Today, the UUA Socially Responsible Investment Committee (SRIC) is announcing that the UUCEF (Unitarian Universalist Common Endowment Fund) has a new screen that places a spotlight on human rights.  Previously, human rights was merged in our screening process with other issues, but is now being considered on a stand-alone basis to allow for focus and clarity.

Companies with a pattern of many human rights violations have always been excluded from the UUCEF.  In the past, however, companies with isolated human rights controversies could be included in our fund if they were otherwise strong performers on the wide range of environmental and social issues the SRIC considers.  The previous methodology reflected our experience that companies with generally good sustainability practices may still have occasional problems, but are often responsive to stakeholder concerns and act to remedy these problems.  Since it was previously difficult for us to judge whether a given company would or would not act to remedy a particular controversy in the future, our screening methodology essentially presumed that companies with generally strong environmental, social and governance profiles were likely to do so.

Newly available data allow the SRIC to be more discerning in our approach.  A company that is deemed to have a human rights controversy triggers their exclusion from the non-comingled portion of the portfolio.  As noted in the recent UU World article, several holdings changes in the UUCEF have flowed from those human rights screening changes, including the screening out of Caterpillar, Motorola Solutions, HP Inc., and Hewlett Packard Enterprise.  These companies had previously been held in the ~25% of the UUCEF that is focused on domestic equities in separately held accounts, where SRIC screening rules are applied.  Because we added a spotlight in our screening on human rights, we have improved our ability to pre-emptively screen out domestically-based companies with human rights controversies from the UUCEF regardless of whether they are seemingly well rated in other dimensions of socially responsible investing.

With this screen-based approach, companies complicit with human rights abuses that end their abusive involvement will automatically have the potential to flow back into the UUCEF.  The SRIC prefers screenings that allow the UUCEF to automatically re-acquire shares of companies that improve their behavior sufficiently so as to no longer be considered to be in a controversy.

The screening process the SRIC maintains will continue to improve with time and changes in the available socially responsible investing tools in the financial world.  As the amount of assets invested in a socially responsible manner has roughly tripled in the last decade, more partners, tools, and financial assets have made our task easier.  More investors driving change with their assets will continue to add investment choices, company level information about SRI, and partners in shareholder activism.  These improvements in the investing environment have had a dramatic impact on how the UUCEF manages its assets, and we will continue to improve the SRI characteristics of the UUCEF going forward.