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"Almost three-quarters of investors (74 percent) would be more likely to work with an advisor who could give them competitive investment returns from investments that also made a positive impact on society and 65 percent of investors would be more likely to stay with an advisor who could discuss responsible investing with them."
--
TIAA Global Asset
    Management
(USA)
    May 2016

"92% of Canadians say that it's important to choose investments that are aligned with their values. By contrast, only 14% of advisors raised the topic of RI [responsible investing] with their clients."
--
Deb Abbey referring
    to 2014 NEI study
    Investment
    Executive
   
(Canada) April 2015

"70% of people [in UK] want to invest ethically but the financial services industry is failing to respond." Referencing research by Abundance.
--
Acquisition
    International
   
(UK) June 2015

 

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Links may only be valid for a limited time   March 1, 2017

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Socially Responsible Funds Underperform. (Is this true?) "In a new paper that will appear in the April 2017 issue of the Journal of Banking and Finance, a top scholarly journal, the authors study over 2,000 funds. They argue that prior studies on SRI or CSR funds are flawed because those studies simply categorized funds as being either socially-responsible or conventional. This categorization leads to too many other differences between funds, and it ignores the fact that firms can have varying degrees of social responsibility.

So, in the new study, they compare low-CSR funds to high-CSR funds. They find that high-CSR funds underperform relative to low-CSR funds. Their evidence is both compelling and robust."

[COMMENTARY] We'll have to wait til the study is out to truly critique it. Initially, my reaction is how the term 'CSR' is defined. Are the researchers only concerned with social issues? Even with that, how is it defined? Do the researchers include environmental and governance factors? One thing is for sure, it'll likely be quite controversial!
Socially Responsible Funds Underperform, by Kenneth A Kim, February 28, 2017, FA Magazine, USA.

The Evolution of Corporate Social Responsibility Assurance – A Longitudinal South African Study. "Although the extent to which companies have provided independent assurance over their CSR disclosures has steadily grown, the study also revealed that the majority still did not. Although the pool of CSR assurance providers has widened to become more inclusive, contrary to the expectation that the dominance of the Big 4 audit firms would gradually be eroded, the study found that the Big 4 audit firms were actually consolidating their position in this area."

[COMMENTARY] I've long held that CSR disclosures should be independently audited -- as per financial statements -- and the results available to all stakeholders. Though the above study was South African based, it provides some insight into the possible state of CSR auditing today. Hopefully, similar studies will be done, particularly in the USA, Europe, and Japan.
The Evolution of Corporate Social Responsibility Assurance – A Longitudinal South African Study, by Barry Ackers, February 25, 2017, Social and Environmental Accountability Journal, UK.

The race is on for socially responsible investing in Japan. "The Japanese market is finally moving towards an ESG environment, similar to the mature markets of the US and Europe."

[COMMENTARY] This is good news for ethical investors globally. Historically, Japanese companies have been reticent to disclose much ESG information. This is now changing with Japan's new corporate stewardship code and especially Japanese institutional investors such as their huge Government Pension Investment Fund demanding ESG data.
The race is on for socially responsible investing in Japan, by Seiji Kawazoe, February 20, 2017, FT Advisor, UK.

How to solve the imbalance in ESG investing. "Investors are actively demanding more information about different components of environmental, social and governance investments. As evidence of this, S&P Dow Jones Indices, one of the world’s largest index providers and a division of S&P Global, acquired Trucost Plc, a carbon and environmental data provider, in October.

During a GreenBiz 17 program Wednesday, Dmitri Sedov, vice president of innovation and digital strategy at S&P Global, said the acquisition of Trucost will help solve a gap between the demand for sustainable investing and the supply of these investments."

[COMMENTARY] We see many of the pioneer organizations associated with ethical-ESG investing being acquired by mainstream investment industry behemoths. In time, we will see if these hookups truly benefit investors. Superficially, this deal appears promising for ethical-ESG investors.
How to solve the imbalance in ESG investing, by Keith Larsen, February 16, 2017, GreenBiz, USA.

Global financiers launch green investment criteria. "Nearly 20 global banks and investors have launched a set of criteria for investments to be considered sustainable. The group, which includes Société Générale and Hermes Investment Management and totals around $6.6 trillion (£5.28tn) in assets, outlined the Principles for Positive Impact Finance (PPIF)."

[COMMENTARY] Such developments are welcome news. Developments like this make sustainable investing -- in this instance particularly for institutions  -- a little bit easier.
Global financiers launch green investment criteria, by Jonny Bairstow, February 16, 2017, Energy Live News, UK.

