Power of One

With his 20-plus-year campaign for change, Neil Wollman helped move his retirement fund toward socially responsible investing. By David Moberg

Promotional dollars created to publicize Neil Wollman's Social Choice For Social Change campaign.

In 1984, Neil Wollman wrote a letter to the Teachers Insurance and Annuity Association-College Retirement Equities Fund (TIAA-CREF), innocently beginning a long campaign that proves how the persistent efforts of one person can change large institutions. Wollman, then a psychology professor at Manchester College, a small school in north central Indiana, invested money in TIAA-CREF for his retirement. In his letter, he asked the fund to divest from companies that did business in South Africa or built nuclear weapons.

TIAA-CREF, one of the nation’s largest retirement investment groups, was unlike many other pension and investment firms that care only about short-range financial returns. It has had a long history of shareholder activism, especially for reform of corporate governance. But there were limits to TIAA-CREF’s social engagement, and many corporations in which it invested profited from oppressive and socially unacceptable practices.

Wollman was an unusual candidate to play the role of social activist. As a political-science student at Northwestern University during the Vietnam War, he was a passive observer of campus anti-war activities. He was ideologically sympathetic to libertarian novelist and philosopher Ayn Rand and espoused a philosophy of the “radical right”—almost anarchism. But shortly after arriving at Manchester, he encountered Ken Brown, a professor in the school’s peace studies program. The two engaged in lively conversations that led to a change in Wollman’s outlook on the world.

Political movements against South African apartheid and nuclear weapons in the early 1980s also influenced Wollman. Not wanting his retirement investments to support corporations whose operations conflicted with his values, he asked TIAA-CREF to establish an alternative investment fund. In response, he got a form letter stating that the financial-services company could not divest as Wollman had requested. The letter did not address his proposal for a socially conscious alternative fund.

Wollman began organizing to pressure TIAA-CREF to change. Under the organizational name of “Clean Up TIAA-CREF” (sometimes shortened to “Clean Up CREF”), Wollman recruited two other academics—his mentor and friend Ken Brown and Donald Pelz of the University of Michigan.

“We just got other people interested through brochures, conferences, little pieces in activist newsletters, and word of mouth,” Wollman says. “It was always part-time and extracurricular. People were always surprised at the influence there was on such a big group as TIAA-CREF from an organization working on the margins.”

Clean Up TIAA-CREF asked people to write letters in support of a socially conscious alternative investment fund. It organized a small contingent of protestors to picket and give speeches at TIAA-CREF annual meetings. Supporters pushed their demand for an alternative fund and received publicity in prominent publications, including The New York Times and Business Week.

TIAA-CREF officials “actively fought [against the alternative fund] for a number of years and gave reasons why they couldn’t do it financially or legally,” Wollman says. “Whether they investigated it or not, I don’t know.” But the letters and protests had their effect, especially since a broader social movement on behalf of socially conscious investing was growing. Some retirement funds were demonstrating that investing could be both profitable and guided by social or ethical concerns.

In 1990, TIAA-CREF agreed to launch a Social Choice Account, which has now grown to about $9 billion in a mixture of stocks and fixed-income investments (out of a total of more than $400 billion in all of TIAA-CREF’s 40 funds). “The Social Choice Account came about because of participant demand,” says Amy O’Brien, a director of social and community investment at the fund. “Higher education folks really care about their values alongside their investment strategies.” O’Brien says. “For many years we’ve been in dialogue with them.” Now about 430,000 out of 3.2 million TIAA-CREF participants, especially younger investors and highly educated women, put some investment in the Social Choice Account.

Wollman disbanded Clean Up TIAA-CREF after the Social Choice Account was established but continued informal dialogue with TIAA-CREF officials. He later restarted campaigning under a new name, Social Choice for Social Change. His new goal was to pressure TIAA-CREF to go beyond the “negative screens” on investment that are designed to exclude companies that do bad things, like sell tobacco, and adopt “positive screens” to seek out companies that do social and environmental good. He also pushed for community investing—investments targeting needy communities that typically lack access to capital.

Experts often divide socially responsible investing into three categories: social screening of investments, shareholder activism, and community investing. While negative screening makes investors feel better about where their money is used, shareholder activism and community investing can have more noticeable influence by changing corporate policies or directly supporting positive investments, such as affordable housing or renewable energy.

