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Ethical Investing News/Commentaries:
Sept. 2011 |
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Commentaries by Ron
Robins
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Investor Coalition With $1.6 Tn In Assets
Urges UN Member States To Spur Corporate Integrated
Reporting.
- [COMMENTARY] "Integrated
reporting -- the practice of embedding
environmental, social, and corporate governance (ESG)
information into corporate financial reports --
received another significant boost recently... The
Corporate Sustainability Reporting Coalition, led by
Aviva Investors, urged U.N. member states to require
public and large private companies to integrate
sustainability information in their annual financial
reports, or explain why they have not done so."
This is great news! The investment/corporate
world are finally seeing the light that the benefits
of such reporting are considerable. Congratulations
to all those ethical investors who have laboured for
years to see such actions occurring.
Investors Step Up Calls for Mandatory, Integrated
CSR Reporting, by Robert Kropp, September 29,
2011, GreenBiz, USA.
CR Magazine Announces Responsible CEO of Year
Award Winners.
- [COMMENTARY] "At the single
largest gathering of socially responsible corporate
leaders, Corporate Responsibility (CR) Magazine,
unveiled the winners of the Responsible CEO of the
Year awards... the CEOs were nominated based on
success in aligning business and stakeholder
interests to 'do well by doing good.' The winners...
are: Donald Knauss, Chairman and CEO of The Clorox
Company; Fred Krupp, President of the Environmental
Defense Fund; (and) Paul Rooke, Chairman and
CEO of Lexmark." For your information.
CR Magazine Announces Responsible CEO of Year Award
Winners, press release, September 28, 2011, CR
Magazine, USA.
Canada Gives Impact Investing A Boost.
- [COMMENTARY] "Proponents of
social-impact investing have scored a victory, with
Toronto’s MaRS Discovery District set to announce
the creation of a centre that will promote the
concept in Canada... The Centre for Impact Investing
that is being announced Thursday in Toronto will be
launched with $1.3-million of financing from the
Rockefeller Foundation and the J.W. McConnell Family
Foundation." Canadian Impact investing could
grow from $2 billion to $30 billion in 10 years.
This investment will help improve social conditions
while providing profits to investors.
MaRS to launch Centre for Impact Investing, by
Tara Perkins, September 28, 2011, The Globe & Mail,
Canada.
Japanese, South Korean Companies Lead In Asian
ESG Reporting. -
[COMMENTARY] "South Korean
companies are still leaders in Asian ESG reporting
(ex-Japan). Chinese companies are improving and
companies in the Philippines now take the bottom
spot, according to the findings of the 2011 Asian
Sustainability Rating(TM) (ASR(TM)), launched today
at the CSR Asia Summit in Kuala Lumpur." It is
highly encouraging for ethical investors everywhere
that ESG/CSR reporting continues to gain favour.
Korean Companies Continue to Lead in Asia on
Sustainability Disclosure, press release,
September 27, 2011, CSR Asia Summit, Malaysia.
Integrated Reporting Gaining Momentum. -
[COMMENTARY] "The movement toward
integrated reporting on environmental, social, and
corporate governance (ESG) issues continues to gain
momentum despite the relatively slow spread of
regulatory mandates in this area, according to a
recent paper, 'Integrated Reporting: A better view?'
by Deloitte Touche Tohmatsu Limited (DTTL)."
Combining and integrating ESG reporting into a
company's periodic reports, annual and quarterly
reports, etc., is the wave of the future! It
deserves our full support.
Deloitte: Integrated Reporting by Businesses Will
Bring Extensive Benefits to Organizations and to
Stakeholders, press release, September 26, 2011,
Deloitte, UK.
Almost 30% Of US DC Pension Plans Could Offer
SRI Options Within 3 Years. -
[COMMENTARY] "As many as 29% of
defined contribution plans could offer socially
responsible investment options in the next two to
three years, based on the results of a survey of DC
plans by Mercer and the U.S. SIF Foundation. Of the
421 plan executives who responded to the survey, 14%
offer at least one SRI option and 15% of those that
don't are considering or planning to add one to
their investment lineup..." This is good news
for those with US DC pension plans.
