Polluted Portfolios

Seldom has the environmental establishment been so embarrassed. A recent Los Angeles Times story reported that many major organizations in the movement "have sought to increase their income by investing in the very companies that they criticize most." The stock portfolios of the Sierra Club and the Sierra Club Foundation have included securities of such frequent targets as General Motors, U.S. Steel, Tenneco, Weyerhaeuser Co. (timber) and Exxon. The Environmental Defense Fund also holds Exxon, even though the fund fought a court battle against the Alaska pipeline, in which Exxon owns a 25% interest.

FOE'S Way. The National Audubon Society has leased out gas and oil rights on its hitherto pristine Paul J. Rainey Wildlife Sanctuary in Louisiana. Washington, D.C., Attorney H. David Rosenbloom, an expert on the social aspects of investments, drew the obvious moral: "If your investments are operating to the detriment of the things for which you stand, there's a question as to how much good you're doing."

Last week the wounded environmentalists lamely struggled to explain their polluted portfolios. Argued E.D.F.'s Berkeley director, Tom Graff: "We can't invest in companies doing environmentally beneficial things, companies in solar energy or scrap iron, for example. If we did, it would look like we were promoting our economic interest when we took a stand on an issue." Added Colburn Wilbur, executive secretary of the Sierra Club Foundation: "Every time we drive, fly or eat we are helping the polluters. We don't have a pure investment portfolio. I don't think we could if we tried."

Professional money managers disagree. They point out that some investment funds already exist--the Dreyfus Third Century Fund is one--that carefully screen polluters out of their holdings. On the other hand, environmental groups could avoid the issue entirely as Friends of the Earth does: FOE sells contributions of stocks and bonds immediately and puts the proceeds to work fighting polluters.

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