Individuals and institutions split on
benefits of ESG investing: survey.
"Individuals believe the environmental, social, and
ethical records of the companies they invest in are
important, said Natixis, while professionals at
institutions and within 'the investment community'
were more sceptical about the efficacy of these
strategies, for example having concerns about
The findings of this Natixis Global Asset
Management survey highlight -- in part -- why the
financial industry has taken so long to respond to
client ESG interests. Despite the arguments made in
this article, I suggest that investment
professionals not only disregarded their clients
interests but have taken an extraordinarily long
time to understand what ESG is and its potential
alpha. Another issue is that most investment
professionals have become short-term oriented,
whereas, ESG investing is more about performance
over the long-term.
Individuals and institutions split on benefits of
ESG investing: survey, by Susanna Rust, June 15,
2017, IPE, UK.
Millennials Think About Charity Entirely
Differently -- they invest in companies making a
positive impact and "social entrepreneurism."
"A study by Bank of America-owned U.S. Trust
showed the youngest of the three generations isn't
as interested in writing a check for a good cause —
millennials would rather contribute in other ways,
which could affect how an advisor manages their
wealth. Only 36 percent of millennials defined
'giving' as making a charitable financial donation,
versus 61 percent of Gen X participants and 83
percent of Boomers."
This good news for advisors and the financial
markets. It assists the overall orientation towards
ESG and is positive for improved ethical behavior
in all financial market participants.
Millennials Think About Charity Entirely
Differently, June 14, 2017, WealthManagement,
Americans Question Motives Behind CSR.
"According to the latest annual Harris Poll
Reputation Quotient study, which tracks the
perception of the 100 most visible companies in the
U.S. by asking consumers to rank their reputations
across a half-dozen key attributes, 45 percent said
they believe companies embark on CSR initiatives
because they believe it’s a role they should play as
leaders in their communities.
Conversely, a similar amount — 40 percent —
said they believe companies develop CSR initiatives
only to bolster their public image and establish
social value for stakeholders."
I believe it's a great thing that companies embark
on CSR activities. However, I wonder if the term CSR
has outlived itself? I find ESG a much better
differentiator between companies as I believe it
delivers a better corporate focus (organizationally
and financially) and possibly reduced 'greenwashing'
Americans Question Motives Behind CSR, by Jon
Gingerich, June 12, 2017, O'Dwyer's, USA.
16th annual Best 50 Corporate Citizens in
Canada report. "This year’s Best 50
Corporate Citizens in Canada ranking is a reflection
of this new disclosure climate. Corporate Knights
had maintained 12 key performance indicators for a
number of years due, in part, to how widely
disclosed these data points were on an industry-wide
scale. Additional metrics were not adopted because
of the limited value provided by assessing companies
on a metric that isn’t available for the majority of
companies in the research universe.
With sustainability disclosure practices
improving (albeit slowly), Corporate Knights was
able to add two new metrics to the ranking
methodology this year: the supplier score and the
clean air productivity score."
The Best 50 Corporate Citizens in Canada is always a
good read and helpful to ethical investors.
16th annual Best 50 Corporate Citizens in Canada
report, June 6, 2017, Corporate Knights, Canada.
Wegmans, Publix Super Markets, Amazon,
Tesla And USAA Draw Top Social Responsibility Scores
In Harris Poll. "Other companies
receiving 'excellent' corporate social
responsibility ratings are Lowe’s, UPS and L.L.
Bean. Monsanto, Wells Fargo and Goldman Sachs
garnered 'critical' corporate social responsibility
marks in the Harris Poll study, which asked more
than 23,000 consumers to rate the 100 most visible
companies in the U.S. on social responsibility
attributes such as: supports good causes,
environmental responsibility and community
Some of the names at the top of this list are
surprising. Wells Fargo has been engaged in some
unethical customer practices, while Monsanto is
criticized by a number of health
Wegmans, Publix Super Markets, Amazon, Tesla And
USAA Draw Top Social Responsibility Scores In Harris
Poll, press release, June 7, 2017, The Harris
Do SRI Funds Have a Future in [US] 401(k)
Plans? "SRI funds are slow to crack the
$6.7 trillion 401(K) market, even though investor
demand is strong."
