Ethical Investing News/Commentaries:
Commentaries by Ron
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In USA, Your Political Persuasion
Might Determine How You Invest. -
"YOU’RE likely to feel more confident about the
economy when your political party is in power... But
a new study has found that your feelings probably
affect the way you invest your stock portfolio. The
study... found that when an investor’s favored
political party held power in Washington, he or she
generally increased holdings of risky stocks,
shifted from foreign to domestic companies and
traded less often. The opposite occurred when the
preferred party was out of office. And the patterns
held whether an investor was a Republican or a
Democrat." I wonder who are richer, Democrat or
Republican investors? That would be an interesting
line of research don't you think? The results might
show even more promise than those many market timing
When a Portfolio Is Red or Blue, by Mark
Hulbert, January 31, 2010, The New York Times,
Covalence Issues 2009 Corporate
Ethical Ratings. -
"IBM (Technology), Intel Corp (Technology) and
HSBC Holdings (Banks) top Covalence ethical ranking
among 581 multinationals within 18 sectors." The
Covalence ratings are worth a look at to find
ethical stocks that are good to invest in. The
ethical ratings of Swiss banks tumbled according to
Covalence. Before making changes to your
portfolio--check with your investment advisor.
Covalence Ethical Ranking 2009, January 26,
2010, Covalence, Switzerland.
IMF Proposes $100 Billion Green
Fund For Developing Countries. -
"According to Dominique Strauss-Kahn, the IMF
managing director, who made the proposal public
Saturday, the capital will come from Special Drawing
Rights – the IMF’s own currency — held by world’s
central banks... The central banks of
developed countries would inject capital into the
fund using some of their SDR allocations. The fund
would then issue bonds to investors, including
sovereign wealth funds that would be backed by the
green fund’s capital."
On the surface it sounds like a great idea. However,
since China, according to the January 31 edition of
The New York Time, is now the world's
largest and most efficient supplier of renewable
energy equipment, it could mean that much of the spoils goes
to them. But western-based companies who have a big
presence in China, such as Vestas Wind Sytems, could
IMF Proposes $100 Billion ‘Green Fund,’ by
Stephen Fidler, January 30, 2010, WSJ Blogs, USA.
Matthew Kiernan, Former Head Of
Innovest Strategic Value Advisors, Launches
Inflection Point Capital Management (IPCM). -
"IPCM has backing from strategic partners Global
Currents Investment Management, a subsidiary of Legg
Mason, which will provide the infrastructure for the
investment boutique, and Phoenix Global Advisors,
which provides the technology to integrate
sustainability research into mainstream financial
analysis. 'Historically, sustainability has been a
standalone asset class, but it seems to me it’s an
investment philosophy – either you buy it or you
don’t,' said Mr Kiernan. He intends to apply the
philosophy across all asset classes and hopes this
will differentiate IPCM from other sustainable
Having personally known Mr.
Kiernan and his great attributes and
accomplishments, I am sure he will succeed admirably
in his new venture.
Sustainable investing behind new manager, by
Sophie Grene, January 30, 2010, FT.com, UK.
UK Ethical Goods & Services Grow
3-Fold In Decade. -
"Expenditure on ethical goods and services has
grown almost three-fold in the past 10 years
according to The Co-operative Bank's Ethical
Consumerism Report published today (30 December).
The report, which has been acting as a barometer of
ethical spending in the UK for a decade, shows that
overall the ethical market in the UK was worth GBP36
billion in 2008 compared to GBP13.5 billion in
1999.The authoritative report analyses ethical sales
data for various sectors including food, household
goods, eco-travel and ethical finance." It is
likely that such growth of ethical goods and
services also occurred in other developed countries
too. This holds continued promise for ethical stocks
and bonds over the longer term.
Ethical sales grow 3-fold in decade says The
Co-operative Bank, January 28, 2010, media
release, The Co-operative Financial Services Press
SEC Says Public Companies Should
Warn Investors Of Global Warming Risks To
Their Businesses. -
"The commission said that companies could be
helped or hurt by climate-related lawsuits, business
opportunities or legislation and should promptly
disclose such potential impacts. Banks or insurance
companies that invest in coastal property that could
be affected by storms or rising seas, for example,
should disclose such risks, the agency said."
