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Ethical Investing News/Commentaries:
Jan. 2012 |
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Commentaries by Ron
Robins
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Sweden's Largest Institutional Investors Slam
Many Swedish Companies For Inadequate Sustainability
Planning.
- [COMMENTARY]
"Sweden’s largest institutional investors have
slammed almost a third of the country’s leading
companies for failing to address sustainability
issues in their business plans. A group of 14
investors, made up of pension funds and asset
managers, said a survey answered by 82 of the
largest 100 Swedish companies showed 32% of them
were failing to sufficiently create and implement
guidelines on sustainability."
Actually, this just shows how high Nordic
standards are in comparison to the rest of the
world! If the rest of the world's companies had a
68% buy-in to sustainability, we would all be
rejoicing!
European Investors Slam Sustainability ‘Stragglers,’
by Elizabeth Pfeuti, January 27,
2012, AI-CIO, UK.
US Retail Industry Reports On Its Green
Activities.
- [COMMENTARY]
"RILA's 2012 Retail Sustainability Report, released
this morning, offers an interesting look at the
evolving philosophy on sustainability within an
industry that has the largest energy bills and the
second largest amount of greenhouse gas emissions in
the commercial sector of the U.S. economy, according
to the Environmental Protection Agency." It's
great that US retailers are getting the
sustainability message. Though in this regard they are still way
behind European retailers.
Read this report to see which ones you like.
Retail Group's First Sustainability Report Puts
Green Lens on Industry, by Leslie Guevarra,
January 26, 2012, GreenBiz, USA.
Monsanto Shareholders Vote Against GE Crop
Study.
- [COMMENTARY]
"Tuesday was Monsanto's annual shareholder meeting
at the biotech company's headquarters in St. Louis,
MO, where corporate changes were voted on –
including a proposal to study the financial risks
and impacts of Monsanto's genetically engineered
crops. The proposal was submitted last August by
Harrington Investments Inc. (HII), a socially
responsible investment advisory firm and minority
shareholder of Monsanto. The study was rejected,
however, with most shareholders in attendance voting
against it."
That outcome was not surprising. What is
unfortunate, just as for the nanotech industry that
I write about below, is how society and companies
involved in these industries are largely 'flying
blind' as to their potential future risks to
humankind and our environment.
It's just plain sad and speaks of short-termism.
The same thing that got us into our present
financial mess. Only GMOs and nanotechnology, to
name just two areas of risk, have the potential for
incredible harm to our very existence. Most ethical
investors are aware of these concerns.
Monsanto Shareholders Vote Against GE Crop Study,
by Sarah Damian, January 25, 2012, Food Integrity
Campaign, USA.
Nanomaterials Need Further Study For Health &
Environmental Risks, Says US National Academy of
Sciences.
- [COMMENTARY]
"Tiny substances called nanomaterials have moved
into the marketplace over the last decade, in
products as varied as cosmetics, clothing and
paint... nanotechnology market... represented $225
billion in product sales in 2009 and is expected to
grow rapidly in the next decade."
I'm totally astonished how the protectors of our
health and environment have let nanomaterials grow
to such a mammoth industry without any real
oversight! I've been warning for years that letting
nanotechnology run amok might be as harmful to us as
letting a deadly flu virus out of the lab. Ethical
investors might want to review the products in some
of the companies they own that use nanotechnology
and really ask themselves if they want to own stock
in such companies.
With Prevalence of Nanomaterials Rising, Panel Urges
Review of Risks, by Cornelia Dean, January 25,
2012, The New York Times, USA.
Corporate Knights Lists Its Top Global 100
Sustainable Companies.
- [COMMENTARY]
"The Global 100 is an annual project initiated by
Corporate Knights Inc., the company for clean
capitalism. The Global 100 is the most extensive
data-driven corporate sustainability assessment in
existence, and inclusion is limited to a select
group of the top 100 large-cap companies in the
world. Launched in 2005, the annual Global 100 is
announced each year during the World Economic Forum
in Davos."
The top three companies are, Novo Nordisk A/S,
Natura Cosmeticos SA, and Statoil AS. Most of the
best companies are European. The highest-ranking US
company, Life Technologies Corp., comes in at 15th.
2012 Global 100 Most
Sustainable Companies, January 25, 2012,
Corporate Knights, Canada.
Canada's RBC Makes $20 Million Commitment To
Impact Investing.
- [COMMENTARY]
"RBC today announced a $20 million commitment to a
new social and environmental initiative aimed at
facilitating solutions to social and environmental
problems. 'Impact finance' describes a range of
financial vehicles and services that use private
capital to finance solutions to social and
environmental challenges while generating financial
return, and is expected to help drive the next wave
of innovation and productivity growth in the global
economy."