Nearly a Third of Non-Profit Institutional Investors Say They Make "Mission-Related" Investments, According to Cambridge Associates Survey. "In a survey of 159 non-profit institutional investors around the globe, 31% say they're currently engaged in mission-related investing -- making investments designed to align with or advance institutional goals or values as well as provide financial returns. Of that group, 44% say they have increased their mission-related allocation over recent years, and 62% expect to grow their mission-related allocation in the coming five years. None of the institutions that currently make mission-related investments expect to decrease their allocations."

[COMMENTARY] We see continuing good news that non-profit institutional investors are increasingly aligning their investments with their missions. It always surprised me how a charity invested in companies that produced products or services abhorrent to its mission. Often it was blamed on the fund manager’s fiduciary responsibility. However, it was often due to the timidity of the charity in properly instructing their fund managers in what they expected from them.  See my editorial: Unethical Investing by Charities.
Nearly a Third of Non-Profit Institutional Investors Say They Make "Mission-Related" Investments, According to Cambridge Associates Survey, press release, February 15, 2017, USA.

Ethical investment demand outstrips adviser interest. "[UK] Fnancial advisers may be seriously underestimating demand for responsible investment, after research showed wide discrepancies between adviser and consumer attitudes to investing ethically."

[COMMENTARY] This is a problem everywhere and explains why the percentage of ethical retail fund assets is only 2-4% of all retail funds. It's an issue I've written about numerous times over the years. This FT article should be broadcast by all professional brokerage and financial planning organizations.
UK Ethical investment demand outstrips adviser interest. by James Fernyhough, February 6, 2017, FT Advisor, UK.

Canadian RI Assets Surpass $1.5 Trillion, up 49% in two years: Canadian RI Trends Report. "The 2016 Canadian Responsible Investment Trends Report reveals that Canada’s responsible investment (RI) market is continuing to experience rapid growth. Responsible investment refers to the incorporation of environmental, social, and corporate governance (ESG) factors into the selection and management of investments. This report provides a detailed overview of recent trends in Canada’s responsible investment marketplace."

[COMMENTARY] These are terrific results! I'm particularly impressed with the growth of 91% growth of assets among individual investors.
Canadian RI Assets Surpass $1.5 Trillion, up 49% in two years: Canadian RI Trends Report, press release, February 2, 2017, RIA Canada, Canada.

The Tipping Point: Women on Boards and Financial Performance. "This year, we analyzed U.S. companies over a five-year period (2011-2016). U.S. companies that began the period with at least three women on the board experienced median gains in Return on Equity (ROE) of 10 percentage points and Earnings Per Share (EPS) of 37%. In contrast, companies that began the period with no female directors experienced median changes of -1 percentage point in ROE and -8% in EPS over the study period (see below exhibits)."

[COMMENTARY] One would think after so many studies showing the financial benefits accruing to companies having women on boards, that shareholders would be demanding it. Yet relatively few do, especially in North America. The 'old boys' network is flourishing and only slowly breaking down.
The Tipping Point: Women on Boards and Financial Performance, by Linda- Eling Lee, January 31, 2017, MSCI, USA.

Steps remain to fully integrate ESG. (Article also reviews important new ESG study.)
"Across all 12 industries, the positive effect on equity return is 6.12 percentage points higher for ESG companies on average. And, if one looks at only the eight industries with clearly higher ESG returns, this difference jumps to an average 14.08 percentage points for ESG companies compared with their peers...

Adding ESG to fundamental analysis is akin to presenting magnetic resonance imaging to medical practitioners used to X-rays. It is likely a game-changer in the way we operate in capital markets. But we have to be careful and creative in order to capture its full potential."

[COMMENTARY] Terrific new research and great observations about the use and issues around implementing ESG in portfolio construction. Download study referred to in the article.
Steps remain to fully integrate ESG, by Rodrigo Tavares and Daniela Barone Soares, January 25, 2017, Pensions&Investments, USA.

Why green bonds are reaching record highs. "According to a recent report by Moody's Investors Service, the rise of green bonds issuances in 2016 is projected to carry over into 2017 as well. The report projects that green bond issuances will increase to over $200 billion in 2017 from $93.4 billion in 2016 if green bonds grow at their 2016 rate."

[COMMENTARY] This post mentions that corporations are far behind governments in issuing green bonds as corporations presently see no financial upside in issuing them. Hopefully, that'll change soon.
Why green bonds are reaching record highs, by Keith Larsen, January 25, 2017, GreenBiz, USA.

