"ETHICAL INVESTING" ISN'T ALWAYS the paradise people imagine it is, and the values it defends aren't always universal ones. Let's take an example.

The story took place on Tuesday in a large Paris restaurant, at the Regular Meeting of Imerys (formerly Imetal). In front of a room full of shareholders, the chairman of the French Group, the world leader in processing minerals, reported on 1999 earnings. Higher profits, successful foreign growth policies.The shareholders were reassured about the future, and the question-answer period began. However, when Jyrki Raina took the floor, unease set in. Raina was wearing a business suit, but he was actually the representative of the American trade union Icem (International Federation of Trade Unions of Chemical, Energy and Allied Industries Workers). He came to speak on behalf of his federation, but also on behalf of an American pension fund company, Walden Asset Management. Raina started by apologizing for his American accent before proceeding: I represent Walden Assets Management, a holder of a portion of your shares, and a company involved in ethical investing. Mr. Chairman, why is your company involved in anti-union practices in the United States, while at the same time your company is improving its relationship with trade unions in Europe? Don't you agree that these practices are morally reprehensible, and that they could affect stock market values if a solution is not found soon?

Shareholders shudder. Aren't they living through an episode from the mini-revolution that is shaking French capitalism? After the United States and Great Britain, France has gained from "socially responsible investing." or "ethical investing," which is a new form of pressure placed on management of companies. It's a new field, which still has trouble benefiting from a long period of experience. Ethical investing is theoretically an attractive idea that occasionally shows its limitations. This was the case on that day.

In the spring of 1999, Imerys (which was still known as Imetal) announced the acquisition of English China Clay PLC (ECC), a multinational specializing in processing minerals. ECC owns a stone grinding plant in Alabama, which employs 280 non-union salaried workers. Only 200 meters away from the plant, Imerys owns another production site, Georgie Marble; 120 people work there, and they are all unionized.

Conflict. Quite logically, Imerys united these two plants, but it's only there that the unification quickly turned into a dispute between the local representatives of the strong trade union, PACE (Paper, Allied Industrial, Chemical and Energy Workers Union), affiliated with ICEM, and the management of the new company. Imerys then claimed that the two facilities are a single site, and that PACE no longer represents the majority in the new plant. The American management team, holding fast to this argument, therefore refused to recognize PACE. "In fact, Imerys is challenging the right of workers to o unionize. This French multinational went so far as to offer strikebreaking services. Local management has held obligatory meetings for the salaried employees in which it shows anti-union films, issuing threats with regard to our sympathizers, and showing favoritism to our opponents," explains Joe Drexler of PACE, who traveled from the United States in order to defend the cause of his union. "That's untrue," responds Patrick Dubert, Director for [acronym DRH] of Imerys. "We have never sought to intimidate the salaried employees in the United States. We simply wanted to institute a type of representation that respects American law at the risk of challenging local practices that aren't always democratic."

In fact, in order to obtain a new union mandate, PACE always hoped that company management would recognize the American system of the authorization card. Across the Atlantic, the custom is that a trade union can became the sole and exclusive representative of employees simply by receiving a wide majority of signatures during the collection of authorization cards. "These union practices are affected by a certain amount of pressure. This is because the unions don't hesitate to go door-to-door to the homes of salaried employees to get signatures. That's not very democratic," explains a French salaried Imerys employee who is starting to understand the complexities and differences between American and Europeans trade union movements.

Anonymity. On the Tuesday before the Meeting, the investors already knew this history. They found details on the Web at www.imerys-workers.org. Others, notably financial analysts, did not remain indifferent to the Raina's representations. Jacques F., who prefers to remain anonymous, comments: "Analysts increasingly look at the social conduct of companies, even if the question still remains somewhat taboo within their profession. In the case of Imerys, however, you can see that the idea of ethical investment is different. This is what a Fund like Walden Asset Management considers ethical in the United States, that is, the possibility of a single representative union in a company, and, moreover, with no elections, something which is inconceivable here. So where are good company ethics, here in Europe or in the United States?" The debate is not over at Imerys, because the two sides are supposed to be meeting in a few days.