Through Social Choice for Social Change, Wollman escalated the public pressure for a proactive, positive investment strategy for the Social Choice Account. He recruited new supporters and won institutional support from groups such as the Union of Radical Political Economists, the National Women’s Studies Association, and Psychologists for Social Responsibility. In the late 1990s, he collected pledges of financial support for the Social Choice Account if it incorporated community investing in its portfolio. Ultimately, about 700 individuals pledged to invest $17 million in the account if TIAA-CREF pursued community investments.

Around 2000, Wollman grew interested in working with various campaigns that were criticizing specific corporations for their labor, environmental, and social policies. He started a new coalition, Make TIAA-CREF Ethical, with a variety of other groups campaigning for major pension funds and investors either to divest from or to directly influence big, miscreant corporations, such as Philip Morris/Altria (promoting smoking), Nike and Wal-Mart (sourcing from sweatshops), Chevron (benefiting from slave labor in Burma), Costco (destructively siting stores in Mexico), and Coca-Cola (linked to paramilitary killings of labor leaders in Colombia). Coalition members include groups such as the U.S. Campaign For Burma, Corporate Accountability International, Press for Change, Campaign to Stop Killer Coke, Sprawl-Busters, and the National Community Reinvestment Coalition.

TIAA-CREF rejected demands to influence these companies, arguing that its practices followed well-respected social screens. “As a provider of pensions to over 2.8 million participants, we cannot use participant assets to debate the activities of one company over another,” TIAA-CREF representative Dan Lindner wrote to the coalition in 2005, ruling out divestiture. “The Social Choice Account is managed in strict adherence to the Broad Market Social Index (BMSI), the most far-reaching socially screened index today.”

Wollman recruited support from well-known progressive academics, such as Noam Chomsky, Howard Zinn, and Dennis Brutus, but the number of investors actively involved in the continued protests was small. Eventually he won additional support from teacher organizations, such as the Professional Staff Congress of the City University of New York, which in 2007 persuaded the 600,000-member New York State United Teachers coalition to support greater TIAA-CREF shareholder activism in support of labor rights.

Despite securing various supporters and partners over the years, Wollman ultimately has done much of the work on his own with little financial help. He cut back on his teaching and his salary at Manchester to devote more time to his organizing.

In 2007, Wollman shifted his academic base to Bentley College, in Waltham, Mass., though he still lives in Indiana. Often he works through quiet dialogue with TIAA-CREF officials, and in 2004 even ended his lobbying efforts after TIAA-CREF assured him that his proposals for more proactive, community investments were “doable” and would soon be implemented. “We have met our part of the ‘bargain’ by refraining from more assertive tactics,” he wrote to TIAA-CREF a year later, “but we have very little to show for it.”

Social Choice for Social Change revived its pressure for community investment in 2005, but internal momentum for change was also building at TIAA-CREF as the company increased its staff responsible for socially responsible investing. And a 2006 survey of TIAA-CREF investors found that 83 percent of Social Change Account investors—and even 67 percent of General Account investors—strongly or somewhat agreed that “ensuring that my investment decisions reflect my personal values about social and environmental impacts” is most important in making investment decisions.

Clearly there was wide support for socially responsible investing. More investors and fund managers are beginning to understand that social dividends do not have to come at the expense of financial returns. “We are the only institutional investor that has done a survey of our investor base,” says O’Brien, which “helped inform our strategy for expansion [and] demonstrated broad interest in a strategy for the double bottom line,” both financial and social returns.

By 2007, TIAA-CREF had made significant steps toward more socially responsible investing, in both its Social Choice Account and General Account. It had established a Social and Community Investing Department, expanded its Corporate Social Real Estate program, which includes affordable-housing investment, launched a Community Bank Deposit Program with a $22-million purchase of a certificate of deposit at Shorebank (the Chicago-based community-development banking company), and started a $100-million Global Microfinance Investment Program.

It also implemented one of the reforms sought by Wollman, creating a program within the Social Choice Account for proactive social investments that includes community lending. Previously, TIAA-CREF had negatively and positively screened investments, giving special attention to investments in affordable housing, renewable energy, and economic development.

With the new proactive fund, it has set a target of investing 2 percent of the Social Choice Account in projects with high social impact outside the traditional equity and bond holdings. These include investments in the International Facility for Immunization (speeding vaccinations in developing countries), New York State Environmental Facility Bonds (for pollution control and clean water facilities), and affordable-housing bonds.

TIAA-CREF also makes what could be considered community investments, or social venture-capital investments (more speculative up-front investments with a double bottom line), through its General Account. “The General Account investments, unlike the Social Choice Account, are private, and not traded daily,” which makes it easier to incorporate both real estate and unorthodox investments, explains Cherie Santos-Wuest, a director of the social and community-investment department.

