UK Investors Buying Green Funds.
-
[COMMENTARY]
"One in every eight investors intending to beat
the 5 April deadline to use their 2009/10 ISA [a tax
free savings/investment account] allowance claimed
ethical funds would be a big part of their thinking,
a survey from The Co-operative Investments has
revealed. The share of the ISA market enjoyed by
sustainable and ethical investments has grown almost
two and a half times in size over the last decade."
Linking sustainability to ethical investing has
added to the appeal of ethical funds. However, one
cannot but wonder
how much interest would there be for purely ethical
funds if
there were not this linkage? Anyone have any
thoughts on this?
ISA investors set to go green, March 12, 2010,
Moneyfacts.co.uk, UK.
CSR Increasingly
Important In Outsourcing Contracts Says
International Association of Outsourcing
Professionals. -
[COMMENTARY]
"On a five point scale, both outsourcing
providers and buyers rated the importance of CSR at
3.9. In addition, 70 percent of outsourcing
customers and providers said they plan to increase
their CSR activity in the next three years, with
small- and medium-size providers having the
strongest intentions to increase CSR." The
advantages of using corporate social responsibility
are becoming self-evident to all companies. However,
what ethical investors need, as well as all
stakeholders, is
Mandatory Corporate Social Responsibility Reporting.
IAOP Survey Finds Corporate Social
Responsibility Increasingly Important in Outsourcing
Contracts, media release,
March 10, 2010, EIN Presswire, USA.
Big American Pension Fund
Reportedly Suing Goldman Sachs Over 'Excessive' Payouts.
-
[COMMENTARY]
"A US labour union pension fund has reportedly
filed a lawsuit against Goldman Sachs, the US
investment bank, over claims of excessive executive
pay. The Philadelphia-based International
Brotherhood of Electrical Workers Local 98 Pension
Fund has lodged the writ at Delaware Chancery Court,
according to Thomson Reuters." It is about time
that institutional funds challenged the
extraordinary payouts of Goldman and others in the
investment industry. What other industry allocates
around 40% of its profits as bonuses?
US pension fund adds to exec comp lawsuits against
Goldman Sachs, by Daniel Brooksbank, March 10,
2010, Responsible Investor, UK.
US Companies Based In More
Religious Environments Take Fewer Financial Risks.
-
[COMMENTARY]
"Gilles Hilary and Kai Wai Hui of Hong Kong
University of Science & Technology say researchers
have long demonstrated the link between religion and
an aversion to risky behavior among individuals.
Rates of gambling, alcohol abuse and crime, for
instance, are lower on average in communities where
church attendance and religious affiliation are
high. Their study in a recent Journal of Financial
Economics — 'The Influence of Corporate Culture on
Economic Behavior: Does Religion Matter in Corporate
Decision Making in America?' — now shows that
religion has a similar effect within for-profit
companies by deterring business activities that
place corporate assets at risk."
The results of this study should
not surprise anyone. It simply highlights that
communities with strong spiritual and religious
values are less likely to engage in potentially
reckless activities. It has been my contention for
decades that individuals imbibing higher spiritual
and community values, such as the 'Cultural
Creatives' as described by sociologist Paul Ray,
is the only way the world will be able to free
itself from its problems.
A new study reveals that U.S. companies are less
likely to accept financial risks when they are based
in communities where religion is important, by
David Villano, March 7, 2010, Miller-McCune, USA.
Australian Study Examines Use Of
Terms Related To Responsible Investing On The Web.
-
[COMMENTARY]
"The study explored the level of support for
responsible investment and consumer motivation to
invest responsibly. The three terms attracting the
most positive association were: responsible
investment (74%), cleantech (69%) and sustainable
investment (62%). The term 'ethical investment'
attracted cynicism, because, the report said, the
concept of 'ethical' can vary significantly between
individuals and lacks clarity."
I concur with the findings of this
study. The word 'ethical' in relation to investing
has always been a difficult one to explain. It will
be fascinating to watch the evolution of the above
mentioned terms.
