History of Terror-Free Investing

How did Terror-Free investing start?

In 2001, the Securities and Exchange Commission (SEC) determined that companies with business operations in terrorist-sponsoring states are exposed to a new risk category known as global security risk.

Conflict Securities Advisory Group, Inc. (CSAG) was formed in 2001 when several major pension systems began asking for data related to this new investment risk category. CSAG is an independent, impartial research firm based in Washington, DC that specializes in identifying and profiling the activities of publicly traded companies in U.S. State Department-designated terrorist-sponsoring states. In total, CSAG profiles more than 550 companies in its Global Security Risk Monitor (Monitor) online database.

The Monitor is the most comprehensive database of U.S. and foreign publicly traded companies with business ties to U.S. State Department-designated terrorist sponsoring states. Among the Monitor's more prominent clients are the SEC, the office of New York City Comptroller Bill Thompson, which oversees the $100 billion New York City employees' retirement systems, the Missouri State Employees Retirement System, the State of Arizona and dozens of the world's leading asset management firms. Go to www.conflictsecurities.com for more information.

Following the airing of a 60 Minutes segment entitled "Doing Business with the Enemy" in 2004, CSAG has increasingly been contacted by investment advisors, asset management firms, index providers, state treasurers, state legislators, individual investors, universities, foundations and pension systems that wanted to know how their data could be used to pursue Terror-Free investing strategies. Terror-Free investing is the term applied by the markets to any investment strategy that excludes some or all companies that do business in or with Iran, Syria, Sudan, and/or North Korea.

Based on CSAG's expertise and exclusive focus on such business ties, investors and asset managers have, in many cases, chosen CSAG to help develop such screens that in many cases require expert analysis of investment policies that define Terror-Free Investing from an exclusion criteria perspective. For example, today, most Terror-Free investing policies use an increasingly standard market definition: "Exclude companies with active or current ties to Iran, Syria, Sudan, and/or North Korea that are non-humanitarian in nature." To develop the screen based on this definition, CSAG uses its expertise to analyzes the roughly 550 companies in its Monitor database to determine those companies that meet the criteria for exclusion. Some investors choose to exempt, for example, firms with consumer goods ties to these countries (e.g., a firm that sells soft drinks into these countries). In such a case, the screen would be adjusted to allow for such an exemption.

More recently, demand has grown to such an extent that fiduciaries and asset managers alike have determined that the most cost effective and non-disruptive approach to investing Terror-Free is via products that have been certified to exclude non-compliant firms. For example, rather than working with investors on a case-by-case basis to establish policies and develop screens to overlay existing portfolios, CSAG increasingly works with firms that provide products in the market for use by many investors. A mutual fund is one such product. Rather than working with an individual client to develop a Terror-Free screen, CSAG can and does certify the product—in this example a mutual fund—to be Terror-Free, thereby making this strategy widely available and ensuring that anyone who invests in such a product knows their portfolio is Terror-Free.

Going forward, investors can expect to find an increasingly vibrant marketplace of investment products and services to choose from that have been Screened and Certified Terror-Free by CSAG, much as any investor that chooses a Green approach in today's markets can simply ask their financial advisor or money manager for such an option.

Learn more about Terror-Free investing options for individual investors, institutional investors, asset managers, and mutual fund providers.

Milestones in Terror-Free Investing

May 2001
Securities and Exchange Commission (SEC) declares view that corporate ties to
U.S.-sanctioned states represent a possible financial risk for investors.

June 2001
Conflict Securities Advisory Group (CSAG) initiates research to identify corporate ties to state-sponsors of terrorism.

April 2002
CSAG launches the Global Security Risk Monitor, the first database to catalog corporate ties to Iran, Syria, Sudan and North Korea.

January 2004
60 Minutes features segment on Terror-Free investing, entitled "Doing Business with the Enemy," featuring CSAG founder Roger Robinson.

March 2004
SEC creates Office of Global Security Risk to enforce disclosure of corporate ties to terrorist-sponsoring states.

March 2005
First Terror-Free certified mutual fund screens out companies with ties to state-sponsors of terrorism, bringing Terror-Free investing option to all investors. CSAG provides Terror-Free Certification.

July 2006
Missouri Investment Trust becomes first public fund certified as Terror-Free. CSAG provides Terror-Free Certification.

May 2007
Benjamin Netanyahu announces his support for Terror-Free investing.

December 2007
FTSE and CSAG announce launch of the first international Terror-Free Index Series.

April 2008
AIPAC supports investing Terror-Free via products.

May 2008
Time Magazine features article on Terror-Free investing. Sen. Joseph Lieberman announces intention to introduce legislation giving federal employees a Terror-Free investment option via the Federal Thrift Savings Plan.

May 2008
Royal Dutch Shell announces withdrawal from $10 billion project in Iran due to U.S. and shareholder pressure.

SUMMER 2008
First Terror-Free Exchange Traded Funds expected to come to market.