The (UK) Guide to Sustainable Investment May
2016. "Once again, [UK] sustainable funds in
our universe of funds have demonstrated
outperformance of the relevant benchmarks. This is
partly due to the avoidance of resources and oil
stocks that have been weak in recent years, and this
may reverse at some point, with this tailwind
becoming a headwind. However, it is nevertheless
encouraging to see so many sustainable funds proving
the point that decent performance can go hand in
hand with a sustainable investment approach."
is a great guide for UK ethical investors produced
by a very reputable outfit.
The (UK) Guide to Sustainable Investment May 2016,
Blue & Green Tomorrow, UK.
BlackRock, World Bank team with scientists to
assess climate risk (for investors).
"Norwegian scientists have teamed up with some of
the world's leading investment firms to assess the
financial risks associated with global warming.
The new Centre for International Climate and
Environmental Research (CICERO) Climate Finance
initiative will bring together climate scientists
and investors, including BlackRock and the World
Bank, to develop tools to help investors more
effectively incorporate climate risk into long-term
establishment of CICERO with major institutional
investors could present a new era for investors
wanting to know how to assess investments in light
of climate change risk. Hopefully, the results of
their findings will not be proprietary but open for
all to use. Perhaps with the involvement of the
World Bank that will be ensured.
BlackRock, World Bank team with scientists to assess
climate risk, by Madeleine Cuff, May 25, 2016,
Influencing climate policy. "The British
non-profit Influence Map has released new research
quantifying how much money is spent each year by
leading oil majors and trade associations attempting
to block climate change policy. It found that
ExxonMobil spent an estimated $27 million (U.S.) in
2015, followed by Shell at $22 million. The American
Petroleum Institute and two other key trade
organizations spent a combined $74 million during
the same year.
When extrapolated out to encompass oil majors and
other trade associations, Influence Map estimated
that global spending could be as high as $500
million a year."
it's unsurprising that the fossil fuels' industry is
spending such sums attempting to protect their
profits. It is also good that Influence Map has done
the sums. Investors can now make more informed
opinions about fossil fuel investments, particularly
as many of these
companies are now starting to increase their
activities in renewables.
Influencing climate policy, May 19, 2016,
Corporate Knights, Canada.
Bloomberg Financial Services Gender-Equality
Index (BFGEI). "For investors who prioritize
gender equality, new market data tools are emerging
to help them assess a company’s efforts on this
front. This week, Bloomberg launched an index that
scores financial-service companies on how well they
treat women and whether they are promoting gender
all know that more women on boards and in management
help companies perform better. Thus, this index
could be useful in determining which financial firms
are better investments for ethical investors.
Bloomberg Financial Services Gender-Equality Index (BFGEI),
by Bouree Lam, May 5, 2016, The Atlantic, USA.
markets ignore vital warning signs.
"MSCI was not the
only company highlighting governance concerns about
VW at the time. At Sustainalytics, which rates
companies based on ESG factors, VW ranked in the
bottom quartile of businesses globally when it came
to governance. Vigeo, the French agency that
provides corporate responsibility analysis to
investors, also ranked VW far below its peers before
the scandal broke."
information here demonstrates the importance of
governance and ESG ratings in helping ethical
investors avoid possible disasters in their
When markets ignore vital warning signs, by
Attracta Mooney, May, 8, 2016, FT, UK.
Sustainability Ranking by RobecoSAM and Robeco.
country sustainability score is based on 17
environmental, social and governance indicators,
which receive a weight of 15%, 25% and 60% of the
total score, respectively. The score ranges from 1
to 10 and should be interpreted as a grade, with the
highest grade being 10 and the lowest 1. The purpose
of the score is to compare countries on the basis of
ESG indicators that we consider to be relevant for
top three countries are who you might expect --
Sweden, Switzerland and Norway. Amazingly, the UK is
rated fourth! The ratings and detailed country ESG
analysis are useful for ethical investors when
assessing sovereign bonds, particularly, from rated
Country Sustainability Ranking, April 2016, by
RobecoSAM and Robeco, Switzerland.
score weak on ESG despite more signing up to PRI.
of managers that are signatories to the United
Nations backed Principles for Responsible Investment
(PRI) in reality have a weak responsible investment
rating, according to research."
inference from the research is that many PRI
signatories signed-up for public relations reasons
and not for the genuine implementation of the six
PRI ESG principles. However, I believe that the PRI
is planning significant steps to encourage its
members to be more aggressive with their ESG
commitments. This must be done if the PRI are to be
respected. They should even throw-out those
signatories that are not serious about their
Managers score weak on ESG despite more signing up
to PRI, by Kristian Brunt-Seymour, April 29,
2016, Professional Pensions, UK.