Blogosphere survey says RI has yet to tap financial
crisis potential, March 8, 2010, by Daniel
Brooksbank, Responsible Investor, UK.
HP, Intel, General Mills Top List
Of Best Corporate Citizens. -
[COMMENTARY]
"Corporate Responsibility Magazine today released
its 11th annual Best Corporate Citizens list... the
full list this year includes a number of shakeups,
including that Bristol-Myers Squibb, last year's top
firm, fell to the seventh position in the rankings.
Coca-Cola, which appears in eighth place this year,
was ranked 56 last year." As ethical
investors, such lists
may provide us with ideas on what to
hold, or sell, depending on our values and how it
fits with our investment strategy.
HP, Intel, General Mills Top List of Best Corporate
Citizens, March 2, 2010, GreenBiz, USA.
News From Responsible Investment
Association Australasia (RIAA), March 8,
2010
"ESG Research Australia hosted their inaugural
broking awards last night in Sydney. Citi Investment
Research and Analysis was recognised as the Best ESG
Broking Firm as voted by investment managers. Andrew
Gray from Goldman Sachs JBWere took out the award
for Best Piece oF ESG Research by an individual
analyst or team for a report on how good ethics can
translate into good returns.
Last week in Melbourne, at the annual Melbourne
Financial Services Symposium awards dinner, the
Investment Stewardship Award was given to Cbus for
the superannuation category and Aviva for the
investment manager category. UCA Funds Management
was highly commended by the judging panel for
outperforming the benchmark in a tough year.
Cbus, Aviva and UCA are all members of RIAA and we
congratulate them for these achievements.
And late last year, the Ethical Investor's
'Sustainable Business Awards' were announced. The
Ethical Investor Fund of the Year was ING
Sustainable Australian Share Trust, with HESTA
taking out the sustainable super fund award and
Elaine Prior of Citi Investment Research winning the
category for sustainability research.
See
Responsible Investment Association Australasia.
PRNews Names Its 2010 Winning
Companies, Organizations and Individuals. -
[COMMENTARY]
"With trust in business at a low ebb, many
organizations have realized that goodwill toward
stakeholders and their communities is a concept
whose time has come—it’s crucial in rebuilding trust
and lifting reputations. Indeed, corporate social
responsibility is coming to the forefront, as
witnessed by the millions of dollars in corporate
donations for earthquake relief in Haiti." One
more list of great companies, etc., only this time
it is from a PR/marketing perspective.
PR News CSR Award winners, March 1, 2010, PRNews,
USA.
Dubai Islamic Bank (DIB) Wins
First-Ever Pan-Arab emeafinance Award For Corporate
Social Responsibility (CSR). -
[COMMENTARY]
"... in acknowledgement of its sustained efforts
to support individuals and communities in the UAE
and across the Middle East, DIB has been named
winner of the first-ever Pan-Arab emeafinance award
for corporate social responsibility... For the
second consecutive year, the bank’s wholly-owned
investment banking subsidiary, DIB Capital, was
named 'Best Investment Bank' in the UAE by
emeafinance, a leading international publication
focused on financial markets in the Europe, Middle
East and Africa regions."
Despite the troubles in Dubai, it
is great to see the emergence of CSR in the Middle
East.
DIB Wins Best Investment Bank & Best CSR Program At
Middle East Banking Awards,
press release, March 6, 2010, Middle East Events,
UAE.
UK's F&C Wins Best Ethical
Investing Manager Awards. -
[COMMENTARY]
"At the Global Pensions Awards ceremony held in
London on Wednesday March 2nd, leading asset manager
F&C was awarded the prestigious accolade of 'SRI
Provider of the Year'. This follows on from F&C
winning the 'Socially Responsible Investment
Programme' Award from Funds Europe in December
2009." Congratulations to everyone at F&C!