RepRisk Releases the Most Controversial Companies 2016 Report. "RepRisk’s MCC 2016 Report spotlights ESG issues faced by globally-active companies, and was developed as part of RepRisk’s commitment to providing transparency into ESG risks and encouraging companies to systematically take into account such risks in their strategies and processes."

[COMMENTARY] Most of the companies at greatest reputation risk are Asian. Volkswagen is the only western company in the top ten.
RepRisk Releases the Most Controversial Companies 2016 Report, press release, January 25, 2016, Switzerland.

Green Bond Giant Awakened by Countries Spending to Save Climate. "Sovereign debt pool of $44.5 trillion starts going green."

[COMMENTARY] It appears that sovereign debt issuance of green bonds is about to take-off! Many responsible-ethical investors will be happy about this. Nonetheless, it'll be worthwhile to review the country's ESG rankings before investing. Helpful in this regard are RobeccoSam's Country Sustainability Ranking, and the EIRIS Country Sustainability Ratings.
Green Bond Giant Awakened by Countries Spending to Save Climate, by Anna Hirtenstein, January 19, 2017, Bloomberg Markets, USA.

2017 Global 100 (Corporate Knights). "An index of the Global 100 most sustainable corporations in the world."

[COMMENTARY] This annual index is one of the best around in its sphere. To obtain a complete download you need to register name and email address.
2017 Global 100, January 19, 20-17, Corporate Knights, Canada.

Major banks 'still not doing enough' to embed climate risk in decisions. "Major banks are largely failing to align their business practices with international climate targets and are still not doing enough to effectively manage climate risk. That is the stark conclusion of a new survey [by Boston Common Assets Management] of 28 of the world's largest banks, which found more than 80 per cent of those polled are not integrating the results of environmental stress testing into their business decisions."

[COMMENTARY] This is probably a case where the banks announce their concerns about climate change, sustainability, etc., but don't quite believe it enough to engage in it internally. It's likely just a question of time before they do.
Major banks 'still not doing enough' to embed climate risk in decisions, by Michael Holder, January 17, 2017, BusinessGreen, UK.

'Inflection point' approaching for long-term investors, says MSCI. "In 2017, the MSCI researchers predicted the emergence of two approaches to long-termism: new benchmarks that 'explicitly incorporate views of the future', and a shift towards high-conviction, low-turnover portfolios."

[COMMENTARY] I welcome MSCI's prediction for 2017 of asset managers taking a greater long-term, low-turnover portfolio view! Short-termism and rapid turnover of investments are detrimental to long-term economic health as they discourage needed multi-year or even multi-decade corporate investments.
'Inflection point' approaching for long-term investors, says MSCI, by Nick Reeve, January 16, 2017, IPE, UK.

Church of England equips investors to monitor climate impact. (Tool useful for all ethical investors!) "The Transition Pathway Initiative (TPI), created in partnership with the UK Environment Agency Pension Fund and the London School of Economics (LSE), was launched at the London Stock Exchange on Wednesday. It is supported by 13 international asset-owners, and five asset-managers, with more than £2 trillion under management collectively, including Aviva Investors, BNP Paribas Investment Partners, Hermes Investment Management, PGGM, and Standard Life Investments.

TPI intends to offer accurate data, provided by FTSE Russell and processed by the LSE, to enable investors to scrutinise how companies are managing climate-related risks."

[COMMENTARY] The new site created for this, The Transition Pathway Initiative, will be a welcome new research site to help ethical investors everywhere assess the progress of public companies towards climate change.
Church of England equips investors to monitor climate impact, by Hattie Williams, January 13, 2017, Church Times, UK.

The Risk And Opportunity For America's Corporate Pension Plans. "Stated very simply, while more and more companies are proclaiming their commitment to 'sustainability,' their pension funds are virtually ignoring the topic."

[COMMENTARY] This is an important article for investors to read and portrays a real conundrum. Pension funds are under tremendous pressure to perform and cannot now legitimately ignore the potential better returns offered them by incorporating ESG criteria into their analytical framework.
The Risk And Opportunity For America's Corporate Pension Plans, by Dr. Bob Eccles, January 10, 2017, Forbes, USA.