Almost 30% of DC plans could offer SRI option,
by Timothy Inklebarger, September 27, 2011, Pensions
& Investments, USA.
Sino Forest, Auditors & Investment Firms, Sued
By Two Of Canada's Largest Ethical Fund Managers. -
[COMMENTARY] "Two big
institutions are taking aim at Bay Street’s largest
firms with a $5.8-billion proposed class action
lawsuit that alleges Sino-Forest Corp. and several
of its key advisors profited from misrepresentations
about the company’s financial condition. Northwest &
Ethical Investment LP, which manages Ethical Funds,
and Comité Syndical National de Retraite Bâtirente
Inc., a Quebec-based labour-sponsored retirement
plan, are suing Sino-Forest, its auditors and
investment bankers on behalf of investors who
purchased the company’s securities between Aug. 17,
2004 and June 2, 2011." This is a big deal in
Canada. Ethics in financial dealings do matter!
Sino suit takes on the Street, by Julius
Melnitzer, September 26, 2011, Financial Post,
Canada.
New Canadian Blog Puts A Positive Spin
On The Social-Economic
Benefits Of Mining Industry. -
[COMMENTARY] "Today, this
economically important sector is under constant
attack by a well-funded and 'web savvy'
environmental movement – which seems to dominate the
Internet with their 'green' propaganda. Partly
because of this, the mining sector’s social license
to operate is being questioned in many jurisdictions
around the world. Republic of Mining will provide a
much-needed industry perspective to a global
audience that may have difficulty finding
information on the many social and economic
benefits, technical advances, environmental
successes and current challenges of this complex
sector."
Those are fighting words! Nonetheless, this blog
could be a useful site for ethical investors
interested in the mining industry, though of course,
it is written by someone who undoubtedly favours the industry. But
many SR-ethical funds and indexes do now have mining
companies in their portfolios.
Republic of Mining, Canada.
Is An 'Efficient' SRI Index Superior? -
[COMMENTARY] "Typical SRI
indices respect such screenings and then simply
weight the acceptable stocks by market cap, or
alternatively by sustainability scores. They thus
ignore the risk/return properties of stocks and in
particular the correlations. Consequently, they do
not necessarily reflect the performance available
from a well-diversified portfolio of SRI-compliant
stocks."
Continuing, "Efficient SRI indices on the other
hand, apply an optimal weighting scheme to the
screened universe. They thus constitute a relevant
proxy for the performance that is achievable through
a sole focus on improving diversification within an
SRI universe. In that sense they constitute a useful
yardstick for active SRI funds from which investors
would at least expect improved diversification, if
not additional value added through stock picking."
This appears to be an interesting concept. I'd be
curios to know what SR-ethical fund managers think of this.
Performance of Socially Responsible Investment Funds
against an Efficient SRI Index: The Impact of
Benchmark Choice when Evaluating Active Managers,
press release September 22, 2011, EDHEC-RISK
Institute, France.
US Consumers Demanding Higher CSR Standards Of
Companies Even In Weak Economy. -
[COMMENTARY] "These findings
are reported in a Future Perspectives white paper
entitled, 'Risk & Responsibility: Marketing CSR in a
Time of Economic Turmoil.' The results show that
economic hardship dramatically increases risk
aversion, and risk averse consumers are 50 percent
more likely to agree that companies have a duty to
be socially responsible and support the communities
in which they operate." This is interesting
research and adds further support as to why
companies need to lead in CSR and why investors
should favour such companies--especially since
research suggests they are likely to have superior
financial performance relative to their peers.
Corporate social responsibility in an uncertain
economy, September 21, 2011, MF Monitor, USA.
Malaysia's Stock Exchange Raising Its
Corporate Disclosure Standards For Listed Companies. -
[COMMENTARY] "Bursa Malaysia
has made various amendments to its Listing
Requirements (LR) and introduced a Corporate
Disclosure Guide (CD Guide) aimed at assisting
listed issuers elevate their standards of
disclosure. High standards of disclosure is a value
proposition that can enhance a listed issuer’s
investability. Bursa Malaysia’s Chief Executive
Officer, Dato’ Tajuddin Atan said, “Bursa Malaysia’s
regulatory framework aims primarily to maintain
market integrity and investor protection. In this
regard, reliable, informative and timely disclosures
are key towards building a corporate community that
is disclosure based and transparent."