This story covers the results of a survey with 600
US financial advisors. The numbers of advisors
claiming to be engaged with SRI funds makes me
question how the advisors might've interpreted that
and other questions. If the advisors are right, then
a large percentage of their client base should
already be in SRI products. However, I doubt that is
the case. Though, it's great to see these numbers!
Do SRI Funds Have a Future in [US] 401(k) Plans?
By Mark Miller, June 2, 2017, Wealth Management,
Sustainable Investment Market Report 2017
– Sustainable investment market in Germany, Austria
and Switzerland makes significant gains yet again.
"The strongest growth in sustainable investments
was recorded in Switzerland (+39%), followed by
Austria (+24%) and Germany (+15%). 'Each year, we
see increasing numbers of investors opting for
sustainability in the management of their assets,'
says Volker Weber, Chair of the Board of Directors
at FNG, commenting on the latest market figures.
'Institutional investors, in particular, are
increasingly being won over, while we know from
asset managers that more and more of them see
factoring in non-financial criteria as a normal part
of their fiduciary duties.'"
These are huge one-year growth figures. Quite likely
a few very large funds were particularly
responsible. Sustainable investing is now mainstream
Sustainable Investment Market Report 2017 –
Sustainable investment market in Germany, Austria
and Switzerland makes significant gains yet again,
press release, June 1, 2017, Eurosif, Europe.
Institutional Investors to Boost ESG
Investments. "Nearly 80% of asset
managers and asset owners incorporate environmental,
social and governance (ESG) factors into their
decision-making, according to a survey from BNP
Paribas Securities Services. The report, titled
'Great Expectations: ESG – What’s next for asset
owners and managers,' found that among the asset
owners incorporating ESG, 46% plan to invest at
least half of their assets into funds that
incorporate ESG by 2019."
This survey indicates tremendous growth for ESG
based institutional investing strategies in the next
few years. It's certainly a positive for all ethical
Institutional Investors to Boost ESG Investments,
by Michael Katz, June 1, 2017, Chief Investment
Now, this is controversial: FAU
Study Says Corporate Social Responsibility Does Not
Prove to Be a Profitable Investment for Most
Companies. "Companies that try to 'do
good' are likely to find that Corporate Social
Responsibility (CSR) is bad for their bottom lines,
according to a new study from Florida Atlantic
University's College of Business. 'We found that
emphasizing Corporate Social Responsibility is not
good for shareholders,' said David Javakhadze,
Ph.D., assistant professor of finance, who
investigated the relationship between CSR and
efficiency with which firms allocate their capital
resources. 'If you're an investor you should think
twice before you invest in those firms that
Since numerous studies including those from elite
universities such as Harvard and Oxford have shown
that companies excelling in ESG (CSR?) perform as
well or better financially and in stock returns,
this new study is an outlier. Nonetheless, it's
worth reviewing and critiquing.
FAU Study Says Corporate Social Responsibility Does
Not Prove to Be a Profitable Investment for Most
Companies, press release, June 1, 2017, Florida
Atlantic University College of Business, USA.
Canadian investors are interested in
responsible investments, and they want gender pay
equity and more women in corporate leadership.
"The report, sponsored by OceanRock Investments
Inc., found that while 77% of investors are
interested in RI, a staggering 73% know very little
or nothing about it. These results highlight the 'RI
awareness gap' – a significant gap between investor
interest vs knowledge about RI.
'A strong majority of investors told us that
they are more likely to choose responsible
investments if their advisor suggests suitable
options or if their financial institution, credit
union or online brokerage informed them about
responsible investments,' said Deb Abbey, CEO of the
At the beginning of Canada's 2017 RIA Conference in
Vancouver, the RIA announces some incredible survey
findings: Canadian investors want responsible
2017 RIA Investor Opinion Survey, press release,
June 1, 2017, RIA, Canada.
Diversity, ESG relatively low scheme
governance priorities: survey. "Board
diversity, ESG investing, and external reviews are
relatively low governance priorities for pension
scheme trustees and managers, according to a report.