F&C wins SRI Provider of the Year Award, press
release, March 2010, F&C, UK.
European Carbon Regulation Having
Little Impact So Far On Firms Costs & Ability To
Raise Funds. -
[COMMENTARY]
"... respondents believe that carbon exposure
could have a real impact on industry from 2012, when
the more stringent Phase III of the EU Emissions
Trading Scheme (ETS) comes into force."
It will be important for investors to know the
carbon data--and how it compares to their peer
group--in companies they invest in. It is best not to wait
for surprises that could be costly. In these columns
I have reported on many sites and studies on this
subject. Simply type 'carbon' in the Google 'This
Site' search box on the left to see the many
references. Good luck.
Carbon risk not incorporated into Europe’s funding
decisions and financial statements, says S&P,
March 3, 2010, NewNet, UK.
MSCI Buys RiskMetrics For
$1.55bn. -
[COMMENTARY]
"MSCI, the index and risk group is buying
RiskMetrics, the New York-listed risk management and
corporate governance firm, in the latest twist to
consolidation in the ESG research and governance
space. It is paying approximately $1.55 billion in a
cash and stock transaction that values RiskMetrics
at $21.75 per share. RiskMetrics last traded at
$18.69 and its highest ever share price was $25.50
during 2008... In November 2009, RiskMetrics
finalised the $10m buy-out of Boston-based KLD
Research & Analytics, which also gave it a foothold
in the SRI index business via deals with FTSE and
Canada’s Jantzi Sustainalytics. That came after a
February, 2009, $16m buy-out of Toronto-based
Innovest."
Cost savings are the purported
rationale for this transaction. What it means for
ethical investors will be unclear for sometime. So
do I welcome this merger? I do not have an answer at
this point.
MSCI buys RiskMetrics for $1.55bn, March 1,
2010, by Hugh Wheelan, Responsible Investor,
UK.
Vodafone, Nokia & HP Ranked
Highest In New Sustainability Rankings. -
[COMMENTARY]
"The companies subjected to this Tomorrow’s Value
Rating were the 20 largest ICT companies according
to the Fortune Global 500 list, which ranks the
world’s largest companies by revenue." I find
when looking at rankings like this, it is good to
check out how companies do on several different
ranking systems.
Tomorrow's Value Rating of world's largest
information and communications technology companies,
March 1, 2010, Tomorrows Value Rating, UK.
Social Investment Organization (SIO)
Produces Canadian Guide To Socially Responsible
Mutual Fund Companies. -
[COMMENTARY]
"All of the firms listed in this Directory are
Sustaining or Associate Members of the SIO. As
Canada’s national association for socially
responsible investment, the SIO raises public
awareness of SRI, educates the financial community
and the public about SRI and takes a leading role in
furthering the use of SRI." This is a very
useful guide for all Canadian ethical investors.
Your Guide to Socially Responsible Mutual Fund
Companies in Canada, February 26, 2010, Social
Investment Organization, Canada.
Swiss Fund Manager Vontobel Says
Sustainable Investment In Asia Could Climb From
Current US$20 Billion Up To US$4,000 Billion By
2015. -
[COMMENTARY]
"In addition, the study examines on the one side
the tremendous pace of change in social,
environmental and corporate governance standards in
the region and on the other the fact that although
investors recognise the corresponding risks they
underestimate the opportunities, thanks to the major
progress achieved in data availability, to identify
Asian companies with high standards of
sustainability and consequently to optimise their
investment strategy accordingly."
The $4,000 billion number is certainly an eye
catcher! There is no doubt in my mind that
sustainable investing in Asia is still in its early
stages and will grow enormously in the years
ahead--and probably much faster than their rapidly
growing economies as well. We only recently became
aware that China is outspending and outpacing the US
in green tech.
Sustainable Investing in Asia - Uncovering
Opportunities and Risks, February 2010, Vontobel,
Switzerland.
Company Carbon Ratings
Announced By Environmental Investment Organization (EIO).