Better late than never, as ethical investor groups
have been demanding such transparency in reporting
for many years. Large numbers of companies who could
be severely impacted by climate change have so far
chosen to ignore the issue. This means that
investors in these companies are taking on
significant financial risk which they might not be
S.E.C. Adds Climate Risk to Disclosure List,
by John M. Broder, January 27, 2010, The New York
Boston College Center For
Corporate Citizenship Releases A 'How To' Guide To
Understand Corporate Social Reporting. -
"This guide is intended to help those approaching
CSR reporting for the first time, as well as those
looking to deepen their understanding of what makes
for a thorough CSR report. It will help readers,
whatever their interests or experience, to identify
quickly and easily the most valuable parts of these
reports. Its focus is on CSR reporting as practiced
by North American companies, but it is applicable to
CSR reporting more generally as well." To obtain
the guide you need to register with the College.
Registration is free.
How to Read a Corporate Social Responsibility
Report: A user’s guide, January 26, 2010, Boston
College Center for Corporate Social Responsibility,
Index Of Greenest Property
Companies Launched. -
"Three of the largest European institutional
investors, Dutch pension management giants APG and
PGGM and the Universities Superannuation Scheme in
the UK, have clubbed together to set up a global
benchmark of the greenest listed property management
companies to gee up poor reporting levels in the
sector. The index creation comes after a survey of
688 property managers – of which 198 responded –
commissioned by the funds and carried out by the
European Centre for Corporate Engagement (ECCE) at
Maastricht University, revealed a 'strikingly low'
number able to provide meaningful data on
environmental factors." Such an index should
prove useful to ethical investors. This index will
no doubt have a European focus.
APG, PGGM and USS create index of greenest property
companies, by Hugh Wheelan, January 28, 2010,
Responsible Investor, UK.
Corporate Knights Announces Its
Global 100 List Of Most Sustainable Corporations.
"The 2010 Global 100 tapped intelligence from the
world's largest sustainability research alliance put
together by Legg Mason's Global Currents Investment
Management to isolate the top ten per cent of
companies from a universe of 3000 global stocks,
which were then transparently ranked based on 10
indicators, with data sourced from ASSET4, a Thomson
Reuters business, and The BLOOMBERG PROFESSIONAL®
The top three companies are GE, PG & E, and TNT. I
see Matthew Kiernan, formerly head of the leading
global ESG firm, Innovest Strategic Value Advisors,
had a hand in this. He has a new company called
Inflection Point Capital Management. This is a list
to take seriously.
2010 Global 100:
The Definitive Corporate Sustainability Benchmark,
January 27, 2010, Global 100, Canada.
Mercer Finds Discrepancy Between
Companies With CSR Policies And Incorporation Of A CSR
Strategy In Their Defined Contribution (DC) Plans. -
"... (71%) of those respondents that currently
have a global CSR strategy (whether they are aware
of the strategy or not) have not considered actively
reflecting this strategy in the management of their
DC plans. This speaks to potential gaps in how
companies are implementing their CSR strategies,
highlighting a possible 'pension inconsistency
risk.'... [which] refers to the negative potential
impact that could result from employees’
dissatisfaction with their pension plans, or from
external scrutiny of the plan in the context of
overall corporate strategy (including CSR)." As
companies realize this discrepancy, ethical
investing could receive a further boost from DC
As companies realize this discrepancy,
ethical investing could receive a further boost from
DC plan management and pension inconsistency: Are
you at risk? By Jane Ambachtsheer and Katherine
Burstein, January 26, 2010, Mercer, Canada.
Middle East ESG Index To Be
"The first environmental, social and governance
(ESG) index of Middle Eastern and North African
companies is due to be launched later this year –
two years after it was first announced. The
Dubai-based Hawkamah Institute for Corporate
Governance, index and ratings provider Standard &
Poor’s (S&P), and Credit Rating and Information
Services of India Ltd. (Crisil) are developing the
index, which will be based on constituents’ ESG
performance." This is excellent news. It now
means most of the globe will be covered by both
regional and global ESG based financial indexes.