It was produced by Winmark, which runs professional
member networks to facilitate peer learning, and
Sackers, a law firm. It was based on a survey of 84
pension schemes – trustees and pension managers –
and 13 in-depth interviews with chairs of trustee
boards and other pensions experts."
It could be that many UK pension schemes are
relatively underperforming as so many scheme
trustees appear ignorant of the potential returns
that a focus on ESG might bring to their schemes.
Diversity, ESG relatively low scheme governance
priorities: survey, by Susanna Rust, May 28,
2017, IPE, UK.
UK Ethical investing sector held back by
lack of awareness, says new survey.
"More than half of the UK population want their
wealth to have a positive impact on society but are
unsure where to turn to for help, highlighting a
knowledge deficit in the area of ethical investing.
The survey, conducted by positive savings
platform Ethex, shows lack of knowledge,
understanding and confidence in what is on offer is
holding many investors back from investing in
50 percent of those asked did not feel they
know enough about positive investment and savings,
although 45 percent were willing to learn more. In
addition, 39 percent did not know whether to expect
a stronger or weaker financial return from positive
investments when compared to traditional ones and 55
percent did not think they were wealthy enough to
make positive investments."
Most investors in the developed
world have for over two decades wanted to be
invested in ethical, socially responsible, and
sustainable companies. It's always been the vested
interests in the mainstream financial industry that
never got the message -- until quite recently.
It's peculiar how an industry priding itself in its
marketing and customer relations has been so
out-of-touch with its clients -- and for such a long
time. I've always asked, whatever happened to the
'know thy client' rule.
Ethical investing sector held back by lack of
awareness, says new survey, by Miranda Wadham,
May 25, 2017, The Investment Observer, UK.
Key ESG Trends. "From a
geographic perspective, the GSIA data showed that
European and Canadian assets were more diversified
across different implementation strategies: in
addition to negative screening, there were a higher
proportion of assets using norms-based screening,
corporate engagement, and integration approaches.
Within the United States, the primary forms of
implementation were integration, negative screening,
and corporate engagement."
This post has some fascinating charts on ESG
investing globally. However, one figure that stands
out -- and I believe questionable -- is the
proportion of sustainable assets vs total managed
assets in Europe at 58.896%. There is an explanatory
note but to me, it seems to obfuscate the issue.
Key ESG Trends, by Blake Pontius, May 23, 2017,
William Blair Blog, USA.
27% of asset managers doubt future of
ethical investing as costs rise, survey, BNP Paribas
Securities Services. "A further 28% of
asset managers admitted they were concerned they
didn’t have the ability to meet the demand for ESG
investments from clients currently, and worried they
wouldn’t in the future. The research report, titled
‘Great Expectations: ESG – What’s next for asset
owners and managers’, also found more than half
(55%) of those surveyed felt the lack of robust data
on ESG investments was the biggest barrier to its
adoption in strategies."
What should've been the headline is that 55% of
those surveyed felt the lack of robust ESG data as
the biggest barrier to fully implementing ESG
managers doubt future of ethical investing as costs
rise, by Louise Hill, May 24, 2017, Portfolio
New Report Reveals 86% of Americans
Expect Companies to Take Action on Social,
Environmental Issues. "Most
interestingly, the study considers consumer behavior
in light of today’s political climate and shows that
67 percent of Americans believe progress on social
and environmental issues will slow in the absence of
government regulation — and their confidence in
organizations to drive change is low. As a result,
43 percent of consumers believe individuals present
the greatest potential to solve social and
environmental issues, followed by nonprofits (18
percent), government (17 percent) and business (13
President Trump needs to tread carefully on social
and environmental regulations, or he risks a
considerable public and political backlash. This
survey by Cone Communications illustrates that the
majority of Americans want their government active
in social and environmental change.