Congratulations to Bursa Malaysia on taking this
initiative. Incidentally, Malaysia is also a leader
in Islamic finance.
BURSA MALAYSIA AMENDS LISTING REQUIREMENTS AND
ISSUES GUIDE TO RAISE DISCLOSURE STANDARDS,
press release, September 22, 2011, Bursa Malaysia,
Malaysia.
Two-Thirds Of UK Public Say Charities Should
Invest Ethically. -
[COMMENTARY] "Two-thirds of the
public believe it is 'important' or 'very important'
that charities invest ethically, according to
research from the social lender Charity Bank. The
bank polled 2,087 randomly selected adults in August
this year." See my thoughts on this subject at
Unethical Investing By Charities.
Charity Bank survey finds that the public approves
of ethical investment, by David Ainsworth,
September 22, 2011, ThirdSector, UK.
S&P Indices & Tokyo Stock Exchange Launch
Carbon-Weighted Index. -
[COMMENTARY] "S&P Indices and
Tokyo Stock Exchange, Inc. announced today the
launch of the S&P/TOPIX 150 Carbon Efficient Index,
which comprises all Japanese companies included in
the S&P/TOPIX 150 re-weighted to reflect the level
of carbon emissions produced by each, while
simultaneously tracking the S&P/TOPIX 150 as closely
as possible." The idea of weighting a large cap
index according to the carbon emissions of its
constituents I believe is novel. It will be
interesting to see how this develops. As most of you
know, a separate index is usually launched
comprising only the lowest carbon emitters.
S&P, TSE launch carbon-weighted index, press
release, September 19, 2011, S&P, Japan.
94% Support For 'Say On Pay' At 67 Canadian
Company AGMs. -
[COMMENTARY] "Say-on-pay
resolutions garnered an average of 94 per cent
support at 67 Canadian companies holding the votes
this year, similar to 94.6 per cent support in 2010,
Hay Group found. The management consulting group
reviewed say-on-pay support compared with companies'
total shareholder returns, returns on equity and
earnings-per-share growth. All showed a weak
correlation with say-on-pay votes across the board,
the report says."
It is particularly interesting that those voting
for say on pay were not especially interested in
tying pay to corporate financial performance, says
this report. Personally, I believe that shareholders
simply want a real say in how executives are
compensated. They have little faith in board
compensation committee decisions, since the board
(and compensation committee members drawn from the
board) are often nominated to the board by the
company's executives!
Say-on-pay votes not tied to results, by Janet
McFarland, September 17, 2011, The Globe & Mail,
Canada.
By Shunning US Megabanks, US Ethical Fund
Shows Good Returns. -
[COMMENTARY] "Last summer, the
'socially responsible' Appleseed fund began barring
the stocks of too-big-to-fail banks, on ethical
grounds. For shareholders, it's been a blessing...
The Appleseed Fund is up 1.7% so far this year --
while the Standard & Poor's 500 Index ($INX +0.57%)
is down nearly 5.4%. The fund has had a terrific
record since launching in late 2006: It's up 40%,
while the S&P is barely level, even including
dividends. And that's even though Appleseed can't
invest in those wonderfully profitable and defensive
'sin' stocks, like distillers and cigarette makers."
Congratulations to Adam and Joshua Straus, the
managers of Appleseed. I have believed for years
that most ethical investors and funds investing in megabanks with unfathomable derivative
positions; balance sheets with assets not reflecting
true (lower) market values; and vastly overrated
capital adequacy ratios--are asking for trouble.
Note their now plunging stock prices!
Shunning megabanks pays off big, by Brett Arends,
September 16, 2011, MarketWatch, USA.
