Portland is moving forward with City Commissioner Steve Novick's plan to stop the city from investing its $940 million portfolio in companies that are ethically challenged.

But as reported in this morning's Murmurs, the group that guides that portfolio warns the "do-not-buy" list could leave the city with few corporations left to invest in.

Novick drew national media attention in May when the city started implementing his plan to dump its $36 million investment in Wal-Mart bonds.

Last week, the City Council took steps toward creating a "do-not-buy" list based on how companies treat their employees, the environment and public health. The City Council on Aug. 6 approved recommendations from a group studying how to start "socially responsible investing."

The plan has alarmed the city's Investment Advisory Committee, which guides the city's portfolio. In a May letter only recently made public, the committee warned that a list of "bad" companies could grow so large it would leave the city with no options for corporate investment.

"Scoring may prove to be difficult as companies may align well with certain principles but not with others," the six-member IAC wrote on May 23. "For example, Wal-Mart has an excellent environmental record but a poor record with respect to labor and business practices. As such, the 'do-not-buy' list might possibly include the city's entire list of eligible issuers."

The IAC also warned that the "do-not-buy" list could hurt the city's investment earnings and created a "ripple effect" on Portland government.

"If the city's bottom line is reduced due to reduced portfolio earnings," the IAC document says, "then services to the public may need to be reduced. The public might feel that this is a good thing in the beginning but when their services start to be affected, it may cause great discontent and anger with the city."

Novick says the IAC's concerns are guiding the city's decisions.

"Their warnings are actually quite helpful to us," Novick tells WW, "as we explain our policy to advocates who want us to put particular industries, in their entirety, on the do not buy list, or object to companies based on one criterion."

Novick says he's going forward with the plan—but he'll be careful about how large the list gets.

"We're not going to put every company on the 'do-not-buy' list," Novick tells WW. "Coke is by definition damaging to human health, but I would not suggest putting them on the list unless I saw evidence that they violated other criteria."