by ELIZABETH M. GILLESPIE | Associated Press | 23 March 2005
SEATTLE - A mutual fund company that invests only in businesses it deems socially responsible has dropped Starbucks Corp., citing the coffee giant's launch of a java liqueur with whiskey maker Jim Beam.
Pax World Funds, a Portsmouth, N.H.-based fund family, steers clear of companies involved in defense or weapons, tobacco, liquor or gambling. It sold 375,000 shares of Starbucks worth an estimated $23.4 million, about 1.6 percent of its Pax World Balanced Fund portfolio, the fund said in a statement released Wednesday.
"While we continue to admire and respect many aspects of Starbucks' business and corporate citizenship activities, the company essentially forced our hand in this matter," said Anita Green, Pax World Funds' vice president of social research.
In a written response to the fund's announcement, Starbucks said it was disappointed but understood Pax World Fund's strict policy on not investing in companies that make money from the manufacture of liquor.
"Starbucks is committed to responsible marketing, and proud of our history of corporate responsibility," the statement said. "Prior to the introduction of this product, Starbucks worked diligently to research and understand its potential impact."
Pax World Funds said it sent Starbucks CEO Orin Smith a letter in mid-February urging the company to end its deal with Jim Beam, which was announced last year.
"We have divested ourselves of these shares reluctantly and only after trying to get the company to reconsider its course of action," Green said. Investors in Pax World Funds expect us to do what we say we will do about avoiding companies that produce liquor."
Starbucks Coffee Liqueur is sold in restaurants, bars and stores licensed to sell liquor. It is not sold in any of the coffee chain's stores.
In the statement it released Wednesday, Starbucks noted it is sponsoring a national program aimed at educating parents and children about the dangers of underage drinking.
Jim Beam Brands Co. and the Distilled Spirits Council of the United States did not return calls for comment Wednesday.
Founded in 1971, the Pax World Funds family includes holdings in companies that sell goods and services which fund managers feel improve the quality of health care, technology, housing, food, education, pollution control, utilities and leisure activities. The funds have about $1.6 billion in assets under management.
Shares of Starbucks fell 22 cents, or 0.4 percent, Wednesday, to close at $51.44 on the Nasdaq Stock Market.