Sustainable Companies Are More Profitable
According To CDP. -
[COMMENTARY] "Consider this:
Global 500 companies that have demonstrated
leadership in carbon disclosure or performance
yielded twice the average return as the index as a
whole between January 2005 and May 2011. 'It
suggests a strong correlation between higher
financial returns and good carbon disclosure and
good carbon performance,' said Paul Simpson, chief
executive officer of the Carbon Disclosure Project (CDP)."
The information that reduction of carbon use might
help corporate profits continues to mount. It is
also good news for ethical investors.
CDP's Annual Report Finds Sustainable Companies are
More Profitable, by Tilde Herrera, September 14,
2011, ClimateBiz, USA.
Replacing Coal With Natural Gas Won't Slow
Climate Change, Says Study. -
[COMMENTARY] "The use of
natural gas rather than coal to meet the world's
energy needs might reduce emissions but would have
little effect on climate change, new research has
found. The study, to be published in Climate Change
Letters in October, highlights the complicated way
in which burning fossil fuels affects the
environment." Since it is generally thought
that natural gas is better than coal for managing
climate change, this study might promote
considerable controversy. Ethical investors and
environmentalists particularly, might want to take
note of this study.
Burning gas instead of coal will not slow climate
change, September 12, 2011, BusinessGreen, UK.
GMI Launches New ESG Research Platform. -
[COMMENTARY] "GMI Analyst
brings together the content and tools of the
Corporate Library, GovernanceMetrics International
and Audit Integrity, which merged at the end of last
year. The new platform, which covers 20,000
companies globally, focuses on two separate ratings:
an ESG rating, which measures long-term corporate
sustainability, and a risk rating, which identifies
companies that, in the short term, may face risks
such as litigation or regulatory action." The
growing availability of increasingly sophisticated
ESG analytical tools can only help ESG analysis
become more popular and hence improve stockholder
returns for investors in companies who demonstrate
superior ESG performance.
GMI launches new ESG research platform,
September 9, 2011, Inside Investor
Relations/Business Insider, USA.
CA Cheuvreux, Bank of America Securities -
Merrill Lynch & HSBC, Are The 2011 Leading SRI &
Sustainability Brokerage Firms, Says Survey. -
[COMMENTARY] "Thomson Reuters
and UKSIF, the sustainable investment and finance
association, announced the results of the ninth
annual Thomson Reuters Extel/UKSIF Socially
Responsible Investing & Sustainability Survey at an
event held at the Thomson Reuters Building in Canary
Wharf, London. The 2011 Survey represents the views
of over 400 investment professionals from 23
countries, making it the most extensive assessment
of socially responsible investing (SRI) in the
European investment community." Each year after
this announcement I lament that we in North America
do not have such a survey.
Thomson Reuters Extel and UKSIF 2011 Socially
Responsible Investing & Sustainability Survey
Results, press release, September 9, 2011,
UK.
SRI-Ethical Fund Investors Primarily Want
Profits, Suggests Study. -
[COMMENTARY] "The results of
the study show that perceived financial quality of
the SRI mutual fund is the most important predictor
of customer satisfaction. However, perceived social,
ethical, and environmental (SEE) quality is also
positively related to satisfaction for the SRI
mutual fund."
I sense that the motivation of many first time
sustainable investment investors is primarily
financial, whereas for the 'older' SRI-ethical
investor their deeply rooted personal values were
equally valued. Pertinently, this study says that
the factors associated with customer satisfaction
might change over time and so need regular
monitoring.
Determinants of customer satisfaction with socially
responsible investments: Do ethical and
environmental factors impact customer satisfaction
with SRI profiled mutual funds? By Jonas Nilsson
(Corresponding author)
Johan Jansson, Sofia Isberg, Anna-Carin Nordvall,
Umeå School of Business at Umeå University, Umeå,
Sweden.
FTSE4Good Indexes Deletes 3M & Pfizer. -
[COMMENTARY]
SEMI- ANNUAL REVIEW OF THE FTSE4GOOD INDICES,
UK.
Interesting Changes In Dow Jones
Sustainability Indexes: HP, Microsoft & Coca Cola
Out; Kinross Gold & Newcrest Mining Ltd., In. -
[COMMENTARY] Are mining companies
improving their sustainability efforts?