Institute and Bloomberg LP Partner to Examine
Bloomberg ESG Disclosure Scores For S&P 500
Companies Reporting VS Not Reporting on
Show Companies Not Publishing Sustainability Reports
Are Disadvantaged by Lower Average Bloomberg ESG
companies not reporting on their environmental and
social activities are most penalized. Non-reporting
companies must realize that not improving internally
on ESG matters and not reporting their performance
on those metrics will be increasingly penalized --
from relatively poor stock performance to credit
G&A Institute and Bloomberg LP Partner to Examine
Bloomberg ESG Disclosure Scores For S&P 500
Companies Reporting VS Not Reporting on
Sustainability, press release, April 26, 2016, Bloomberg
LP/Governance & Accountability Institute, Inc., USA.
Quebecers would allocate a portion of investments to
only 46% of Quebecers have heard of responsible
investing (RI), 66% said they’d be willing to
allocate a portion of their investments to it when
told about this option. Responsible investing may
have topped the $2 billion mark at Desjardins, but
Quebecers’ interest in RI suggests this kind of
investing could grow by leaps and bounds in the
is a trendsetter in many areas of social
development. It could also lead Canadian investors
in their adoption of SR-ethical investing!
66% of Quebecers would allocate a portion of
investments to responsible investing, press
release, April 22, 2016, Desjardins Group, Canada.
Bangladesh Apparel Workers Still at Risk, Investors
"... known as the Bangladesh Investor Initiative
[representing] 139 institutional investors from
North America and Europe with collective assets
valued at over U.S. $3 trillion... the group
expresses concern over the pace of progress being
made to remediate the issues identified by
inspections conducted by both the Accord on Fire and
Building Safety and the Alliance for Worker Safety."
tragic that the affected workers haven't yet
received compensation, nor that the necessary safety
regulations are properly in place to prevent similar
fires, etc. Hopefully, the call by the signatory
investors in the above group will spur some faster
action to resolve the outstanding issues.
Bangladesh Apparel Workers Still at Risk, Investors
Say, press release, April 21, 2016, Interfaith
Center on Corporate Responsibility (ICCR), USA.
Update: Socially Responsible Investing Coming of
"Nearly four-in-ten (38 percent) of households with
a net worth between $100,000 and $1 million (not
including primary residence) consider social
responsibility when selecting an investment. This is
up from 36 percent last year. Roughly one-third of
Millionaire investors with a net worth up to $5
million consider social responsibility when choosing
an investment; up from 29 percent the previous
been watching the growth of interest in SRI among
wealthy American investors -- particularly as
Spectrem Group -- for several years now. The full
report is available for $9000.
Earth Day Update: Socially Responsible Investing
Coming of Age, by Donald Liebenson, April 26,
2016, Millionaire Corner, USA.
Materiality Without (Comparable) Metrics? Back to
the future of financial reporting?
"What if a firm could pick and choose which
element(s) of its financials on which it would
report? What if each firm could define its reporting
categories on its own (think of choosing one or more
contemporary non-GAAP financial reporting
categories, e.g. pro forma, operating earnings,
EBITDA, cash earnings, or some combination, any
combination, or something else)?
what if a firm’s Board could define which financial
data points were material? What if a Board could
determine when it should release information? How
would publics (investors and others) judge a firm’s
value, potential, strength/weakness, and how would
comparisons be made?"
situation cited above was once the reality of
financial reporting that investors had to deal with
before the 1930s. We would think it ridiculous that
such information and reporting were not standardized
as we have it today. Yet, ESG/materiality reporting
is now in much the same state as financial reporting
all those decades ago. This article is a great read
and the author makes a good case for establishing
ESG Materiality Without (Comparable) Metrics? Back
to the future of financial reporting? By Dr.