630 Companies And Investors Tell Washington: Continue Accelerating the Low-Carbon Economy. "The company signatories, which include DuPont, Gap Inc., General Mills, Hewlett Packard Enterprise, Hilton, HP Inc., IKEA, Johnson & Johnson, The Kellogg Company, Levi Strauss & Co., L’Oreal USA, NIKE, Mars Incorporated, Pacific Gas and Electric, Schneider Electric, Sealed Air, Starbucks, VF Corporation, Unilever, among others. These signatories collectively take in nearly $1.15 trillion in annual revenue, are headquartered across 44 states, and employ about 1.8 million people."

[COMMENTARY] Most American CEOs know that a sustainability/ESG focus assists profits, stock prices, and competitiveness. There is no turning back, especially as renewable energy becomes cost competitive with fossil fuels -- even without any subsidies!
630 Companies And Investors Tell Washington: Continue Accelerating the Low-Carbon Economy, press release, January 10, 2017, Ceres, USA.

Is Your Mutual Fund Company Taking Climate Change Seriously? "The vast majority of climate scientists (97 percent) believe climate change is real, but what about your mutual fund company? We examined how the nation’s (America's) largest mutual fund companies voted on climate-related shareholder resolutions in 2015 and 2016. The results are revealing."

[COMMENTARY] This is an interesting chart for investors in many countries as the same companies often have fund management activities in numerous countries. Also, it might affect your own investing activities. Thank you Ceres for gathering this information.
Is Your Mutual Fund Company Taking Climate Change Seriously? By Rob Berridge, January 6, 2017, Ceres, USA.

Transparency or Greenwashing? Disclosing Environmental, Social and Governance Risk Factors. "To help senior finance leaders in understanding how ESG risk disclosures affect the perception of, and potential investment in, their organizations, Financial Executives Research Foundation (FERF) interviewed subject matter experts from a variety of industries. "

[COMMENTARY] The research provided in this report illustrates how far ESG has come!
Transparency or Greenwashing? Disclosing Environmental, Social and Governance Risk Factors, report, January 5, 2016, FEI Daily, USA.

Navigating the Sustainable Investment Landscape. "A survey of over 100 investment professionals shows that institutional investors – including pensions, foundations, universities, and NGOs – are increasingly considering the material importance of social, environmental, and governance factors in constructing their portfolios... Despite the enthusiasm and more capital flowing, WRI found key gaps in the market that prevent even the most motivated asset owners from deploying capital sustainability."

[COMMENTARY] This is an informative paper to read, particularly for institutional investors new to sustainable investing.
Navigating the Sustainable Investment Landscape, by Elizabeth Lewis, Ariel C. Pinchot and Giulia Christianson, December 2016, World Resources Institute, USA.

Fossil Fuel Divestments Now Represent $5.2 Trillion. "A network of local governments, pension funds, faith organizations, philanthropies and wealthy individuals representing $5.2 trillion in assets have committed to — and in some cases already started — divesting from fossil fuel companies, according to a report released on Monday."

[COMMENTARY] The odds of President elect Donald Trump inspiring a major reversal in the fossil fuel divestment movement get slimmer everyday. In time he'll come to understand that the world is moving past fossil fuels and that industry is entering old age.
Fossil Fuel Divestments Now Represent $5.2 Trillion, by Brian Kahn, December 12, 2016, Climate Central, USA.

The Just 100 -- America's Best Corporate Citizens In 2016. "Social impact is woven into the mission statements of nearly every major company on the planet. But which companies actually practice what they preach? FORBES has partnered with Just Capital, a nonprofit created by billionaire investor Paul Tudor Jones II, to determine which ones are the best corporate citizens--the Just 100.

In all, some 1,000 companies were scored and ranked within their industries according to ten metrics: worker pay and benefits, worker treatment, supply chain impact, community well-being, domestic job creation, product attributes, customer treatment, leadership and ethics, environmental impact and investor alignment."

[COMMENTARY] This is a great new approach in determining the value of corporate actions accross a spectrum of stakeholder concerns. It should be well accepted in the responsible investing community.
The Just 100: America's Best Corporate Citizens In 2016, by Steve Schaefer, November 30, 2016, Forbes, USA.

2016 Global RepTrak® by Reputation Institute. "Reputation Institute’s Global RepTrak® 100 uncovers the world’s most reputable companies in innovation, governance, citizenship and more. Download the report or view the recorded presentation of the results to discover which companies are leading the way in the reputation economy this year."

[COMMENTARY] Reputation Institute's reports are always worthwhile for ethical investors to review.
2016 Global RepTrak® by Reputation Institute, December 2016, USA.

