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Ethical Investing News/Commentaries:
Aug. 2011 |
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Commentaries by Ron
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Corporate UK Pension Funds Lagging In
Responsible Investment Policies Says UKSIF. -
[COMMENTARY] "Too few UK
pension funds are adopting responsible investment
approaches, according to the UK Sustainable
Investment and Finance Association, including some
funds sponsored by companies in the forefront of
driving sustainable business policy." The UK
Stewardship Code requires fund managers to explain
their responsible investment policies, so it's
surprising that more funds are not adopting
responsible investment policies.
Sustainability ranks low with funds, Ruth
Sullivan, August 28, 2011, Financial Times, UK.
Is China About To Invest In US SRIs? -
[COMMENTARY] "Zuo Xiaolei, chief
economist at China Galaxy Securities Co Ltd, said
that China's foreign-exchange reserves are likely to
be invested in US projects for clean energy and
automobiles and a technological upgrade, all of
which would boost the US industrial sector. 'China
can use the money to buy the stock of US companies,
facilitate merger and acquisition projects and
increase socially responsible investment,' Zuo
said." China could easily begin selling a
small part of
its huge hoard of US treasuries and invest the
proceeds in the US, and as some are speculating, a
good portion could go into US socially
responsible-ethical investments!
Greater US investment encouraged, by Chen Jia,
August 26, 2011, China Daily, China.
Israeli Study Says Corporate CSR Has Little
Impact On Stock Prices. -
[COMMENTARY] "Stocks of
companies that are committed to corporate social
responsibility (CSR) policies perform statistically
similarly to those corporations that do not have
these programs, according to a new study by
Ben-Gurion University of the Negev... [However] they
believe that greater importance is being placed on
these [CSR] policies and that investors will
ultimately seek out companies with these
initiatives."
Interesting, but what I believe they did not do
was to compare how CSR programs affected stock
prices of companies within individual industry
sectors. Instead, they compared the "U.S. Dow
Jones Sustainability Indexes from 2004 to 2009 and
19 companies listed on the Israeli MAALA CSR Index
from July 2010."
Corporate Social Responsibility Programs Have Little
Impact On Stocks, August 24, 2011, Science
Daily, USA.
Sustainable Investment Challenges For Africa. -
[COMMENTARY] "Commissioned by
IFC, the study surveys private equity investors,
asset owners and asset managers, and other key
stakeholders on the environmental, social, and
corporate governance issues (ESG) that would be
important for investing in Africa. Overall, the
study found, 'As an investment destination, the
continent's numbers are compelling.'" This is an
insightful article for anyone interested in
sustainable investing in Africa.
AfricaSIF Co-Founder Describes Challenges to
Sustainable Investment in Africa, by Robert
Kropp, August 24, 2011, SocialFunds, USA.
South Africa Taking More Steps To Promote
Sustainable Investing. -
[COMMENTARY] "So far, 2011 has
been a banner year for sustainable investing among
South Africa's institutional investors. In March,
the National Treasury issued a revamped version of
Regulation 28 of the Pension Funds Act, which
regulates R 1.1 trillion (USD 152.5 billion) in
private pension funds and R 1 trillion (USD 138
billion) in the Government Employees Pension Fund (GEPF),
South Africa's first signatory to the international
Principles for Responsible Investment (PRI)."
South Africa continues to be a world leader in
promoting sustainable investing. There is no doubt
that many other countries will follow this path too
in the years ahead.
CRISA and Regulation 28: South Africa Boosts
Sustainable Investing, by Reynard Loki, August
21, 2011, Justmeans, USA.
New York State Subpoenas Three Natural Gas
Producers For Possible Investor Misrepresentation. -
[COMMENTARY] "New York State’s
attorney general has sent subpoenas to three large
energy companies as part of a broad investigation
into whether they have accurately described to
investors the prospects for their natural gas wells,
according to several sources familiar with the
inquiry... Subpoenas were sent to the three
companies — Range Resources, Cabot Oil and Gas, and
Goodrich Petroleum — according to the sources, who
have direct knowledge of the investigation." The
concerns around natural gas deposits and extraction
are heating-up. Investors in such companies--often
excited about the opportunities for natural
gas--should be aware of the possible problems!
New York Subpoenas Energy Firms, by Ian Urbina,
August 18, 2011, The New York Times, USA.
Financial Pressures Making Canadians Buy Fewer
Green Products. -
[COMMENTARY] "'The majority of
Canadians think it is too expensive to make choices
that will benefit the environment in the face of
personal pocketbook pressures,' said Jack Bensimon,
president of Bensimon Byrne, the Toronto-based
advertising agency that put out the Consumerology
Report..."
This might well be true for consumers in many
other developed countries as well. Thus, ethical
investors investing in green consumer product
companies should take note. Long term trends
generally indicate consumers becoming increasingly
green in their purchases. But short term,
particularly in uncertain economic times, green
products might become a difficult sell if not priced
competitively.
Environment taking back seat to pocketbook issues:
survey, by May Jeong, August 27, 2011, The Globe
& Mail, Canada.