James Hawley, April 12, 2016, TruValue Labs, USA.
new, independent, Canadian university-based
responsible investment website.
"Ethiquette®... developed and managed by the
Responsible Consumption Observatory (RCO) of UQÀM’s
School of Management Sciences (ESG UQÀM) and
Ellio.... A crossroads for dialogue and the
sharing of information by responsible investment
stakeholders in Québec and Canada (organizations, NPOs, media and government), Ethiquette aims first
and foremost to help individual investors as they
venture into the realm of responsible investment."
is a terrific new site for Canadians and others
seeking knowledge about responsible
investing (RI). It offers information on RI
products, strategies, resources and more...
Millennials set to drive major growth in Canadian
"82% of millennials surveyed believe that RI will
become more important in the next five years, with
two-thirds of saying it is important for their
advisors to be knowledgeable about RI issues and
Abbey, CEO of Canada's Responsible Investment
Association (RIA), reports on an impressive and
important new Canadian study on the present and
potential future investing actions of millennials,
boomers, and Gen Xers. The studies' findings show
that millennials are extremely interested in RI!
Even if you're not Canadian, the reports' findings
are really worth reading.
Millennials set to drive major growth in Canadian
RI, by Deb Abbey, April 14, 2016, Investment
Carbon ETFs for the Socially Responsible Investor.
investors believe we are reaching a political
tipping point, when the regulatory burden on firms
with a large carbon footprint must increase
good article on low-carbon ETFs by Morningstar.
Low Carbon ETFs for the Socially Responsible
Investor, by Kenneth Lamont, April 11, 2016,
worth the effort? "Impressively,
7 percent of companies included on DJSI North
America have been included for 11 years, since
launch of the Index. Companies are selected for the
index if they rank among the top 20 percent in their
industry; existing index members are protected by a
buffer rule that allows them to stay in the index as
long as they belong to the top 30 percent."
is a great article explaining the intricacies of the
Dow Jones Sustainability Index (DJSI) and why
companies might engage to be included.
Is DJSI worth the effort? By Megan DeYoung,
April 7, 2016, GreenBiz, USA.
US DOL Bulletin
Hampers Social Impact Investing.
implies that the act of voting or otherwise
addressing long-term environmental, social and
governance (ESG) risks are unrelated to the
provision of benefits.
'We believe the bulletin is out of date,' said Meg
Voorhes, director of research with (US SIF), an
organization dedicated to advancing sustainable,
responsible and impact investing across all asset
how companies perform on ESG measures
has very real consequences for their future
profitability. Yes, this DOL bulletin is truly
DOL Bulletin Hampers Social Impact Investing, by
Juliette Fairley, April 7, 2016, AdvisorNews, USA.
Professional Advisors Already Winners with Fiduciary
Rule. "The Department of Labor’s
announcement of its long-awaited, long-debated
fiduciary rule for retirement plan advice will be
remembered as a milestone in the history of the
industry. To put it simply, professional financial
planners and advisors have achieved a victory, and
the Wall Street and independent broker-dealer
service models have been dealt a blow."
is a terrific step forward for average American
investors. It now says that brokers have real
fiduciary responsibility to their clients and are
not simply salespeople!
Veres: Professional Advisors Already Winners with
Fiduciary Rule, by Bob Veres, April 8, 2016,
PRI says now is the time to act on ESG in credit
"Investors across our signatory network are
being asked to support a call for credit rating
agencies to incorporate ESG into their credit
analysis in a more systematic and transparent way.
In May last year our survey received responses from
99 investors who showed strong support for an
initiative on credit ratings, with 78% wanting to
see ESG more explicitly in ratings."
is a timely call for all involved in ethical
investing to get behind PRI's call to encourage
credit rating agencies to integrate ESG factors into
their credit ratings!
PRI says now is the time to act on ESG in credit
ratings, press release, April 6, 2016, UNPRI,
Underperform, Boards Less Diverse New Study Finds.
"The study finds that controlled companies
generally underperformed non-controlled firms over
all periods reviewed in terms of total shareholder
returns, revenue growth, and return on equity."
firms refer to companies controlled by a major
stockholder. The study suggests that diversity of
boards and ownership provides better governance and
lower CEO pay, among many other findings.
