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Ethical Investing News/Commentaries:
July 2009 |
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Commentaries by Ron
Robins
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ESG Issues Have Come To The Fore
Among Emerging Market Investors.
-
[COMMENTARY]
"In 2009, 46 percent of asset owners strongly
agreed with the statement 'ESG issues are an
important part of our research, portfolio management
and manager selection,' up from 36 percent in 2007.
The majority of asset owners (78 percent) think the
importance of ESG factors has been amplified by the
crisis and will result in greater use of ESG
criteria over time." It is unfortunate that it
took the recent financial crises and the lack of
transparency and poor ethical conduct to convince
powerful investors to wake-up for the need of ESG
(environmental, social and governance) issues to
come to the forefront. Anyway, a higher
consciousness is now prevailing and is likely to
grow regarding the inclusion of ESG matters in
investment decisions.
Sustainable Investing In Emerging Markets (July
2009), July 2009, International Finance
Corporation, USA.
Trucost Examines Carbon Risks
Inherent In UK Pension Funds.
-
[COMMENTARY]
"Governments in OECD countries are implementing
legislation and regulations to introduce or
strengthen controls on greenhouse gas emissions
through mechanisms such as cap-and-trade schemes.
Carbon-intensive companies will incur rising carbon
costs under government policies to apply carbon
pricing and may lose market share to more efficient
and innovative companies that emit less and seek new
opportunities. As a consequence, the potential
exposure of earnings to carbon costs across
portfolios could have a knock-on effect on pension
fund returns."
This extremely well researched study does not state
the carbon footprints of specific UK pension funds,
but treats them as a group. However, it does go into
detail the effects on earnings of various large
carbon emitters.
Carbon Risks in UK Equity Funds, July 2009,
Trucost/ WWF/Mercer, UK.
Shareholder Engagement--New
Report Offers Useful Advice & Perspective.
-
[COMMENTARY]
"There is a real debate as to whether there
should be a forum for collective engagement. This
could have the benefit of ensuring companies hear
the range and depth of investor views and also bring
economies of time spent for companies. But there is
genuine concern and nervousness that collective
forums would not allow open and honest dialogue and
could simply create another ‘box ticking’ activity
as senior people would not attend." It is clear
that many shareholders want to be actively engaged
in the companies that they invest in. This report is
of significant interest to such individuals and
institutions.
Corporate Governance & Shareholder Engagement,
by Jan Hall, July 2009, Thomas O'Malley/JCA Group,
UK.
Study: Screening For Quality
Corporate Governance Adds To Returns.
-
[COMMENTARY]
"Results from this study found that enhanced screens
for corporate governance risk augmented investment
returns in a hypothetical fund. The results of the
study set the stage for the development of a
commercially-viable governance alpha index."
This fascinating study has just come to my
attention, courtesy of Canada's Social Investment
Organization. It provides more proof that screening
for factors that demonstrate quality governance can
prove profitable. Click link below and scroll down
to study. You will need to 'add it to cart' but it
is free.
Investing In Corporate Governance: Maximizing
Governance Alpha,
by Ric Marshall, The Corporate Library, USA.
A Billion Euros Came Back Into
SRI Funds In May.
-
[COMMENTARY]
"Over a billion
euros (€1,068.3m) shifted back into European SRI
funds during May as equity markets rose, according
to the latest available figures compiled for
Responsible Investor by Lipper Feri, the investment
data group. Bond funds were among the biggest
sellers representing three of the top five asset
gatherers during the month. SRI funds or ‘RI
Screened’ as they are labelled by Feri are those
that have undergone an ‘extra financial’ ESG screen
in their stock selection process."
As investors come back into the markets they are
showing a preference for ethical stocks and bonds.
It seems the recent turbulence and unethical conduct
in the financial markets is now having an effect on
investor behaviour.
A billion euros shifts back into SRI funds as
markets rise,
by Hugh Wheelan, July 28, 2009, Responsible
Investor, UK.
First
European Sharia Compliant Money Market Fund
Launched.
-
[COMMENTARY]
"Bank of London and the Middle East (BLME) is
launching the Sharia’a Dollar Income fund, which it
describes as Europe’s first sharia-compliant
money-market portfolio, writes Nick Rice. Domiciled
in Luxembourg as an unregulated Sicav-Sif for
sophisticated investors, the vehicle already has
$50m (£31m, €35m) in assets and requires a minimum
investment of $500,000." Sharia compliant
investments share many of the same features as
ethical investments. It will be fascinating to see
if sharia compliant money market funds gain ground
in the developed world.