-
[COMMENTARY]
"For the first time a Ranking has been created
which penalises and rewards companies on a global
scale against absolute emissions with a particular
emphasis on the reliability of the data being
provided. The effect of the Rankings is first and
foremost to encourage disclosure and verification
amongst companies. It will then begin to create
incentives for companies to reduce their emissions
through share price pressure."
This is an idea whose time has come. Ethical
investors can see the rankings of most of the
world's big companies. The methodology of how they
construct the rankings is also available. This
ranking system might be one that many ethical
investors will want to follow.
Launch of ET Carbon Ranking, press release,
February 22, 2010, Environmental Investment
Organization, UK.
UAE Companies Not Adopting CSR
Policies. -
[COMMENTARY]
"More than 90% of businesses in the UAE do not
adopt corporate social responsibility, or CSR,
policies and practices associated with auditing and
monitoring, a study revealed." Is it the
cultural characteristics of the region, or for other
reasons, for the non-adoption of CSR by companies in
the United Arab Emirates?
Study: Over 90% of UAE companies do not adopt CSR
policies, by
T. Ramavaman, February 23, 2010, MENAFN-Khaleej
Times, Jordon.
SHARE Issues 09 Key Proxy Vote
Survey Of Canada's Investment Managers. -
[COMMENTARY]
"The purpose of SHARE’s annual Key Proxy Vote
Survey is to give pension fund trustees information
that will allow them to compare proxy voting by
investment managers and proxy voting services...
more firms are issuing proxy voting reports to their
clients, consulting with their clients in the
development of their proxy voting guidelines, and
disclosing their proxy voting guidelines to the
public." This report will be of particular
interest to Canadian pension fund boards and others
who hire asset managers to manage their funds.
09 Key Proxy Vote Survey, February 2010, SHARE,
Canada.
US Study Says Vice Fund (VICEX)
Outperformed Domini Social Equity Mutual Fund (DSEFX)
Over Long Term, But Not In 2009. -
[COMMENTARY]
"We examine the performance of socially
responsible investing (SRI) vs. vice investing
through sin funds. Our research shows while the
annualized return of SRI through Domini Social Index
(DS 400 Index) from 1990 to 2009 has been higher
than that of S&P 500, the relative 5 and 10- year
returns are more favorable in S&P 500. We also find
that while SRI through Domini Social Equity Mutual
Fund (DSEFX) outperformed vice investing through
vice fund (VICEX) over the most recent one year,
VICEX has outperformed DSEFX over the long term.
Presumably, U.S. investors sacrifice returns by
investing in social responsibility."
I believe we are entering a very
different investment world now. The emphasis on
environmental, social, and governance (ESG)
criteria, plus the rising concerns about ethics,
point to potentially superior long term results for
ethical investors. Perhaps the past year where
ethical funds performed really well against their
conventional peer is indicative of the trend I
foresee.
Socially Responsible Investing vs. Vice Investing,
by Hoje Jo, Roopali Sharma and Sylvie Wright, all at
Santa Clara University, and Tamanna Saha of New York
University, February 2010, USA.
Natural Marketing Institute (NMI)
Publishes Its Top 10 Trends For The Next Decade.
-
[COMMENTARY]
"These trends are the result of various NMI
research sources including the Health & Wellness
Trends Database® (HWTD), the LOHAS Consumer Trends
Database® (LCTD), Healthy Aging/Boomer Database® (HAB)
and Supplements/OTC/Rx Database™ (SORD) as well as
analysis of current activities in the marketplace.
NMI databases, now including 11 years of data across
500,000+ U.S. consumers, provide comprehensive
information across more than 150 product
categories."
The trends include "Getting Off the Grid” and
"Meaningful Green." To understand them
click here.
Studying these trends might help you on where to
place some of your funds.
Top Trends for the
New Decade,
February 17, 2010, Lohas.com, USA.
