TIAA-CREF Drops Coke from Social Choice Account
NEW YORK (Reuters) - Coca-Cola Co. has been ejected from the $8 billion
(4.38 billion pounds) TIAA-CREF Social Choice Account, a fund which
invests according to social criteria, officials of the pension fund
said on Tuesday.
The Coca-Cola position was sold after the fund's consultants said
the soft-drink maker did not meet requirements in areas relating to
marketing to children, and overseas worker rights and environmental
Herbert Allison, chairman, president and chief executive of TIAA-CREF,
disclosed the sale in a question-and-answer session at the annual
meeting of CREF, the College Retirement Equities Fund.
As of March 31, the last period for which figures were available,
the Social Choice Account had 1.2 million shares of Coca-Cola with
a market value of $52.4 million.
CREF has $184 billion of assets under management and TIAA-CREF together
manage more than $380 billion. The company provides retirement plans
in the academic, medical and cultural fields.
Amy O'Brien, TIAA-CREF director of social investing, said the Coca-Cola
shares were sold following a periodic review by KLD Research & Analytic
Inc. of its Broad Market Social Index. The latest reconstitution was
completed at the end of June.
KLD saw shortcomings on the part of Coca-Cola in several areas including
worker rights at overseas bottling plants, marketing of soda products
to children, and environmental issues related to water usage overseas,
Karin Chamberlain, manager of KLD Indexes, said in a phone interview.
"On the flip side, they do produce a very good corporate social responsibility
report and they are actively engaging with shareholders, but we find
that they are far too reactionary," Chamberlain said. "They are an
industry leader and they should be out in front addressing these issues."
Coca-Cola said in a statement: "KLD never discussed their decision
with us, and they left it to a misguided activist to announce their
action," referring to Ray Rogers, director of a group called "Campaign
to Stop Killer Coke," who attended the CREF meeting and issued a statement
about the divestment.
"The decision does not reflect the significant progress we have made
on the issues cited by KLD," Coca-Cola said. "Socially responsible
investing is a very important and serious activity. It must be based
on hard facts and clear information, not innuendo and supposition."
Chamberlain said Coca-Cola had been in the Broad Market Social Index
since it was launched in January 2001.
Boston-based KLD reviews companies in the Russell 3000 Index and removes
many based on exclusionary screens, such as whether its basic business
involves tobacco or gambling.
KLD also uses "qualitative" screens to do with issues such as corporate
stewardship or workplace issues, O'Brien said.
Coca-Cola remains in KLD's Domini 400 Social Index, which is tracked
by the $2 billion Domini Social Equity Fund. The index is also licensed
to clients who use it to track performance of socially screened portfolios.
The TIAA-CREF Social Choice Account is the major fund that is affected
by the change in the Broad Market Social Index.
The fund has more than 430,000 investors and is billed as the world's
largest social fund for individual investors.
Critics of Coca-Cola at the CREF meeting said they were pleased with
the removal of the company from the fund.
Neil Wollman, a professor of psychology at Manchester College in North
Manchester, Indiana, said, "It's a good move but it could have happened
Wollman has been a persistent critic of TIAA-CREF for what he calls
foot-dragging on social investment issues. Nevertheless, he said he
was pleased with steps taken since O'Brien joined the organisation
a little over a year ago.
In May, TIAA-CREF formed a new Social and Community Investing Department
within its Asset Management area.
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