New funds: July 27, by Nick Rice, ft.com, UK.
(Subscription to ft.com, which is free for a limited
service, might be required.)
US Mutual
Funds Begin Disclosing The Carbon Footprint Of Their
Holdings.
-
[COMMENTARY]
"You want a car that gets good gas mileage and
you want energy efficient appliances (or at least I
hope you do). But do you want a low-carbon
investment portfolio? The Green Century Balanced
Fund is betting that you do. The Boston-based mutual
fund says it is the first U.S.-based fund to
disclose its carbon footprint, which is 66% less
than the carbon intensity of the S&P 500 Index."
This is the next frontier for companies and funds:
disclosing their carbon footprints. For many ethical
investors the best funds and stocks that are good to
invest in will be those with the lowest carbon
emissions. This is an interesting article and
written by a pioneer in the socially
responsible/ethical investing field.
Is There High Interest in a Low-Carbon Mutual Fund?
By Marc Gunther, July 23, 2009, GreenBiz
article via Reuters, USA.
Indian
Ethical Indices Outperforming Conventional
Benchmarks.
-
[COMMENTARY]
"Even as socially responsible investing (SRI) is
yet to find its feet in India, indices that screen
stocks based on ethical and environmental concerns
have been outperforming their benchmark peers... For
example, while the Nifty has delivered 73 per cent
returns since March 9 when markets started showing
an uptrend, the S&P ESG (environmental, social and
corporate governance practices) India index has
returned 105 per cent. Similarly, the CNX Nifty
Shariah and the CNX 500 Shariah have posted returns
of 76 per cent and 81 per cent, respectively."
One does not normally associate ethical investing
with developing world economies. However, their
performance in India is likely to encourage many
more investors there and elsewhere to invest in
them.
Ethical indices outdo benchmarks, by Vandana/Mumbai,
July 24, 2009, Business Standard, India.
Responsible
Investments (RI) To Be 15% Of Global Assets By 2015: Robeco/Booz & Company Study.
-
[COMMENTARY]
"We expect the RI market to become mainstream
within asset management by 2015, reaching between
15%-20% of total global Assets Under Management (USD
26.5 trillion) and a total revenue of approximately
USD 53 billion." This study again affirms
investing in ethical stocks and bonds will grow
substantially over the long-term. It cites the
impact of global warming and both corporate and
government responses to it as significant factors
for the mainstreaming of RI.
Responsible Investing: a paradigm shift, from niche
to mainstream, July 2009, Robeco/Booz & Company,
USA.
50 Investor
Groups, Social Investment Forum (SIF) Urge SEC To
Require Environmental, Social & Governance (ESG)
Disclosure.
-
[COMMENTARY]
"The organizations are asking the SEC to require
companies to report: (1) annually on a cohesive set
of sustainability indicators in accordance with the
most up-to-date reporting framework of the Global
Reporting Initiative (GRI); and (2) on other
material ESG matters as they come to light."
Congratulations to the SIF for organizing this
response to the SEC. On where I stand, see my editorial,
We Need Mandatory Corporate Social Responsibility
(CSR) Reporting.
For SIF press release, click:
More than 50 Investor Groups, Social Investment
Forum Urge SEC to Require Environmental, Social &
Governance (ESG) Disclosure, July 21, 2009,
Social Investment Forum, USA.
New UK
Corporate Responsibility Index Launched.
-
[COMMENTARY]
"SocialFunds.com -- In London yesterday, the
Corporate Responsibility Index was launched by
Business in the Community (BITC), a U.K. consortium
of 700 companies devoted to improving their positive
impact on society. The index, which is the first of
its kind, benchmarks the corporate social
responsibility (CSR) performance of companies. This
year's index includes 122 companies that volunteered
to be assessed." The fact that companies are
volunteering to be included shows that more and more
companies see the advantages of using corporate
social responsibility.
See data at
Corporate Responsibility (CR) Index, BITC, UK.
Global
Reporting Initiative--A Standardized CSR
Report--Makes Gains, But Used In Only 13% Of S&P 500
Companies & 22% Of FTSE 100 UK Companies.