This is the first such initiative in
Canada--probably even in North America. Hopefully,
other financial institutions will follow. Ethical
investors will want to carefully watch this fund's
activities!
RBC Announces $20 Million in Commitments to New
Social and Environmental Initiative, press
release, January 24, 2012, RBC, Canada.
UK Holden & Partner's Show No Significant
Difference In Capital Appreciation Between An
Ethical And 'Conventional' Portfolio.
- [COMMENTARY]
"Over the last five years Holden & Partners have
worked with a charity client who have strict ethical
screens, including animal testing, intensive
farming, tobacco and human rights (among others)...
One of the main concerns for the charity trustees
has been the long term impact on performance that
such a screen would have... from a capital
perspective an active manager in the UK market can
perform in line with the broader market, even with
an ethical screen which excludes almost half of the
market."
Another broker study showing that even excluding
half of the companies in a given stock market, an
ethical investment portfolio does not mean lower
returns.
Holden & Partners analysis suggest that 'ethical
screens' do not necessarily impact on performance,
by Mark Hoskin, January 19, 2012, Holden & Partners,
UK.
Green Bond Bankers In Japan, Sweden Beat US.
- [COMMENTARY]
"Five of the 10 top underwriters on about $7 billion
of the bonds issued by international finance
institutions were drawn from the two countries,
according to a ranking by Bloomberg New Energy
Finance released today. London-based HSBC Bank Plc
and JPMorgan Chase (JPM) & Co. of New York took
third and fourth place." We are just in the
early stages of green bond issuance. I believe that
they will become a major force in debt finance in
the years to come.
Green Bond Bankers in Japan, Sweden Beat U.S. to $7
Billion, by Sally Bakewell, January 24, 2012,
Bloomberg, UK.
Some CSR Activities Slowing Says Report.
- [COMMENTARY]
"The fifth annual State of Green Business report,
published today by Joel Makower and the editors of
GreenBiz.com, finds that while progress is still
happening in some areas, for the first time
corporate sustainability has slowed, stopped and in
some places even reversed. 'What’s to blame? Simply
put, sustainable business is suffering a
recessionary hangover,' writes Joel Makower,
Executive Editor of GreenBiz.com and principal
author of the report."
This report provides useful reading for ethical
investors and may provide additional investing
guidance for them.
'Recessionary Hangover' Slows Corporate
Sustainability's Momentum, by Matthew Wheeland,
January 18, 2012, GreenBiz, USA.
Major US Investors Seek Disclosure Of Company
Lobbying Activities.
- [COMMENTARY]
"Investors today announced the filing of shareholder
resolutions at 40 corporations, for votes at 2012
shareholder meetings; the resolutions urge the
corporations to report on lobbying expenditures,
including indirect funding of lobbying through trade
associations." To me, it would seem that such
reporting should be part of the annual management's
review of company operations. It should be enforced
by auditors as full and fair disclosure.
Investors Announce New Shareholder Initiative
Seeking Disclosure of Company Lobbying Activities,
press release, January 19, 2012, American Federation
of State, County and Municipal Employees, USA.
Giant Fund Group Calls For Veto On Executive
Pay In The UK.
- [COMMENTARY]
"Fidelity fund managers are calling for the right to
veto excessive pay packages for company executives.
The group said that reform is needed to tackle
complex pay structures and allow shareholders to
reign in generous bonuses for company management.
Dominic Rossi, chief investment officer of equities
at Fidelity made the statement in an open letter to
the government as the average pay of FTSE executives
has increased four-fold from 1998 to 2010."
It's about time that the big fund managers
stood-up against the excessive remuneration of many
executives--especially since it lowers profits and
possible stock market returns!
Fidelity calls for veto on executive pay, by
Caelainn Barr, January 19, 2012, Citywire Money, UK.
Global Mining Industry Focusing On Sustainable
Development, Says Report.
- [COMMENTARY]
"The global metals and mining industry is rapidly
changing priorities to closely focus on achieving
sustainable development, operational efficiencies,
cost reduction and innovation. Environmental
remediation, securing resource supply, energy
conservation and protection of natural mineral
reserves form the core areas of interest in today's
intensely competitive mining environment." The
extractive industries generally are being forced to
consider sustainability as the communities in which
they operate demand that their environmental, social
and numerous other concerns are accounted for.
Global Mining Industry Shifts Gears to Focus on
Sustainable Development, According to a New Industry
Report by Global Industry Analysts, Inc., press
release, January 19, 2012, Global Industry Analysts,
Inc.
Attitudes Of Religious Organisations Towards
Responsible Investment, Survey.
