Investing in rights

BOSTON – The financial disclosures investors get in the mail from mutual fund companies don’t normally capture Nancy Prindle’s attention.

Then again, the dry brochures rarely delve into anything as gripping as the bloodshed in Sudan’s Darfur region – a topic that has inspired action from Prindle, a Delaware, Ohio woman who counts a handful of Vanguard Group funds in her retirement nest egg.

“I don’t have any idea what ought to be done in the Sudan, but I don’t want to help fund what is going on,” Prindle said about the conflict in Darfur, where the United States accuses the Sudanese government of committing genocide.

The 63-year-old educational consultant said she was “horrified” to recently learn that five Vanguard funds invest in a Chinese company exploring for oil in Sudan.

So Prindle cast a yes vote on an activist-backed proxy ballot proposal on human rights that Vanguard mailed to millions of its investors, leading up to a July 2 special shareholder meeting in Scottsdale, Ariz.

A handful of large fund companies – among them, T. Rowe Price Group Inc. and TIAA-CREF – are now confronting and even embracing the idea that they should screen out investments that may be linked to human-rights abuses abroad.

The willingness of some big mainstream companies to address issues they once tried to avoid is creating new options for investors. In the past, the big players mostly left socially responsible investing to boutique firms whose funds aren’t typically included in employers’ 401(k) plans.

Vanguard says it’s recently begun screening companies across all its 157 funds to identify any company “whose direct involvement in crimes against humanity or patterns of egregious abuses of human rights could warrant engagement or divestment.”

Shareholders at 14 Fidelity Investments funds rejected proposals similar to the one at Vanguard, with the measures typically achieving support of 20 to 30 percent. Fidelity doesn’t screen any of its more than 400 funds based on social criteria, although spokesman Vin Loporchio said his company “may, however, take the potential effect of political or social actions of a company into consideration” when making buy-or-sell decisions.

Another major player, T. Rowe Price, recently stepped up monitoring of potentially problematic companies to address what it calls “extra-financial risk” from investments. Its policy says the company determined the “risks outweighed the potential benefits” from investing in companies doing business in Sudan, so it sold off Sudan-related holdings.

However, T. Rowe Price leaves open the possibility that it could reverse course – its policy says the company “may change our thinking about this particular risk factor in the future.”