Natural Investing

The NI Social Rating^SM is a tool you can use to get a snapshot of social performance, but portfolio content is not a part of the Rating, as we do not attempt to evaluate every company in every fund. Investors are urged to consult a fund's website, quarterly reports, and annual reports to review a fund's portfolio holdings.

Jack and Hal developed the Rating in 1990 while writing Investing from the Heart (Crown), to give a simple graphic representation based on a qualitative evaluation of each SRI fund's screening process. They looked at the screens stated in the fund's prospectus and verified with the fund managers how they actually applied the screens, either informally or via written policy. Mutual funds were scored and then awarded a to  rating, with being a fund with minimum screening and given for a fund that was comprehensively screened on many social issues.

Nearly a decade later, Jack and Hal wrote Investing with Your Values (Bloomberg Press, 1999); during that span the SRI mutual fund industry had grown from 12 funds in 1990 to 55 mutual funds that had defined social criteria in their prospectus, plus over 100 others that qualified due to their selection of particular stocks and bonds. As a result, NI refined the Rating system and added new credit to funds that participate in Community Investing and Shareholder Activism.

The methodology used to compile the Rating addresses the three main strategies of Corporate SRI - Avoidance and Affirmative Screening, and Shareholder Activism - along with Community Investing. The mutual fund's application of each element is weighted and scored, and then the funds are ranked. Those in the lowest percentile group (0-20%) are awarded , those in the highest percentile group (81-100%) . Each fund is reviewed annually to determine its rating, and it is not uncommon for funds to rate differently from year to year given changes in their social responsibility policies.