Indian Companies Lag Badly In Community
Engagement, Survey. -
[COMMENTARY] "Of 500 companies
studied by independent think tank, only 10 were
found to perform rigorous corporate social
responsibility activities for the community."
This study was somewhat restrictive and might not
reflect
the full range of CSR activities among Indian
companies.
Indian companies aren't socially responsible, by
Shailesh Bhatia, August 14, 2011, Mid-Day, India.
Large Multinationals Accused Of Duplicity In
Their Climate Change Pronouncements & Actions. -
[COMMENTARY] "Many companies
have taken official stances on climate pollution,
pledging to reduce their greenhouse footprint in
order to reduce the threat of a destabilized
climate. However, a number of these same companies
are sponsoring toxic, far-right denial of climate
science. The American Legislative Exchange Council
(ALEC) pushes an extremist denier agenda throughout
the United States, funded in secret by corporations.
ThinkProgress has acquired a list of the sponsors of
ALEC's 2011 annual meeting, held last week in New
Orleans."
Continuing, "The radical anti-science agenda
of ALEC stands in direct contravention to the
official public policies of its funders, which
include top health-care companies like Bayer, Merck,
Pfizer, and Johnson & Johnson, and top energy
companies like Chevron, ConocoPhillips, and Entergy."
Ethical investor should review the list of
companies mentioned in this article that are deemed
duplicitous. Then determine whether to contact them--or sell their stock!
Companies claim concern for climate, but sponsor
ALEC, by Brad Johnson, August 8, 2011, Grist,
USA. See also,
BP funds push for more offshore drilling in
oil-soaked Louisiana, Brad Johnson, August 5,
2011, Grist, USA.
Major SRI Fund Groups Target Oil Companies
Operating In Syria. -
[COMMENTARY] "A group of social
investment firms plans an e-mail campaign to urge 11
oil companies to either stop operations in Syria or
communicate their condemnation of the violent
crackdown on protesters to the government, said
Maureen O'Brien, head of engagement at the Conflict
Risk Network, which is spearheading the effort for
the investors... The investors are Boston Common
Asset Management, Calvert Asset Management, Domini
Social Investments, GES Investment Services and
Capricorn Investment Group."
Some believe it was the international
condemnation and boycott by multinationals against
apartheid in South Africa that eventually brought
down the racist regime there. Could it work with
Syria? It's worth a try!
Investment firms push oil companies on Syria, by
Barry B. Burr, August 9, 2011, Pensions &
Investments, USA.
US Asset Managers Trail European Counterparts
In Implementing ESG Analysis. -
[COMMENTARY] "Less than a
quarter of US asset managers are using ESG risk
analysis to inform their investment decisions, and
European managers are considerably out-performing
their American and global counterparts in
integrating sustainability considerations, a report
from MSCI ESG Research has revealed." European
asset managers, and especially those in the UK, have
been leaders for years in applying ESG criteria in
selecting investments.
US asset managers trail European counterparts in ESG,
by Sam Riley, August 9, 2011, Top1000Funds.com,
Australia.
Mining Companies With Good Stakeholder
Relations Perform Better Financially, Study. -
[COMMENTARY] "Wharton Professor
of Management Witold Henisz has found a way of
measuring the benefits of stakeholder engagement
activities to public mining companies that operate
in risky environments. Henisz and two co-authors
researched the role that stakeholder events played
in companies’ efforts to maximize profits. The
answer: huge."
Continuing, "Professor Witold Henisz... notes in a paper entitled
Spinning Gold: The Financial Returns to External
Stakeholder Engagement (PDF 480KB): 'There is a
powerful business case to win the hearts and minds
of external stakeholders. We found in our research
that the value of the relationship with politicians
and community members is worth twice as much as the
value of the gold.'”
This could be a landmark study for all mining
companies! It clearly demonstrates that proper CSR
policies can be of enormous benefit for all
stakeholders while greatly enhancing the financial
performance of the engaged companies.
Stakeholder engagement improves valuation: study,
by Richard Ketchen, August 4, 2011, IR Web Report,
USA.
Ethical Investments Surge Among Danish Pension
Funds. -
[COMMENTARY] "More than half of
Denmark's pensions industry now uses active share
ownership methods to sway companies falling foul of
ethical investment guidelines, with only 2% reacting
by simply offloading problem stocks, a report
reveals." The move towards ethical investments
is a common theme among pension and institutional
funds throughout the developed world. This is great
news for all ethical investors.
Interest in SRI surges among Danish pension funds,
F&P study shows, by Rachel Fixsen, August 8,
2011, IPE, UK.
US Debt Deal May Gut Clean Energy Support,
While China Increases It! -
[COMMENTARY] "'I don’t see clean
energy avoiding that hatchet,' said Richard Caperton,
policy analyst for progressive think tank the Center
for American Progress. The House has already taken
steps to cut the budgets for several federal
agencies, including the EPA, a favourite target of
conservative Republicans. In July, the House cut
around $1.5 billion, or 18%, from the EPA’s budget,
setting it at $7.4 billion for the 2012 fiscal year,
which begins on 1 October."