- [COMMENTARY]
"Religious organisations are major investors... An
important question for them is how to make
investments in, and to earn returns from, companies
and activities that are consistent with their
religious beliefs or that even support these
beliefs. Religious organisations have pioneered
responsible investment... Although our results
cannot be generalised because of the non-random
character of our sample, six main characteristics of
faith consistent investing are drawn: investing is
not perceived as being in contradiction with
religious values... "
Everyone interested in faith-based investing
should review this important survey.
From Preaching to Investing: Attitudes of Religious
Organisations Towards Responsible Investment, by
Céline Louche, Daniel Arenas and Katinka C. van
Cranenburgh, Journal of Business Ethics, DOI
10.1007/s10551-011-1155-8.
FORTUNE Magazine Lists Top 100 US
Companies To Work For.
- [COMMENTARY]
"Call it a hat trick: for the first time in the
15-year history of Fortune’s Best Companies to Work
For list, we have a three-time champion, as Google
reclaims the top spot for workforce happiness (it
debuted on our list at no. 1 in 2007, and stayed
there in 2008). We’ve had a couple double headers
before -- Container Store, SAS and Edward Jones have
all clinched the no. 1 spot twice -- but Google this
year marks the first three-peat."
Such top companies often outperform in the stock
market too. Is that a co-incidence? I don't believe
so. Ethical investors might want to review this
year's top one-hundred companies.
The Best Companies to Work For, by Leigh
Gallagher, January 19, 2012, FORTUNE, and
100 Best Companies To Work For, FORTUNE, USA.
Efficiently Weighted Indices Can Lead To SRI
Outperformance – EDHEC.
- [COMMENTARY]
"Investors can achieve outperformance with socially
responsible investment (SRI) indices if they use
efficient weights, says financial research centre
EDHEC-Risk Institute, despite its earlier studies
suggesting SRI funds produced little alpha."
This article should be read by all ethical
investors, as it offers an interesting perspective
on how to perhaps construct outperforming ethical
investment portfolios.
Efficiently weighted indices can lead to SRI
outperformance – EDHEC, by Nina Röhrbein,
January 17, 2012, IPE, France.
American Socially Responsible Investors Don't
Want to Sacrifice Returns, Wharton Study.
- [COMMENTARY]
"Investors interested in socially responsible
investing do not necessarily expect to sacrifice a
portion of their gains. Thus, to encourage socially
responsible investing, its returns should be
comparable to returns for conventional investing."
Fortunately, the conclusion generally drawn from the
dozens of studies indicate that over
the long term, socially responsible-ethical
investors don't have to sacrifice returns. However,
this study does contradict many surveys that show
SR-ethical investors would tolerate lower returns if
they are invested in industries and companies that
relate to their values.
It could be that many newly converted SR-ethical
investors, investing in green-sustainable companies,
don't really share the same values of the more traditional
SR-ethical investors.
Socially Responsible Investing, by Olivia S.
Jung, January 12, 2012, Wharton, University of
Pennsylvania, USA.
Sustainability Nears A Tipping Point, Says MIT
Sloan Survey.
- [COMMENTARY]
"In our survey, we found that more respondents than
ever before say their companies are putting
sustainability on their management agendas. Our
survey this year involved 2,874 managers and
executives from 113 countries... According to the
respondents, 70% of companies that have placed
sustainability on their management agendas have done
so in the past six years; 20% have done so in just
the past two years."
These findings are welcome news and should warm
the hearts of ethical investors.
Sustainability Nears a Tipping Point, by David
Kiron, Nina Kruschwitz, Knut Haanaes and Ingrid von
Streng Velken, December 2012, MIT Sloan Management
Review, USA.
Record Breaking Greentech Investment Seen In
2012.
- [COMMENTARY]
"The clean-tech sector is primed for a
record-setting year of investments in 2012,
following robust growth in 2011 despite difficult
conditions, according to the Cleantech Group. Global
clean technology venture and corporate investments
totalled $9 billion in 2011, a 13% increase over
2010, according to the analysis firm’s preliminary
2011 data. This is just shy of 2008’s record of $9.5
billion." The increasing realization that going
green can make money should continue to propel
greentech.
2012 seen breaking record for clean-tech investment,
by Gloria Gonzalez, January 10, 2012, Environmental
Finance, UK.
Companies Adopting Sustainability Outperform
Financially.
- [COMMENTARY]
"Companies that adopted environmental, social and
governance policies in the 1990s have outperformed
those that didn't." One wonders how much more
effort it takes to convince companies--and
particularly investment advisors--that
sustainability pays! Most investors realize this.
It's a pity that their advisors usually don't.
Is sustainability now the key to corporate success?
By Robert Eccles, Ioannis Ioannou, and George
Serafeim, January 6, 2012, The Guardian, UK.
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