December 2004 | Letters to the Editor
Response to Paul Hawken
We were disappointed with the errors in Paul Hawken’s article “Is Your Money Where Your Heart Is?” (October). Pax World Funds was not contacted about the article prior to its release, and we would like to set some of the facts straight.
Pax World has never owned General Motors. In the past, we held Hughes Electronics (consumers know it as DirecTV) which later was listed as a tracking stock of GM. Last year, Hughes was acquired by News Corp and has since been spun off as DirecTV.
In the article, the author’s approach is to isolate one aspect of socially responsible investing (SRI) and analyze it. Pax World and the other SRI mutual funds named in the article utilize screening AND advocacy AND community investing. These are irrevocably intertwined strategies to examine one without the others is like critiquing a house’s architectural style when all you see is the basement. He condemns Pax World’s investment in Chesapeake Energy because Chesapeake has only white men on the board of directors. However, he omits the fact that we WITHHELD our vote for every director candidate because of their lack of diversity.
Mr. Hawken also states that SRI portfolios use the Dow Jones Industrial Average as a performance benchmark. This is false. The Securities and Exchange Commission requires all mutual funds to compare their performance to a relevant benchmark, in order to help investors conduct apples-to-apples comparisons. Mutual funds have different strategies, and it would be meaningless to compare a bond fund or a conservative balanced fund to the DJIA. All annual reports must name the fund’s benchmark and show performance comparisons.
We agree with Mr. Hawken that the SRI industry is not perfect. SRI practitioners have been discussing our definition and our message for years. This is not an easy task, because SRI is driven by the diverse values of its members. Our values are not better than yours; neither are Mr. Hawken’s. We encourage your readers to do their own research, analyze SRI’s integrated strategies of screening, advocacy, and community investing, and then decide for themselves.
Sincerely,
Pax World Funds
Correction: Pax is correct. The Pax World Balanced Fund held a General Motors tracking stock (GM “H” class) for Hughes Electronics as of June, 2003. We regret the confusion.
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