-
[COMMENTARY]
"With 46 percent growth over 2007 numbers, the
GRI reported today that a record 1,002 companies
issued sustainability reports based on the
organization's G3 Guidelines in 2008. Because there
is no requirement to inform the GRI that a report
has been issued in accordance with its guidelines,
the number of GRI-compliant reports in 2008 is
likely higher than the reported figure, but still
represents a minuscule portion of the world's
corporations... " More government induced
standardization and CSR reporting requirements are
needed. Again, see my editorial,
We Need Mandatory Corporate Social Responsibility
(CSR) Reporting.
Despite Record Growth, Only a Tiny Fraction of Firms
Report on Sustainability, July 16, 2009,
GreenBiz, Netherlands.
Six In 10
Americans Want Religion In Business.
-
[COMMENTARY]
Other findings in this Marist Poll: "Financial
and Investment Industry Worst... the financial
industry fares worst in the opinion survey. The
majority of Americans and two-thirds of executives
gave a grade of “D” or “F” (on an A-F scale) in
ethical matters to the financial and investment
industry." Polls like this indicate why ethical
investing will continue to gain ground.
Six in 10 Americans Want Religion in Business,
July 17, 2009, MC Marketing Charts, USA.
UN's PRI: 25%
Rise In Members Incorporating Responsible Investing
(RI) Elements In Fund Manager Contracts.
-
[COMMENTARY]
"The PRI said it had surveyed almost 300 global
pension funds (asset owners) and fund manager
signatories, and that 63% of the asset owners –
which include some of the world’s biggest retirement
plans – now made RI elements a part of manager hire
stipulations, up from 38% in 2008." This is
continuing great news for responsible (ethical)
investing. It demonstrates that a higher
consciousness is beginning to permeate the
investment industry.
PRI: 25% rise in members incorporating RI elements
in fund manager contracts, PE guide launched, by
Hugh Wheelan, July 16, 2009, UK.
United
Nations Environmental Program (UNEP) Financial
Initiative Issues New Report On Legal & Fiduciary
Responsibilities Of Integrating Environmental,
Social, & Governance (ESG) Factors Into Asset
Management.
-
[COMMENTARY]
This is a landmark report and makes a convincing
case for asset managers and investors to incorporate
ESG factors into their decision making process. Over
time, this report should prove helpful to boosting
the fortunes of ethical stocks and bonds.
Fiduciary responsibility: legal and practical
aspects of integrating environmental, social and
governance issues into institutional investment,
July 2009, UNEP Finance Initiative, Switzerland.
SEC Considers
Making Mandatory Company Reporting On How Climate
Change Is Likely to Affect Them.
-
[COMMENTARY]
"The SEC is taking on climate change. Regulators
there are considering requiring companies to
disclose the effects of climate change on their
financial health, according to ClimateWire... At
issue here is whether the SEC should force companies
to discuss how climate change is increasing risk
through physical damage, financial loss and legal
liability." Should the SEC agree to make
companies disclose such information, we might see
some very big and welcome changes in company
rankings in the S&P 500! Be prepared.
SEC studies...climate change? By Kim Peterson,
July 13, 2009, MSN Money, USA.
Companies
Rated 'High' On CSR Measures Often Rated Differently
By Consumers.
-
[COMMENTARY]
"The results of a recent corporate responsibility
study – the Corporate Citizenship Study (CCS) – have
experts befuddled. The CCS asked consumers to rank
several corporations’ level of corporate social
responsibility, or CSR (a corporation’s transparency
in its practice and reporting of environmental,
financial, and other policies). The results of the
CSS were unexpected: consumers ranked several
corporations (including Microsoft and General Mills)
over other companies (including Pepsi, Coca Cola,
Apple, and McDonald’s) deemed more socially
responsible by the CRO 100 (a CSR policing agency
that annually ranks corporations in its “Best
Corporate Citizens” list)."
It seems that in
the eyes of the consumer, brand recognition often
trumps a company's corporate social responsibility
credentials. Nonetheless, for companies, the
advantage of using corporate social responsibility
can, over time, add to the bottom line in many ways.
Do Consumers Know What They're Doing? Recent Study
Baffles Corporate Responsibility Experts, July
14, 2009, Triplepundit, USA.
Canadian
Province Of Quebec Unveils Pioneering Sustainable
Mining Development Strategy.