Controlled Companies Underperform, Boards Less
Diverse New Study Finds, press release, March
29, 2016, Investor Responsibility Research
Center Institute (IRRCi)/Institutional Shareholder
Services Inc. (ISS), USA.
Rolex, Disney, Google Top World’s Largest Survey of
"The RepTrak® System measures the general public’s
perception of the world’s top companies on the seven
key rational dimensions of reputation: products and
services, innovation, workplace, governance,
citizenship, leadership and performance."
ethical investors might query some of the top names
on this list. However, it's all about perception and
perception influences markets -- and stock prices.
This is always a noteworthy list to peruse.
Rolex, Disney, Google
Top World’s Largest Survey of Corporate Reputations,
Catalyst Investors, March 22, 2016, USA.
90% of (global) retail investors have
trust in financial services: Survey.
"Investors expect higher levels of transparency than
ever before, holding their investment managers to
the highest ethical standards, and are laser-focused
on returns, according to a recent study from CFA
Institute, the global association of investment
it's the CFA Institute who compiled the survey it is
useful reading for all in the investment industry.
Compared to other surveys of trust in the
investment/financial industry, this one paints a
relatively rosy picture. (For CFA's actual report,
90% of retail investors have trust in financial
services: Survey, March 29, 2016, Moneycontrol,
New investors' site analyses UK
funds for their SRI styles and policies. "We
fill a gap in the market by helping (mainly)
financial advisers to understand and meet their
clients’ green and ethical investment goals more
easily. The recently revamped sriServices Fund
EcoMarket database tool is a comprehensive, ‘whole
of market’ database."
the site founders focus on its applicability for
advisors, I can see many individual UK ethical
investors using the site.
investors' site analyses UK funds for their SRI
styles and policies, March 2016, Fund EcoMarket,
The study of socially responsible
investing. "'It seemed like institutional
investors don’t necessarily care about a company
having a good rating on an environmental or social
parameter. But, they do care if the company has a
poor rating.' [Quoting Associate Professor Abhishek
Varma, Illinois State University]."
study looks interesting, but I have few details on
it so far. The article cited is worth reading by
ethical investors as it might provide additional
information they might consider in their stock and
portfolio selection process.
The study of socially responsible investing, by
Molly Hartrup, March 24, 2016, Illinois State
University News, USA.
G&A Institute & Trust Across
America Partner to Examine Trustworthiness for S&P
500® Companies Not Reporting on Sustainability.
"Results Show Higher Trust for Firms Reporting on
Their Sustainability Journeys."
results of this survey are unsurprising to me. In
fact, I'm surprised that the data didn't show an
even larger difference of trust between those
companies reporting on sustainability compared to
those that didn't. Nonetheless, it still makes a
good case for non-reporting companies to report on
sustainability and I congratulate the survey
sponsors for conducting the study and making the
G&A Institute & Trust Across America Partner to
Examine Trustworthiness for S&P 500® Companies Not
Reporting on Sustainability, press release,
March 24, 2016, Governance & Accountability
Global Islamic Wealth Management
Industry Faces Trust Deficit. " A global
survey on the Knowledge, Attitude and Practices (KAP)
of the Global Islamic Wealth Management Industry
conducted by Edbiz Consulting, a London-based think
tank, revealed that the global Islamic wealth
management industry is facing a trust deficit that
is hampering the growth of the industry.
'48% of the respondents said they
have never used any Islamic wealth management
products and services, citing lack of understanding,
lack of trust and preference to manage own wealth as
reasons for not subscribing,' said Dr Sofiza Azmi,
Group CEO of HD-Edbiz Group of Companies.
'This finding resonates with
interviews conducted with more than 50 leading
industry practitioners and experts. About 18% of
them said that convincing Muslim HNWIs to invest in
Sharia-compliant way is very difficult. There is
certainly a trust deficit when it comes to managing
wealth in a Shariah-compliant way,' she added."
trust is an issue for Islamic wealth managers -- and
we know is not a major issue for the socially
responsible-ethical investment industry -- may offer opportunities for SR-ethical
investment managers to manage funds for Muslim HNWI
Global Islamic Wealth Management Industry Faces
Trust Deficit, press release, March 24, 2016,
Top Index Funds Showing
Significant Interest In ESG. "Top index funds
are showing significant interest in environmental,
social and governance issues, said Bob McCormick,
chief policy officer for Glass Lewis, the large
proxy advisory services... He added a reason index
funds have a greater incentive to consider ESG
issues than other investors is because they can’t
sell their shares short term so they have to focus
on long-term environmental and governance matters
that could impact the value of their holdings."
interesting perspective is suggested here that as
index funds generally have a longer-term time
horizon than most other funds, they could be more
amenable to engaging with companies on ESG issues.
