common stock as an effective instrument for promoting social justice.” While SRI was relatively obscure, the UUA already had generated positive results to spark the resolution. Using its status as a shareholder, the UUA teamed with allies in 1966 to persuade Eastman Kodak to hire more Black residents from within its host community of Rochester, New York.
Investment in entrepreneurs, which comprises five percent of all UUCEF holdings, typically occurs through local nonprofits like the Enterprise Center in Philadelphia, which provides guidance along with funding to would-be business owners.
The UU endowment investments might be modest compared to many institutional investors but are part of a larger force for change. Through the Interfaith Center on Corporate Responsibility, UUCEF partners with over 300 entities that collectively use $4 trillion in assets to push shared concerns. The collaboration provides members serious clout to promote priorities like reducing carbon emissions, eliminating forced labor, increasing healthcare access, and expanding sustainable food systems.
Attempts to pass laws divesting state and local government funds from fossil fuel companies are spreading after Maine became the first U.S. state to pass such a law in 2021. Such efforts in heavyweight investors like New York and California have provoked corporate front groups like the American Legislative Exchange Council (ALEC) to try stifling democratic activity in this realm. Working with some right-wing state legislators, ALEC is promoting state laws that prohibit government and public retirement funds from considering ethics in their investment decisions.
To be clear, shareholder advocacy has plenty of critics who challenge whether resolutions and commitments reliably lead to meaningful impact. UUA Executive Vice President Carey McDonald says, “Questions about how we use and invest our money get to the heart of what it means to live our UU values. We are all a part of, and implicated by, our incredibly destructive global capitalist system.” He adds, “Through UUCEF, we try to find the most ethical ways forward to both support our faith financially and advance our values in the world—it is a never-ending path of discernment and dialogue.”