Beyond conventional real-estate investments in urban office and apartment buildings, the Corporate Social Real Estate Program—financed from the General Account, not the Social Choice Account—increasingly focuses on workforce-housing development, aimed at creating housing for moderate-income workers, especially in areas where the gap between housing costs and median income has risen rapidly.

“Often there’s more than the double bottom line from these investments,” Santos-Wuest says, “because many of the new developments will be ‘green’ and built by minority developers.”

The Corporate Social Real Estate Program also focuses on reviving or creating retail in minority and low-income communities abandoned by mainstream retailers, encouraging in-fill development of housing and retail in cities and older suburbs, and supporting transit-oriented development.

The new investment in community banking, financed from the General Account, is already paying off. “Shorebank really specializes in investing in underinvested communities, and we have more loan demand than our ability to finance locally,” says Shorebank executive vice president Jean Pogge. “So when TIAA-CREF put in $22 million, it was enormously helpful. It was translated right away into lending because our loan growth is that strong.”

Many of the working-class, principally African-American and Latino homeowners from South and West Side Chicago neighborhoods served by Shorebank are now turning to the bank for “rescue mortgages.” Subprime borrowers with adjustable interest rates that are suddenly shooting upward can turn to Shorebank, which works closely with them to get fixed-rate mortgages and avoid foreclosure.

The new TIAA-CREF initiatives—including community investment in the Social Choice Account, microfinancing, Corporate Social Real Estate, and community banking—excite people like Timothy Smith, president of the Social Investment Forum, an organization of financial advisers, mutual funds, foundations, and others promoting socially responsible investing. “I think TIAA-CREF has not just moved forward for itself but has become a thought leader in taking environmental, social, and governance goals for investment into account,” he says. “I don’t mean they’re at the front of the pack, but their policy statement on governance, especially since it comes from a fund of $420 billion, is a powerful statement that these issues can’t be ignored by the investor community.”

Smith gives Wollman’s campaigns, as well as broader changes in society, credit for the change in TIAA-CREF policies. “I’m sure that the TIAA-CREF campaign [that Wollman led] would like to say it’s a result of their initiative, and that’s not unimportant,” he says. “It’s been a sustained voice from members. But another factor that’s probably even stronger is that [TIAA-CREF officials] are legally fiduciaries. They’re responsible for taking care of that money.” And investing in companies like Enron, or many socially irresponsible companies, can be costly.

John Taylor, president of the National Community Reinvestment Coalition (NCRC), a coalition of 600 nonprofit groups that began supporting Wollman’s campaign in 2000, is a little less impressed with TIAA-CREF’s own initiative and gives more credit to the campaign. “I’m pleased that [TIAA-CREF officials] have responded somewhat, but given their capacity, they could do so much more,” Taylor says. “It’s still a trickle what they’re contributing to socially responsible investments. They’re laggards, not leaders, most definitely.”

“I do think the [protest] groups have had an impact, but it’s David and Goliath,” Taylor says. “I think it’s been almost like water dripping. If you wait long enough, it drills a hole through the rock. I’m in awe [of] Neil and others who are part of the coalition, who continue to hammer away against all odds [at TIAA-CREF] and are really having an impact.”

Jeff Ballinger, organizer of Press for Change, a Nike critic that is part of Make TIAA-CREF Ethical, thinks that the growing involvement of teacher organizations may strengthen the ad-hoc coalition. The TIAA-CREF campaigns have “limped along year to year mainly through efforts of Neil to keep people active,” Ballinger says. “But, he has won some struggles in the corner he has focused on, which is the lending.” Ballinger argues that organizational muscle will be needed in the fight to use TIAA-CREF investments as a way to change the behavior of big corporations, like Nike.

Over the past decade, socially responsible investment overall has surged—from $639 billion in 1995 to $2.29 trillion in 2005. Shareholder challenges, especially on governance issues like executive pay, are growing more effective. Maybe TIAA-CREF would have caught the wave at some point on its own, but there is no denying that the shoe-string campaign of Neil Wollman and his allies played a major role in making the giant investment company eventually do what its investors wanted—to do good while making money. Wollman thinks TIAA-CREF can do even better, and he’s not stopping until they do.

David Moberg is the senior editor of In These Times, a magazine dedicated to informing and analyzing popular movements for social, environmental, and economic justice.

Published by the National Housing Institute