In 2006, Parnassus Investments (http://www.parnassus.com) added an exclusionary
ID: 1172479 • Letter: I
Question
In 2006, Parnassus Investments (http://www.parnassus.com) added an exclusionary screen to exclude investing in businesses involved with Sudan when the international community recognized the Darfur region conflict as genocide. Do you agree or disagree with these criteria for a SRI investment? What might be unintended consequences of a screen like this? In 2006, Parnassus Investments (http://www.parnassus.com) added an exclusionary screen to exclude investing in businesses involved with Sudan when the international community recognized the Darfur region conflict as genocide. Do you agree or disagree with these criteria for a SRI investment? What might be unintended consequences of a screen like this?Explanation / Answer
Do you agree or disagree with these criteria for an SRI investment?
Yes, when considering a country/company for the investment we have to look at the business environment in which it operates. A country which is identified for genocide by the international community does not invoke investor confidence whether in terms of Law and order nor in terms of political stability. So it would be advisable to stay away from such high-risk investment as they result in violations of the sanctions put in place by the international governments. This results in Legal risks and litigation expenses to the investor.
What might be unintended consequences of a screen like this?
As a result of these decisions, the economy of the country in question would be deprived of investment capital and this would further weaken the economy and result in more domestic violence. Effective solutions are found to problems when education and employment opportunities are made available to citizens but as a result of the exclusion these facilities become harder to the suffering economy/Country
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