Middle East ESG index finally to be launched this
year, January 21, 2010, Environmental
Some Israeli Companies Continue
To Be Divested Or Barred From Fund Holdings. -
"Africa Israel Investments and Elbit Systems have
been added to Danske Bank’s list of companies that
fail to adhere to its Socially Responsible
Investment policy." Some fund managers are
continuing to divest or barr holdings in Israeli companies that help
construct the dividing wall between Israel and the
West Bank, or help build settlements on disputed
Israeli companies excluded from bank’s investments,
January 25, 2010, The Copenhagen Post,
RiskMetrics, Who Recently
Purchased KLD & Innovest, Up For Sale Says Wall
Street Journal. -
"A number of media companies and private-equity
firms have been contacted about a potential
acquisition of the New York provider of risk
analysis, financial research and
corporate-governance services for investors such as
pensions and hedge funds. The company could fetch a
premium of about 30% to its current value, said one
person involved in a potential transaction. That
would value the company, which has about 1,100
employees, all in New York, at around $1.3 billion,
based on where its shares traded Friday." If
this is correct, on wonders, why now?
RiskMetrics Puts Itself Up for Sale, by Jeffrey
McCracken and Peter Lattman, January 23, 2010,
Wall Street Journal, USA.
Canadian Executives Believe The
Return On Investment In Socially And Environmentally
Responsible Practices Justifies The Expenditure.
"When executives were asked what they viewed as
the potential benefits of investing in or pursuing
socially and environmentally responsible practices,
their top three responses were a positive
organizational reputation, higher or sustained
employee engagement, and eliminating waste/reducing
their impact on the environment."
Associates survey adds continued support as to the
advantages of using corporate social responsibility
in advancing employee morale, corporate performance,
Research from Best Employers in Canada Study Builds
Business Case for Investment in Corporate Social
media release, January 25, 2010,
65% Of US SRI Funds Outperformed
Market Benchmarks In 2009. -
"A review of 160 socially responsible mutual
funds from 22 members of the Social Investment Forum
(SIF) finds that the vast majority of the funds --
65 percent -- outperformed their benchmarks in
calendar year 2009, most by significant margins.
These SRI funds topped benchmarks across nearly all
asset classes, including balanced, large cap, small
cap and global funds, as well as bonds." The
evidence speaks for itself.
Performance of Social Investment Forum Member Mutual
Funds as of December 31, 2009, media release,
January 21, 2009, USA.
FairPensions Coordinating 140
Pension Funds To Grill Royal Dutch Shell On Its Oil
Sands Investments At Its AGM May 18. -
"The resolution was filed on December 31, and the
company has confirmed that it will be on the AGM
agenda. The resolution raises concerns over the
long-term success of the company arising from the
risks associated with oil sands. It points to
expected carbon price rises, oil price volatility,
expected fluctuations in demand, regulation of
greenhouse gas emissions, and the legal and
reputation risks arising from environmental damage
and impairment of traditional livelihoods. Thirty
percent of Shell’s
total reserves is estimated to be represented by
oil sands developments." Investors in energy
companies with oil sands developments have to be
worried about future outcomes.
Institutional shareholders to quiz Shell board over
Canadian oil sands at AGM, by Daniel Brooksbank,
January 18, 2010, Responsible Investor, UK.
Investors With $13 Trillion In
Assets Call For Strong Government Climate Change
"On the heels of international climate treaty
talks in Copenhagen, the world’s largest investors
today released a statement calling on the U.S. and
other governments to move quickly to adopt strong
national climate policies that will spur low-carbon
investments to reduce emissions causing climate
change. Private-sector investors will likely be
responsible for financing more than 85 percent of
the global transition to a low-carbon economy...
