NorthStar's history of social investing

NorthStar has always been on the cutting edge of socially responsible investing (SRI). As one of the first members of the Social Investment Forum at its founding in 1984, Ms. Goodridge, founder of NorthStar Asset Management, Inc. has always used the strictest social criteria in selecting investments for clients. In the mid-1980s, divestment was the first line of attack for creating a social portfolio, followed closely by investment in "good" companies. The best social investments could be found most easily in small and mid-cap companies. Clients were happy to own names like Ben & Jerry's, Safety Kleen, HB Fuller, Maytag and Herman Miller, with no military contracts, no animal testing, good environmental records, excellent product quality and safety, exceptional corporate citizenship and employee relations. These companies provided excellent social and financial returns.

After the deep market decline in 1987, the first companies to gain favor were, however, the large and mega-cap companies, many with subsidiaries abroad, diversified products and complicated corporate structures. Social investors now needed a way to carefully examine the universe of large cap companies to maintain competitive financial returns. The development of the Domini Social Index and the corresponding screening criteria created by Kinder, Lydenberg and Domini (KLD), gave social investors new tools to create broader, more diversified portfolios. Unfortunately, even with this research, it was clear that most large companies had some aspect of their profits, production of their products, environmental impact or corporate policies that was worth questioning from both a socially and financially responsible perspective.

While divestment and positive investments intitally felt like the most effective way to do SRI, the need to invest in mega-cap, international companies forced us to reevaluate the true impact that investors had on social change.

In 1993, NorthStar began to focus more attention on the shareholder proxy process in an effort to hold large companies accountable for their social impact. Initially we encouraged our clients to vote their proxies by publishing the NorthStar Proxy Voting Guide. This was the first booklet of its kind that helped clients cross-reference their stock holdings with pending social resolutions and vote according to their values. In 1998, NorthStar Asset Management, Inc. began to vote proxies on behalf of our clients.

NorthStar's motivation is for proactive social change. In 2000, NorthStar filed its first shareholder resolution. Since that time our shareholder activity has increased exponentially and is now an integral part of the social investment process at our company. While some shareholder advocates utilize "backroom dialogues" as a method to engage corporations, NorthStar contends that companies are more apt to change their policies if their reputations are at risk through media attention and shareholder pressure. We believe that when shareholders and the public are educated about an issue, they will be more likely to hold the company accountable for its actions and policies.