New Report Reveals 86% of Americans Expect Companies
to Take Action on Social, Environmental Issues,
by Libby MacCarthy, May 18, 2017, Sustainable
UK Savers clueless about what their banks
do with their money. "Triodos: The
sustainable and ethical bank surveyed 2,003 people
who have some savings. The research reveals that the
transition to a low-carbon economy is the top
priority for savers wanting to make a positive
difference. Nearly half (47 per cent) said they
would like their money to be used to help develop
renewable energy, while four out of ten (41 per
cent) wanted to support energy efficiency.
Savers also identified social housing (41 per
cent), community/society groups (28 per cent), human
rights and labour rights (28 per cent), urban
regeneration (24 per cent) and sustainable business
(23) as areas they would like their money to be
invested in... "
Of course the savers were talking about their bank
deposits here and how they should be used. At the
ethical UK bank, Triodos, they actually publish the
details of who they make loans too.
UK Savers clueless about what their banks do with
their money, by Marina Gerner, May 12, 2017,
Money Observer, UK.
Advisor Interest In SRI Nearly Doubles
Since Last Year, Survey Says. "Forty
percent of advisors now report that socially
responsible investing is important to them and their
clients, compared to only 21 percent who said that
This is wonderful news. Soon SRI-ethical investing
will be quite normal for advisors and investors
alike. Perhaps a day might come when nearly all
investing is SRI-ethical-ESG compliant!
Advisor Interest In SRI Nearly Doubles Since Last
Year, Survey Says, by Karen Demasters, May 11,
2017, FA Magazine, USA.
Fostering Long-Termism in Investing.
"Khan, Serafeim, and Yoon (KSY)9: found that
portfolios made up of companies with high KLD10
sustainability scores weighted by SASB11 materiality
scores outperformed portfolios of companies with low
KLD sustainability scores weighted by SASB
materiality scores by average annual return gaps
ranging from 3.1%/yr. to 8.9%/yr. over 20+year
observation periods, depending on the degree of
portfolio concentration.12 They observed their
results were notably different from the mixed
results of previous ESG studies that did not include
the materiality dimension."
I've used the above quote as a leader to encourage
all my readers to read this extraordinarily
insightful piece that strongly argues for long-term,
participatory, sustainable, and focused investing!
Fostering Long-Termism in Investing, by Keith
Ambachtsheer, May 9, 2017, Benefits & Pensions
6 benefits to companies that issue green
bonds. "Last year, almost twice as many
green bonds as expected were issued, and in the
first quarter of 2017, issuance stood at $21.76
billion, up nearly 42 percent from the same period
last year. What's more, a new report by the
Organization for Economic Co-operation and
Development (OECD) estimated that the green bond
market could increase to $4.7 trillion to $5.6
trillion in outstanding bonds by 2035, with annual
issuances of $620 billion to $720 billion."
With investors appetite for green bonds rising
sharply and outstripping demand, green bond yields
often command relatively lower yields. As lower
yields frequently mean reduced interest costs to
companies it increases the attractiveness for
companies to issue them vis a vis regular bonds.
It's a win for companies and a win for ethical
6 benefits to companies that issue green bonds,
by Rochelle J. March, May 5, 2017, GreenBiz, USA.
10 reasons Wealth Managers are following
investor demand to ESG. "But investors
are even more attuned to ESG than advisors are,
which makes ESG savvy a competitive advantage in
today’s managed money world."
The reasons given for advisors to engage in ESG
issues with their clients are many had the key ones
are covered in this post. Furthermore, surveys and
studies back the reasons discussed.
10 reasons Wealth Managers are following investor
demand to ESG, by TruValue Labs. May 2, 2017,
Finally – A Meaningful Deciphering of
what “ESG Integration” Really Means.
"The problem, however, is that 'integrating ESG' has
become a meaningless mantra. Firms were using
'integrating ESG' to mean everything from mandatory
consideration of the most sophisticated analysis to
Sustainalytics, an independent ESG research
firm, [has] developed a typology of how
organizations use ESG. Do they use centralized staff
or distribute ESG analysis responsibilities to the
portfolio teams? Is ESG considered on a
portfolio-company-by-portfolio-company basis, or
more thematically, for instance looking at potential
investments in the water sector? Is ESG research
mandated to be considered, or just made available to
the investment teams? Do the organizations modify
external research or use it as is?"