[The meeting included] 450 global investors at the
United Nations... UN Secretary General Ban Ki-Moon,
United States Special Envoy for Climate Change Todd
Stern, billionaire investor George Soros and former
Vice President Al Gore."
Clearly, global investors who take
climate change seriously feel adrift after
Copenhagen. Without broad agreement by leading
governments on this issue, companies and investors
are somewhat adrift as to what steps they can take.
Nonetheless, many investors and companies will
pioneer initiatives that ethical investors will be
keen to participate in.
Investors Representing $13 Trillion Call on U.S. and
Other Countries to Move Quickly to Adopt Strong
Climate Change Policies,
media release, January 14, 2010, Investor Network on
Climate Risk, USA.
Large UK Firms Making Progress On
Nat'l Climate Goals, Intensive Sectors Lag. -
"Although the U.K.'s 100 largest companies are
making headway toward the country's climate change
goals as a whole, its most carbon-intensive
industries are lagging with emissions reduction
targets that fall short of national goals."
Though this report is focused on UK companies, it
offers insight as to how these and similar firms
operate in other developed countries. The report is
an interesting read for anyone interested in ethical
Large UK Firms Making Progress on Nat'l Climate
Goals, Intensive Sectors Lag, January 7, 2010,
ClimateBiz, UK. See
actual report, by the Carbon Disclosure Project.
Asset Managers Ignoring
Climate Change Risk Analysis--Update. -
We now have access to the Ceres report: "Nearly
half of the respondents - 44 percent - said they do
not consider climate risks at all because they do
not believe that climate change is financially
'material' to investment decision-making... half of
the respondents - nearly 49 percent - said they did
not analyze climate risks because their investor
clients did not ask them to. Another shortcoming...
incentive structures and benchmarks that asset
owners use for evaluating asset managers are heavily
weighted towards short-term performance focusing
primarily on quarterly returns where climate risks
are far less likely to show up."
Most of the problems cited above--as well as
mentioned here many times--are due to the
short-termism orientation of the investment industry
itself! The consciousness of the investment and
financial industries must change. However, I fear it
will be another meltdown, perhaps of the 'bail-out'
bubble, before these industries do change.
New Report: Investment Managers Still Lagging in
Response to Climate Change Risks and Opportunities,
press release, January 6, 2010, Ceres and Investor
Network on Climate Risk (INCR), USA.
Global Greentech Venture Capital
Down 33% In 2009 Over 2008. -
"Worldwide venture capital investment in green
technology companies fell 33 percent in 2009 to $5.6
billion during the global financial turmoil,
according to a survey by Cleantech Group and
Deloitte." This was expected.
Venture money in green cos off 33 pct in '09-report,
by Poornima Gupta, January 6, 2010, Reuters, USA.
A Huge US Pension Fund, The
TIAA-CREF, Sells Shares In Companies Working With
Sudanese Government. -
"TIAA-CREF, the giant $402bn (€315bn) US pension
plan and investment fund group for US teachers and
researchers, has sold its shares in four Asian
companies: PetroChina, CNPC Hong Kong, Oil and
Natural Gas Corporation and Sinopec, in protest at
their business links to the Sudanese government
presiding over genocide in Darfur." Most ethical
investors applaud moves such as this one. As ethical
investing increases in popularity, companies, in
order to protect their stock prices, will become
increasingly wary of working with tarnished regimes.
TIAA-CREF sells PetroChina and Sudan-linked
companies in Darfur protest, by Hugh Wheelan,
January 5, 2010, Responsible Investor, UK.
Most Large Asset Managers Ignore
Climate Change Risk Analysis. -
"... the vast majority of the world's largest
investment managers are not analyzing
climate-related risks and opportunities in their
short- and long-term investment decision-making. So
concludes a new Ceres report that will be the
subject of a phone-based press conference at 11 a.m.
EST Wednesday, January 6." It will be
interesting to get the details when the report is
released tomorrow. One would have thought that all
the discussion on climate change should have
produced some changes in the way asset managers
assess their investments.
Investment managers ignoring climate: report,
January 4, 2010, HazMat, USA.
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