Funds Exercise Muscle Over Principles
November 1, 1999
A consortium of 15 mutual fund and asset management firms has agreed to boycott the purchase of securities of Mitsubishi International of Tokyo. The group of investment advisers followed the recommendation of the International Fund for Animal Welfare, an advocacy group based in Yarmouth Port, Mass. The fund urged the actions against Mitsubishi because of a proposed salt production plant the company plans to build in Baja California, Mexico that the fund says will harm wildlife.
The consortium includes: Calvert Group of Bethesda, Md., Citizens Funds of Portsmouth, N.H., Crown Futures of Fairfield, Iowa, Domini Social Investments of Boston, Everest Asset Management of Fairfield, Iowa, First Affirmative Financial Network, a division of Walnut Street Advisors of St. Louis, Mo., Green Century Fund of Boston, Miller Howard Investments of Woodstock, N.Y., MMA (Mennonite Mutual Aid) Praxis Fund Group of Goshen, Ind., Parnassus Funds of San Francisco, Calif., Pax World Funds of Portsmouth, N.H., Prentiss Smith & Co. of Brattleboro, Vt. and Trillium Asset Management, Walden Asset Management and Winslow Management, all of Boston.
The animal welfare fund charges that Mitsubishi, in a joint venture with the Mexican government, intends to build and operate what would be the largest salt production plant in the world without regard to its impact on the environment. According to the fund, the area is a part of Latin America's largest wildlife sanctuary. The fund is particularly concerned that the proposed factory sits in the migratory path of the Pacific gray whales and that the whales use the site of the proposed project as their breeding ground, said Jared Blumenfeld, the fund's director of habitat. Moreover, the salt production process leaves a toxic residue that would be flushed into the surrounding bay and probably destroy other marine life, the fund said.
Stephen Wechselblatt, vice president of Mitsubishi International, who works out of the company's New York office, defended his firm's actions. Mitsubishi has agreed not to build the plant if studies being done by Mexican scientists and scientists from Scripps Institution in La Jolla, California persuade it not to, he said.
Research on the potential impact of the salt plant has already been done, according to Blumenfeld. A 1994 environmental impact report predicted the salt plant would harm the environment, he said. At that point the Mexican government refused to allow Mitsubishi to start the project. So Mitsubishi has commissioned and is paying for a second environmental impact report, which will presumably provide a favorable opinion, Blumenfeld said.
Blumenfeld said there are also problems with Mitsubishi's existing but smaller salt producing plant located 150 kilometers north of the proposed Baja California site. According to the fund, a Mexican environmental enforcement agency accused Mitsubishi of 298 violations in 1996, and in 1998 determined that the plant was responsible for the death of 94 sea turtles.
As a result, the fund asked the consortium of asset managers not to invest in Mitsubishi. Together, the group of 15 investment advisers manage $14 billion said Blumenfeld.
"We met with Mitsubishi in Japan, Mexico and the United States," said Blumenfeld. "We told them there's an economic price tag to what you are doing."
Wechselblatt said Mitsubishi would agree to meet with concerned fund managers and investment advisers to discuss the project.