Barring high inflation that supports higher oil
prices, and thus clean energy prices, the reduction
in US government support for clean energy could be
very significant for the US clean energy industry.
US debt deal likely to gut clean energy support,
by Gloria Gonzalez, August 4, 2011, Environmental
Finance, USA.
Regarding China, the reverse is happening!
"China announced a national feed-in tariff (FiT) for
solar power installations this week, possibly
signalling a long-awaited boom in solar development
in China."
China surprises with solar tariff announcement,
by Joshua Speckman, August 3, 2011, Environmental
Finance, USA.
Eiris Ranks Sovereign Bonds On Sustainability. -
[COMMENTARY] "The US, with the
largest and most liquid sovereign debt market, comes
only 34th in Eiris’ sustainability ranking of 73
major economies, which is headed by Sweden, Austria,
Switzerland, Finland, Germany and the UK."
Ethical investors have been calling for such ratings
for sometime. Finally, the SRI ratings community has
gotten the message!
See also,
Sovereign bond returns linked to sustainability –
Sarasin.
Government bonds get ESG test, by Steve Johnson,
August 7, 2011, Financial Times, UK.
US Cleantech Investment Plunges In 2Q2011. -
[COMMENTARY] "The second quarter
of 2010 was a record-breaking era for investment in
clean technology companies, which makes this year's
numbers seem all the worse. According to
just-published research from Ernst & Young,
investment in clean technologies companies dropped
by a whopping 44 percent in the second quarter of
2011, though there is still plenty of activity in
the market." Cleantech investment seems in some
ways to mirror economic activity, hence this is not
surprising.
Cleantech Investment Drops 44%, but Big Deals
Suggest Future Growth, by Matthew Wheeland,
August 3, 2011, GreenBiz, USA.
US Shareholder Voting On Environmental &
Social Issues Continues To Increase. -
[COMMENTARY] "Environmental and
social issues were at the top of shareholders’
attention during the 2011 proxy season, according to
Ernst & Young (E&Y). About 40% of all resolutions
that proceeded to a vote revolved around
environmental and social issues, up from 31% last
year, marking the second year in a row that these
resolutions comprised of the largest portion of
shareholder proposals that came to a vote, according
to the consultancy firm’s 2011 proxy season update."
This illustrates the increasing influence of
green-ethical investors on corporate behaviour!
US shareholders fixate on environmental and social
issues, by Gloria Gonzalez, August 2, 1022,
Environmental Finance, UK.
German Institutional Investors Lead In
Sustainable Investing. -
[COMMENTARY] "On average German
institutional investors apply sustainable factors to
half their assets, but this rises to almost three
quarters (73%) for foundations, according to the
survey, by Union Investments of 218 large-scale
investors managing about €1trn." This is great
news. However, if only circumstances could change so
that individual Germans could invest similarly as
well.
Institutional interest in sustainable investing
grows in Germany, August 3, 2011, Global
Pensions, UK.
CSR Often Promoted To Counter Corporate Social
Irresponsibility, Study Says. -
[COMMENTARY] "Economists Matt
Kotchen of Yale University and Jon Jungbien Moon of
Korea University suggest that an important reason
companies do good is to paper over the bad stuff
they’ve done." One only needs to look at the CSR
reports from tobacco companies to realize that this
is, sadly, often the case.
Doing Good to Do Bad? By Justin Lahart, August
1, 2011, The Wall Street Journal, USA.
Shanghai Stock Exchange To Launch
Sustainability Index. -
[COMMENTARY] "This week, SSE
announced that it will launch the SSE Sustainable
Development Industry Index and the CSI Commodity
Equity Index on August 22. According to the
Exchange, the three themes of the Sustainable
Development Industry Index will be Education and
Publishing, Low Carbon Economy, and Cyclic Economy."
The Shanghai Stock Exchange has been a leader in
requiring their listed companies to produce
sustainability reports. The SSE Sustainable
Development Industry Index demonstrates the Exchange's
continuing interest in sustainability.
Shanghai Stock Exchange to Launch Index for
Low-Carbon Companies, by Robert Kropp, July 30,
2011, Socialfunds.com, USA.
ESG Investing Outperforms, Says RCM of Allianz
Global Investors. -
[COMMENTARY] "Introducing
environmental, social and governance criteria into
an investor’s stock selection process has no
negative impact and is more likely to lead to
outperformance over the longer term, research
suggests. A study by RCM, a company of Allianz
Global Investors, tested the impact of ESG issues on
portfolio performance over the period 2006 to 2010.
The evidence found investors could have added 1.6% a
year over five years to their investment returns by
allocating to portfolios that invest in companies
with above-average ESG ratings."
I read a critique of ESG-based investing by Mark
Harrison, director of publications at the UK's CFA
Institute, in the FT today. He said, "Like
conventional active managers, SRI/ESG funds are
failing to beat similar benchmarks..." I suggest
he needs to update his research!
ESG investment results in outperformance long term,
by Chris Panteli, August 1, 2011, Professional
Pensions, UK.
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