Ethical Investor Groups Calling
For Boycott Of 'Conflict Minerals' From The Democratic
Republic Of The Congo. -
[COMMENTARY]
"Since the conflict began, more than 5.4 million
have lost their lives. The DRC is one of the most
mineral rich countries in the world, with sizeable
deposits of gold, tantalum, tin and tungsten.
According to the United Nations, over 50% of the
mines in eastern Congo are controlled by warring
armed groups, who demand 'taxes,' bribes or other
payments for the minerals being extracted out of the
mines. The majority of the minerals are smuggled to
neighboring countries where they are sold to
smelters, and ultimately find their way into
finished consumer products. This practice directly
hinders repatriation and disarmament efforts, as it
provides armed groups with a robust funding source."
Deutsche Bank & NASDAQ OMX
Introduce The DB NASDAQ OMX Clean Tech Index. -
[COMMENTARY]
"DB Climate Change Advisors (DBCCA), the climate
change investment and research business of Deutsche
Bank's Asset Management business, and The NASDAQ OMX Group,
Inc. (Nasdaq:NDAQ) today announced the introduction
of the DB NASDAQ OMX(R) Clean Tech Index (DBCC). The
index is an accurate, real-time representation of
the global clean technology sector with exposure to
clean energy, energy efficiency, transport, waste
management and water companies. This is the first
clean technology index co-branded by a global
exchange company and a global bank."
We have another good clean tech index to watch now.
For ethical investors, it is always useful to see
what companies such indices include. They might give
you ideas as to what to put into your own
portfolio.
Deutsche Bank and NASDAQ OMX Introduce the DB NASDAQ
OMX Clean Tech Index, press release, February
10, 2010, Deutsche Bank & NASDAQ, USA.
International Brands Disclosing
Global Forest Footprint. -
[COMMENTARY]
"A Report published today by the investor-backed
initiative the Forest Footprint Disclosure (FFD)
project reveals the names of those businesses that
have responded to its first call to disclose details
of their ‘Forest Footprint’. This term indicates the
extent to which procurement policies for Forest Risk
Commodities (FRCs) such as palm oil, soy, timber,
beef, leather and biofuels are linked to
deforestation. The Report identifies two high
profile British High Street names as ‘Best
Performers’ in their sectors – Marks & Spencer
(General Retail) and Sainsbury’s (Food and Drug
Retail)."
Again, looking at what the companies report--or do
not report--is a worthwhile exercise for
ethical investors. It just might affect one's
holdings.
International Brands lead the way in disclosing
their global forest footprint,
February 10, 2010, Forest Footprint Disclosure
Project. See
full report (over 6MB PDF). UK.
Shareholders Successfully
Pressure Shell To Freeze Executive Salaries &
Incorporate Sustainability Measures In Employee
Bonuses. -
[COMMENTARY]
"Institutional shareholders have welcomed an
announcement by Shell, the Anglo-Dutch oil giant,
that it plans to limit top executives’ pay and
include sustainable development as a significant
part of performance bonuses." The winds of
change are hitting corporations everywhere. By
taking a lead like this Shell is demonstrating the
advantages of using corporate social responsibility
to advance its own interests as well.
Shell freezes exec salaries and includes
sustainability performance after shareholder
pressure, by
Daniel Brooksbank, February 17, 2010, Responsible
Investor, UK.
Corporate Water Usage Risk
Unmeasured. -
[COMMENTARY]
"Unfortunately, the vast majority of large
publicly traded companies are failing to adequately
manage and disclose the risks they face from water
scarcity, an issue that will likely become more
acute as the world's population increases and the
future impacts of climate change come to pass,
according to new Ceres research." This is a
subject ethical investors need to be aware of as it
breaks upon the consciousness of investors
generally. Water management and costs will be a huge
consideration for companies in the not so distant
future and could significantly affect financial
results and stock prices.
Lack of Awareness About Water Risks Threatens to
Sink Global Firms, February 11, 2010, GreenBiz,
USA.
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