Calvert Takes Harder Line on Corp. Rule Stretchers

August 22, 2002 ( - A major socially conscious investment firm has added a new set of corporate governance and business ethics guidelines to its social investment criteria.

Essentially, the new guidelines adopted by Calvert state that the firm will not invest in companies whose corporate governance and business practices have “compromised the interests of shareholders”, though Calvert says it will also avoid companies that have engaged in serious securities fraud, and whose corporate governance is significantly worse than that of its peers.
“Calvert’s social analysis has always included several facets of corporate governance,” said Barbara J. Krumsiek, President and CEO of Calvert in a press release. “Now, we examine data on fifty-one separate issues pertaining to corporate governance when conducting our company analysis.”

Noting that firms with poor governance are “more likely to stretch the rules”, Calvert says those fifty-one items include:

  • independence and diversity of boards and key committees
  • compensation of executives and directors
  • the quality and independence of auditors; corporate charters and bylaws
  • the degree to which shareholders are informed and consulted on material items such as anti-takeover provisions and stock option plans.

Calvert has also published a special Web based report entitled Rebuilding: Corporate Ethics and Investor Confidence .