Religious Funds Pressure Firms on Policies

When retail giant Wal-Mart rejected a request by the Timothy Plan to remove copies of Cosmopolitan magazine from racks in its checkout lines, the mutual fund group, which invests based on biblical principles, showed its displeasure by selling 9,200 shares of the store's stock.

When Kimberly Clark, which makes Huggies diapers and Kleenex tissue, began matching employee contributions in Planned Parenthood, the Ave Maria Mutual Funds, which manages its money according to Catholic principles, promptly sold 30,000 shares.

Increasingly, the growing number of mutual funds that invest according to religious principles have also become vocal advocates on a host of social issues, say industry watchers.

Such religious funds have increased dramatically in the United States. From just 34 such funds in 1999, the sector has increased to 75 funds in 2002, according to MMA Praxis Mutual Funds, a group of funds run by the Mennonite Church. That 121 percent jump compares to a mere 16 percent rise in the number of new mutual funds overall.

And they're not shy about their activism. This year has so far been the most active ever for religious shareholder advocates. Members of the Interfaith Center on Corporate Responsibility, a New York-based coalition of faith-based institutional investors, have filed 140 shareholder resolutions with 92 companies this year.

"They file the lion's share of social [shareholder] resolutions in the United States," said Tracy Rembert, director of shareholder programs for the Social Investment Forum, a Washington-based nonprofit group dedicated to promoting socially responsible investing.

Cosmo Clash, Tissue Tussle

The Timothy Fund crusade to get Cosmopolitan taken out of Wal-Mart's checkout aisles started last year after the fund's president, Arthur Ally, visited a store and was taken aback by the magazine cover's headlines.

"I handed [the magazine] to a supervisor and asked her if she would please read the cover to me and she turned beet-red and said, 'No,' " said Ally. "If it's too embarrassing to read, why would you have it there?"

Ally said he is just one of a group of ministries pressuring Wal-Mart to move "sexually explicit magazines" from the checkout lines to the magazine racks, not to quit selling them.

But Wal-Mart spokesman Tom Williams said each individual store decides how to stock its checkout aisles. "There are organizations that do approach us, and we try to listen to everybody," said Williams. "But our decisions are based on our customers."

As for the magazine itself, it responded to the campaign by saying, "American women have made Cosmopolitan the No. 1-selling women's title on newsstands in the U.S. because of its empowering information about relationships and careers, health and beauty, and other issues important to them. It's a magazine written by women and for women, and its editors believe in the First Amendment right to freely publish and display the magazine."

Similarly, the dispute with Kimberly Clark stock began late last year when the Ave Maria mutual fund, managed by the Schwartz Investment Counsel of Bloomfield Hills, Mich., heard the tissue paper producer had starting contributing to Planned Parenthood.

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