Dow Jones Sustainability Indexes-SAM.
US Food Retailers See Mostly Gains In Organic
& Local Foods. -
[COMMENTARY] "Food retailers
see opportunity in organic food. In 2010, the
organic industry overall grew by about 8 percent to
$28 billion. That drove 66.2 percent of retailers to
add natural and organic items to their shelves.
Almost 65 percent said sales of those items
increased in the prior 12 months, according to the
report. Most of that growth was in the West and
Northeast, which saw organic sales growth of 80
percent and 72.2 percent, respectively. In the
Midwest, 19 percent of retailers reported organic
sales declines.
Continuing, "Locally sourced food, on the
other hand, is popular with consumers across the
board. More than 90 percent of consumers buy local
food at least 'occasionally,' 9 percent do so
'whenever possible' and 9 percent 'never' do,
according to FMI's consumer-focused report, 'U.S.
Grocery Shopper Trends 2011.'" Given the
economic environment, this data bodes well for firms
catering to these trends.
Grocers Embrace Local, Organic to Try to Drive
Growth in Tough Times, by Charles Redell,
September 8, 2011, GreenBiz.com, USA.
UK Ethical Investment Association Presents
Awards For Best Practices. -
[COMMENTARY] "The Ethical
Investment Association (EIA) has presented
transparency awards to Ecclesiastical Investment
Management, Henderson Global Investors, Jupiter
Asset Management and Rathbone Unit Trust
Management." Congratulations to the award
winners.
Ethical advisers praise investment houses, by
Oliver Haill, September 7, 2011, FT Advisor, UK.
Insurers Unprepared For Climate Risk. -
[COMMENTARY] "The vast majority
of insurers are unprepared to handle climate risks
even though they acknowledge the impact of climate
change on extreme weather events, according to a
report by investor coalition Ceres... only 11 of 88
insurers have formal risk management plans in
place." Anyone investing in the insurance
industry because it is deemed a suitable place
for ethical funds should study the
Ceres report!
Insurers unprepared for climate risk, by Gloria
Gonzalez, September 2, 2011, Environmental Finance,
UK.
Solar Power Soon To be Grid Competitive In
Parts Of Europe. -
[COMMENTARY] "Solar
photovoltaic (PV) power generation will be grid
competitive in parts of Europe as early as 2013, and
across key European markets by the end of the
decade, according to an industry association report
– making the technology more attractive to
investors." Great news, and to be expected as
carbon energy sources grow more costly while
renewable energy scales up becoming ever less
costly.
Solar PV edging towards grid parity in Europe,
by Jess McCabe, September 6, 2011, Environmental
Finance, UK.
$2.4 Tn Invested In Green Companies &
Technology Between 2007 & 2011, Says GreenTransitionScorboard. -
[COMMENTARY] "The Green
Transition Scoreboard® (GTS) is a time-based, global
tracking of [the] private financial system for
sectors investing in green markets. Ethical Markets
Media began reporting on the GTS in 2009, tracking
private investments and firm commitments in the
Green Economy since 2007. This update of the GTS
finds that over $2.4 trillion has been invested in
the green economy, up from the $2 trillion reported
in February 2011." This data is impressive,
especially when considering the financial duress of
recent years! Well done Hazel Henderson, President
of Ethical Markets Media and creator of the GTS.
Green Transition Scoreboard, August 2011 Update,
September 6, 2011, Ethical Markets Media, USA.
UK Government's £3bn Green Investment Bank
Advisory Group Includes Lord Stern & Penny Shepherd. -
[COMMENTARY] "Lord Stern of
Brentford, author of the landmark Stern Review on
the economics of climate change, chairman of the
influential Grantham Research Institute on Climate
Change, and holder of previous posts at the World
Bank and the European Bank for Reconstruction and
Development, is probably the most high-profile
member of the group, which will hold its first
meeting on 6 September." Penny Shepherd is the
Chief Executive of the UK Sustainable Investment and
Finance Association. It is great to see her on the
board.
Lord Stern appointed to Green Investment Bank
Advisory Group, September 1, 2011,
BusinessGreen, UK.
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