The Investor Responsibility Research Center
Institute (IRRC) commissioned Sustainalytics for
this research and Sustainalytics has now shone a
light on how ESG criteria are used by asset owners
and managers. The results are fascinating and
important for all responsible-ethical investors to
Finally – A Meaningful Deciphering of what “ESG
Integration” Really Means, by Jon Lukomnik, May
1, 2017, HUFFPOST.
The 2017 100 Best Corporate Citizens.
"Compiling the 18th annual list of the 100 Best
Corporate Citizens began with our research team
documenting 260 data points of disclosure and
performance measurements for the entire Russell
1000. The data was gleaned from publicly available
information and each company was ranked in seven
This is a great list compiled by people who really
know the subject. Hasbro, Inc,; Intel Corp; and
Microsoft Corporation are the top three. See the
The 2017 100 Best Corporate Citizens, April 21,
2017, CR Magazine, USA.
The Ethics & Trust in Finance Prize --
Formerly Ethics in Finance, Robin Cosgrove Prize.
"[The prize] promotes greater awareness among
young people throughout the world concerning the
benefits of ethics in finance, and encourages
high-quality management of banking, insurance and
financial services based on trust and integrity.
Launched in 2006 and now in its 6th Edition,
the global competition for the Prize for Innovative
Ideas for Ethics & Trust in Finance is open to young
people, aged 35 years or younger, from throughout
the world. The competition invites creative papers,
which may be submitted in English or French, setting
out analyses or proposals for innovative ways to
promote ethics & trust in finance. The Jury
allocates the prize money of USD 20,000 among the
I've been promoting this prize almost since it's
inception. It's a very worthy endeavour and I
encourage those under 35 with an interest in this
subject to submit their ideas! The fact that
Christine Lagarde, IMF's Managing Director has been
involved, demonstrates the importance of what the
prize is attempting to do. For entering the
competition or information on the prize, go to
Trust in Finance Prize.
Hermes finds 'clear relationship' between
ESG and credit spreads. "Companies with
the weakest ESG credentials, as captured in low QESG
scores, tended to trade with the widest CDS [credit
default spreads] spreads, Hermes found – indicating
a higher risk of default."
It makes sense that companies with bad ESG
characteristics are poor credit risks. And
that's why their financing costs are higher too. As
companies understand that good ESG performance means
lower financing and human resources' costs with
potentially higher prices for their shares,
they'll increasingly strive to improve their ESG
Hermes finds 'clear relationship' between ESG and
credit spreads, by Susanna Rust, April 19, 2017,
Investment & Pensions Europe, UK.
US companies rank miserably low on the
UN’s new corporate responsibility rankings.
"The SDG Commitment Report 100... is the
first-ever analysis to use annual reports as the
sole metric to assess corporate commitments to the
UN’s 17 sustainable development goals. Analysts
argue that the corporate annual report, a
legally-required document, is a higher—and
better—standard to judge a company’s commitment to
sustainability than any voluntary corporate
... Apple is joined at the bottom of the
gilded heap by more than a dozen companies who also
ignored sustainable development in their annual
reports, including Disney, Walmart, and General
This report is deeply embarrassing for those
multi-national corporations priding themselves in
their good social and environmental activities.
Obviously, the UN wants to shame these corporations
to significantly engage in their Sustainable
US companies rank miserably low on the UN’s new
corporate responsibility rankings, by Dan
Morrison, April 19, 2017, OrbMedia, USA.
ESG increasingly important in global
shift towards sustainable economy. "In
a bid to better understand the mindset of investors
globally, EY recently
surveyed, for its 'Is your nonfinancial performance
revealing the true value of your business to
investors?' report, part of the global investment
community, which included 320 participants, of which
one-third have more than $10 billion under
This EY survey is revealing in showing how far
the investment community has come concerning the
importance of climate change and sustainability in
assessing potential investments. For instance, the
concept of stranded assets -- unknown just a few
years ago -- has become a major concern to
ESG increasingly important in global shift towards
sustainable economy, April 13, 2017,
Green Bonds Awards, Environmental
Finance. They cover banks,
underwriters, companies, etc.