Top Index Funds Showing Significant Interest In ESG,
by Ted Knutson, March 21, 2016, Financial Advisor,
Ratings Now Available to Individual Investors
Globally. "The new Morningstar Sustainability
Rating™ for funds is now available on its North
American and European websites as well as in
Morningstar® Advisor WorkstationSM, the company's
web-based practice management platform for
it has come to pass! It will be fascinating to watch
the reaction of individual investors to this option.
Will they gravitate to higher rated sustainable
Morningstar Sustainability Ratings Now Available to
Individual Investors Globally, press release,
March 17, 2016, The Netherlands.
Sustainable Funds Are Walking the
Walk. "The results are impressive, if not
surprising, and clearly support the notion that ESG
funds are investing in companies with strong
sustainability performance to a much greater degree
than funds in the overall universe.
Nearly half of the ESG
funds--45%--received the highest Sustainability
Rating. That compares with only 10% of funds in the
overall universe (the ratings are normally
distributed within each Morningstar Category, with
10% receiving the highest--and lowest--ratings). And
80% of intentional ESG funds have ratings of High or
Above Average, compared with only a third of the
is a relief for most ethical fund managers! As
mentioned before, it could give these fund managers
a new advantage as investors noting the differences
in ESG fund scores possibly begin switching to funds
with higher ESG scores.
Sustainable Funds Are Walking the Walk, by Jon
Hale, March 17, 2016, Morningstar, USA.
Is Your Mutual Fund a Climate
Change Denier or Climate Champion? "Among 42
mutual fund companies whose voting we analyzed, nine
companies, including the world’s largest mutual fund
company Vanguard, failed to support a single
climate-related shareholder resolution in 2015. The
other eight are American Funds, American Century,
Blackrock, Fidelity, ING (Voya), Lord Abbett,
Pioneer and Putnam."
data that Rob Berridge and Jackie Cook present is
not surprising, though somewhat disappointing that
some of the world's largest mutual fund companies
are so disengaged in the climate issue. However,
with the growing interest among investors in ESG and
that Morningstar and MSCI have fund rankings
according to ESG criteria it's likely that such fund
companies will need to change their perspective --
or risk losing clients and assets.
Is Your Mutual Fund a Climate Change Denier or
Climate Champion? By Rob Berridge and Jackie
Cook, March 15, 2016, EcoWatch, USA.
Eighty One Percent (81%) of
the S&P 500 Index Companies Published Corporate
Sustainability Reports in 2015.
charted the rapid and significant uptake in
corporate sustainability reporting among the 500
companies -- over the years, sustainability
reporting rose from just 20% of the companies
reporting in 2011 to 81% in 2015."
obvious that companies have gotten the message that
CSR strategies can pay dividends. Not only has CSR
become the norm, but ESG analysis in stock selection
and portfolio construction is fast becoming the norm
too. We have come a long way since I started
advocating for ethical investing over forty years
Eighty One Percent (81%) of the S&P 500 Index
Companies Published Corporate Sustainability Reports
in 2015, press release, March 15, 2016,
Governance & Accountability Institute, USA.
What Motivates Companies to
Do Good—Altruism, or Guilt?
analysis suggested that most CSR programs are
implemented as a matter of good management practice,
or to atone for past bad behavior. The researchers
found that for many companies, investing in CSR
because they think it’s the right thing to do or a
good move for the business overall pays off by
improving the overall financial performance of the
When looking at market-based measures of
performance, firms that made decisions to
incorporate these programs into their business
strategies saw a boost. That gives some credence to
the theory that firms can in fact 'do well by doing
chalk this one up as another plus for CSR! This
study -- by researchers at respectable universities
reviewing the CSR activities of 4,500 companies over
19 years -- has credibility. (See it
What Motivates Companies to Do Good—Altruism, or
Guilt? By Gillian B. White, March 14, 2016, The
Does CSR create shareholder
wealth? "In our recent study, we attempt
to answer this question that has troubled managers
and scholars for the better part of the last four
decades. And what we observe after rigorously
analyzing data from a large sample of 1725 firms in
the United States for the years 2000-2009, is that
the answer is a characteristically academic one –
findings are worth a read by all ethical investors.