-
[COMMENTARY]
"The strategy is constructed around three main
policies. One, the mineral sector will be prepared
to create wealth now and in the future. Two, mineral
development will be done in an environmentally
friendly manner. Three, the government will foster
integrated, community-centred development."
These points make a lot of sense and if properly
implemented could set new standards for the global
mining industry and attract many ethical investors
who, hitherto, have shunned investing in
resource/extractive industries.
SUSTAINABLE DEVELOPMENT: Quebec publishes mineral
strategy, July 12, 2009, Canadian Mining
Journal, Canada.
South Korean
CEOs Overwhelmingly Interested In Green Investments.
-
[COMMENTARY]
"Over 80 percent of 105 South Korean CEOs at
major companies plan to invest in environmental
technologies and see them as a major business in the
long-term, a survey said on Monday, adding to hopes
for a government green spending plan." I doubt
if you would see this level of interest in green
investments among American CEOs. China also, on a
proportional basis, is leaping ahead of the US and
Europe in its green investing initiatives. It
appears to me that Asia is likely to lead in the
green tech/energy revolution in the decades ahead.
South Korea CEOs interested in green investment:
survey, by Cho Meeyoung; editing by Jonathan
Hopfner, Reuters, South Korea.
Ethical
Investing Grows In Africa.
-
[COMMENTARY]
"Databank Financial Services on Friday added to
its annals of investment banking, an equity fund
named ARK Fund, which seeks to integrate ethical and
environmental concerns into its investment
decisions. Databank is therefore the first to
introduce ethical fund in Ghana, which aims at
investing the fund’s proceeds in companies, which
make only positive contributions to the world and
thus exclude investment in specific activities or
industries that are not in harmony with investors’
moral, religious and value orientations." It is
wonderful to see that ethical investing is growing
even among some of the poorer countries in this
world.
Databank introduces first ethical investment fund in
Ghana, July 11, 2009, Ghana Business News,
Ghana.
ShareOwners.org. New Site For US Stockholders To
Organize And Fight For Financial Industry Changes
Benefiting Shareowners. -
[COMMENTARY]
"ShareOwners.org is working to help promote
market fairness for investors like you and me. This
is our chance to have a real voice by working
together." I have just become aware of this site
and I think it might be something that many US
ethical investors might want to participate in.
ShareOwners.org, USA.
US SRI Firms
Write To SEC Slamming Chamber Of Commerce Voting
Report As Fatally Flawed. -
[COMMENTARY]
"US SRI firms and advisors have attacked as
'fatally flawed' a recent report published by the US
Chamber of Commerce that claims that shareholder
proposals at corporate AGMs show no clear evidence
of short- or long-term improvements in operating or
stock market performance of target firms and could
be placing trustees in breach of their fiduciary
duty under ERISA guidelines... At a Responsible
Investor conference on ESG in New York last week,
Adam Kanzer, managing director and general counsel
of Domini Social Investments, said the research
methodology was not rigorous and claimed it showed
significant political bias in its data selection."
US SRI houses write to SEC to slam Chamber of
Commerce voting report as fatally flawed, by
Hugh Wheelan, July 2, 2009, Responsible Investor,
UK.
VC Greentech
Investment Rises In 2Q/09. -
[COMMENTARY]
"Venture capital investment in green technologies
totalled $1.2 billion in 85 deals in the second
quarter of 2009, up from $836 million in 59 deals in
the first quarter, Greentech Media Inc. said." I
wonder how much of an effect government green
stimulus packages are helping spur VC green
investment?
VC investment in green tech rises, report says,
by Chris Reidy, July 1, 2009, The Boston Globe,
USA.
First U.S.
Islamic ETF Launched. -
[COMMENTARY]
"The first U.S. exchange traded fund to comply
with Islamic law began trading today on the New York
Stock Exchange under the ticker symbol JVS. Javelin
Exchange Traded Funds launched the fund to match the
performance of the Dow Jones Islamic Market Titans
100 Index, which is composed of 100 companies
located in 23 countries outside the U.S." This
is exciting news as it means that ETF products are
now being launched based on the new Islamic/Shariah
indices crafted by the major index providers.
Undoubtedly, investor demand for these products is
likely to grow in the years ahead, in part due to
the ethical characteristics and values evidenced by
the
underlying investments.
First U.S.-Based Islamic ETF Launches Today, by
Lee Conrad, July 1, 2009, onwallstreet, USA.
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