An interesting list, particularly for those in the
investment industry. Provides good insight into the
growing importance of the green bond market.
Green Bonds Awards, Environmental Finance, press
release, April 13, 2017, Environmental Finance, USA.
Arabesque Combines Big Data and AI to
Launch Unique Corporate Transparency Tool.
"A new tool that allows investors, regulators,
NGOs, corporates, and consumers to monitor the
sustainability of over 4,000 of the world’s largest
corporations has been launched today. Arabesque
S-Ray™ is designed to streamline vast amounts of
environmental, social, and governance (ESG)
information into one easy-to-use, smart application.
Its unbiased diagnostic technology processes
countless data points to evaluate companies in three
Arabesque S-Ray™ is the first tool of its
kind to score corporate performance on the normative
principles of the United Nations Global Compact:
Human Rights, Labor Rights, the Environment, and
Another great analytical tool for ethical investors.
However, the free version is pretty basic.
Arabesque Combines Big Data and AI to Launch Unique
Corporate Transparency Tool, press release,
April 11, 2017,
Academic Research Based on RepRisk Data
Shows That Negative ESG News Increases Credit Risk.
"A new academic study shows that negative news
linking a company to environmental, social, or
governance (ESG) issues increases credit risk. The
study used data from RepRisk, a leading provider of
ESG risk analytics and metrics. Researchers at ETH
Zurich, MIT Sloan, and the University of Hamburg
performed the research which was published by the
prestigious peer-reviewed journal 'Strategic
These findings aren't surprising. After all, if a
company has ESG issues creditors less likely to
continue lending to that company as if there are no
problems. Anyway, it's good to see these findings as
it further incentivizes companies to perform better
on ESG issues. And that benefits companies and
Academic Research Based on RepRisk Data Shows That
Negative ESG News Increases Credit Risk, press
release, April 5, 2017, RepRisk, Switzerland.
2017 Future 40 Responsible Corporate
Leaders in Canada ranking. "Shifting
the spotlight to medium-sized corporate
sustainability leaders across Canada."
An interesting and useful list, particularly for Canadian
ethical investors. It includes many
Future 40 Responsible Corporate Leaders in Canada
ranking, April 6, 2017, Corporate Knights,
This Man Will Purify Your Portfolio.
"Portfolios were far from [Michael] Jantzi's
ambitions when he landed degrees from Canadian
universities in economics and international affairs.
He was going to help humanity via a career in the
foreign service. But those jobs were scarce. He was
partway through the process of getting licensed in
securities sales when he had a revelation. If he
must sell out to Wall Street, why not feed its less
avaricious appetites? He would do research on
This is a terrific overview of the career to-date of
Michael Jantzi, one of the world's true pioneers in
ethical investing and presently CEO of
Sustainalytics, a global leader in ESG ratings.
Under Mr. Jantzi's direction,
Sustainalytics has recently made a great
breakthrough in bringing their individual ESG
company ratings directly to the investor through
Scotia iTRADE, the large Canadian discount broker.
It's likely only a matter of time before many more
brokers offer this service and the retail public
finally has direct inexpensive access to quality
individual company ESG ratings and research.
This Man Will Purify Your Portfolio, by William
Baldwin, April 3, 2017, Forbes, USA.
Sustainable strategies on growth track in
U.S. "Assets under management in U.S.
mutual funds and exchange-traded funds using an
environmental, social and governance-only approach
reached $200 billion at the end of February, up 5.8%
from Dec. 31 and up 17% from year-end 2015,
Morningstar Inc. data show. The data do not include
institutional separate accounts or ESG assets
managed internally by U.S. pension plans."
Good overview by Mr. Diamond of US funds utilizing
ESG criteria. Also, it's great to see Morningstar
collecting and publishing fund/ESG data since they
have a such a terrific database to mine for it.
Their benchmarking will be particularly useful.
Sustainable strategies on growth track in U.S,
by Randy Diamond, April 3, 20-17,
Pensions&Investments, USA. (Subscription
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