They truly make some fascinating observations,
particularly the role of marketing departments in
promoting key corporate efforts to certain key
However, I wonder if their findings
would've been any different if they looked at the
years 2010 to 2014 inclusive (five full years)? The
outperformance of companies leading with ESG in that
period has been generally noteworthy. Also, consider
that the largest review ever compiled -- on
2200 individual ESG studies -- found a
significant positive impact of ESG on corporate
Does CSR create shareholder wealth? By Saurabh
Mishra, McGill University, Canada, and Sachin Modi, Iowa State University, USA, March 7, 2016, LSE
Review, London School of Economics and Political
Ethisphere Announces the
2016 World’s Most Ethical Companies®.
"The World’s Most
Ethical Companies program honors companies that
excel in three areas – promoting ethical business
standards and practices internally, enabling
managers and employees to make good choices, and
shaping future industry standards by introducing
tomorrow’s best practices today. Honorees have
historically out-performed others financially,
demonstrating the connection between good ethical
practices and performance that’s valued in the
In 2016, 131 honorees were named spanning 21
countries and five continents and representing over
45 industries. In its 10th year, the list includes
14 ten-time honorees and 13 first-time honorees."
is a good list with a great pedigree. However, I do
wonder why the vast majority of companies honoured
are American! It could be that not many companies
outside the USA bother completing Ethisphere's
Ethics Quotient questionnaire. If they don't
complete it they don't appear considered for the
World’s Most Ethical Companies® Honorees, press
release, March 7, 2016, USA.
Introducing MSCI ESG Fund
Metrics. "We leverage our ESG Ratings
coverage of more than 6,000 companies (11,000 total
issuers including subsidiaries) and more than
350,000 equity and fixed income securities globally
to create ESG scores and metrics for approximately
21,000 multi-asset class Mutual Funds and ETFs
seems that MSCI is determined to create competition
to the new Morningstar/Sustainalytics company/fund
ratings' system. This is great news for investors
and fund managers. They'll be able to compare funds'
ESG performance using these two different
Introducing MSCI ESG Fund Metrics, March 2016,
Bond Market Asking `What Is
Green?' Curbs Climate-Friendly Debt.
second guessing whether to participate in green-bond
markets as scrutiny by environmental groups raises
the bar on what constitutes a climate-friendly
After quadrupling in size from 2012 to 2014, lifted
by investors tracking environmental performance in
addition to yield, the green bond market is expected
to slow for a second consecutive year, according to
Bloomberg New Energy Finance. Growth moderated to 28
percent last year and in 2016 may nudge ahead just 4
percent, to $50 billion, the London-based researcher
not sure if this is happening, but perhaps groups
like Friends of the Earth, Banktrack, and other
environmental groups should work with the Climate
Bonds Initiative and Green Bond Principles to decide
acceptable environmental criteria for green bonds.
So far, it seems this hasn't happened. Until it
does, the green bond market is restrained in
attaining its potential. Perhaps there could be
different grades of green bonds depending on their
Bond Market Asking `What Is Green?' Curbs
Climate-Friendly Debt, by Anna Hirtenstein,
March 5, 2016, Bloomberg, UK.
Third of ethical funds fail
Morningstar’s top sustainability rating.
"Any fund with
more than 50 per cent of its assets covered by a
company-level ESG score from Sustainalytics will be
rated, with the portfolio score then giving an
asset-weighted average of the ratings. Deductions
will be made to this score for companies involved in
The fund’s Morningstar portfolio sustainability
score is then ranked relative to at least 10 peers,
with the funds evenly distributed across the rating
– from one globe, or low, to five, or high."
not too surprised by the headline. It's also
important to understand Morningstar's criteria for
their ESG ratings.
Third of ethical funds fail Morningstar’s top
sustainability rating, by Laura Suter, March 1,
2016, Fund Strategy, UK.
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