Investors in the Americas show soaring demand for green investments but barriers still remain: HSBC survey. "According to the research, investors in the Americas are seeking more green investment opportunities, with nearly three quarters (74%) planning to increase their climate related or low carbon exposure... the report revealed that the vast majority of investors in the Americas (82%) believe a lack of credible opportunities is the largest obstacle to making green investments. Furthermore, 79% of the same investors cited moderately or highly inadequate disclosures as a top barrier to making green investments. "

[COMMENTARY] With stock exchanges demanding more ESG disclosure from listed companies and investors demanding the same, the onus on companies to produce better and more detailed sustainability reports grows strongly.
Investors in the Americas show soaring demand for green investments but barriers still remain: HSBC survey, press release, December 8, 2016, HSBC, USA.

Sustainability reporting in stock exchanges 'comes of age'. "As many as 21 stock exchanges across the world could introduce sustainability reporting standards in the coming months. They would join the 17 exchanges that currently recommend listed companies to report on environmental, social and governance (ESG) issues — going a step further by providing model guidance to participating companies."

[COMMENTARY] I hope that US President-elect Donald Trump soon realizes that sustainability pays. The rest of the world realizes it. It's great news that stock exchanges everywhere are creating sustainable reporting standards for their listed companies.
Sustainability reporting in stock exchanges 'comes of age, by Anya Khalamayzer, December 7, 2016, GreenBIz.com, USA.

EU Workplace Pensions Now Required to Incorporate ESG Issues. "The new directive will cover European workplace retirement plans, which is estimated to be a market of around 125,000 plans with €2.5 trillion investment. The new directive needs to be passed by the European Council (which is expected to take place in early 2017), following which there will be a 2-year period granted for Member States to transpose it into national law."

[COMMENTARY] Assuming the European Council passes the directive, this will be a terrific step forward setting a precedent for pension plan and other investment regulatory authorities everywhere.
EU Workplace Pensions Now Required to Incorporate ESG Issues, by Latham & Watkins LLP, December 6, 2016, Lexology.com, UK.

2016 ET Carbon Rankings Report. "The 2016 ET Carbon Rankings report represents an in-depth analysis of the greenhouse gas emissions data gathered to produce the public ET Carbon Rankings. In addition to providing further context to the Rankings and their application for low-carbon and fossil-free indexes, it assesses the current state of Scope 3 emissions disclosure and the emissions reduction potential across the most carbon-intensive sectors."

[COMMENTARY] This is an illuminating report on the carbon rankings of the world's largest public companies.
2016 ET Carbon Rankings Report, December 2016, ET Carbon Rankings, UK.

Green bonds: New study shows extraordinary growth and signals potential in financing Europe’s climate and environment goals. "In 2012 USD 2.6 billion of green bonds were issued globally. By 2015 total issuance had multiplied to USD 41.8 billion. It rose to USD 74.3 billion by end of November 2016. European and Chinese issuers make up the largest share of the climate-aligned bonds market globally. In Europe, France and UK are the biggest issuers."

[COMMENTARY] As the above figures suggest, there's a huge latent market for green bonds. As most of us know, we're still at the early stages of their issuance.
Green bonds: New study shows extraordinary growth and signals potential in financing Europe’s climate and environment goals, press release, December 2, 2016, European Commission, Belgium.

The league table of countries with the most 'caring' investors. "Europeans are less concerned about environmental issues when it comes to selecting investments than Asians or Americans, according to a major study of attitudes in 28 countries."

[COMMENTARY] The results of this survey are surprising! However, upon reflection, perhaps they're understandable.
The league table of countries with the most 'caring' investors, by Andrew Oxlade, December 2, 2016, CITY AM, UK.

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Disclaimer: This website does not make investment recommendations. Nothing in this site should be interpreted as a recommendation or solicitation to buy/sell any securities or investments. Investing for the Soul is a source of general information and resources for spiritual investing, ethical investing, and socially responsible investing (SRI). Investors should consider their actions thoroughly and consult their financial advisers and other professionals, prior to taking any investment action. This website does not necessarily agree with the opinions expressed in articles on its pages or offered on the web pages to which it might be linked. Such opinions are the responsibility of the writers themselves. Furthermore, this site does not offer or provide any warranties, representations, guarantees, implied or otherwise, as to the accuracy, legality, copyright compliance, timeliness or usefulness of the information, materials or services on this, or other sites, to which it is linked. Also, Mr. Ron Robins is not an investment advisor, nor is he licensed with any professional investment related body, and thus is not able to, nor does he make, any investment recommendations.

 

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