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         Links may only be valid for a limited time                                        September 3, 2010

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Study Says Over 19 Years Returns Of SRI & Conventional Funds Show Statistically Indistinguishable Returns. - [COMMENTARY] "This article explores that topic through an analysis of those actively managed mutual funds categorized as “Socially Conscious” from 1990 to 2008 (19 calendar years) and finds that while SRI funds tend to slightly underperform their non-SRI peers (−17 bps per year), they tend to slightly outperform on a risk-adjusted basis (+1 bps year), but the results were neither statistically nor economically significant." Here we have another study demonstrating the general equivalency of long term performance between SR/ethical and conventional funds.
Exploring the Cost of Investing in Socially Responsible Mutual Funds: An Empirical Study, by David M. Blanchett, Fall 2010, The Journal of Investing, USA.

Survey Shows Both Consumers & Company Executives Not Buying Corporate Green Messages. - [COMMENTARY] "The corporate sector has gone to great lengths in recent years to persuade consumers of its commitment to environmental sustainability. But consumers aren't buying it, to judge by the results of a study released this month by Gibbs & Soell Public Relations. Nor, for that matter, do corporate executives -- queried in a parallel survey -- necessarily think companies are deeply committed to going green."

I wonder if consumers are getting bored with all the green talk. Perhaps they are more concerned about their jobs and losses in their net worth? It is a pity that we as humans tend to be reactive rather than proactive. Unfortunately, it might take more environmental disasters that deeply hurt their finances before consumers really think green.
Thumbs Down on Corporate Green Efforts, by Mark Dolliver, August 31, 2010, Adweek, USA.

Younger Canadians Less Likely To Buy Products Based On Company's Social Responsibility. - [COMMENTARY] "In the survey, only 16 per cent of those under the age of 30 said a company’s reputation was 'very important' for them in making product choices, compared with more than 75 per cent of respondents over the age of 55.... The findings are contained in the Consumerology Report, a quarterly survey conducted for Toronto advertising agency Bensimon-Byrne that tracks trends in Canadian consumer attitudes." This data is a shocker. I wonder if it extends to the US and other developed countries? What does it mean for investing in 'best-of-sector' (in CSR) companies?
Survey points to a generation gap over corporate social responsibility, by Adrian Morrow, August 31, 2010, The Globe & Mail, Canada.

Covalence Offers Insight Into Ethical Behaviour In Banking Industry. - [COMMENTARY] "The ethical reputation of banks shows a smaller progress than other sectors, according to the Covalence Banking Sector Report 2010 released today. The reasons are a low volume of positive news regarding products, as well as criticisms related to remunerations and gender discriminations." Ethical investors interested in the banking sector might find this report useful. Nothing earth-shattering though.
Banks are Shy in Offering Sustainable Products, September 1, 2010, Covalence, Switzerland.

Will Reducing Oilsands Output Increase Carbon Emissions? - [COMMENTARY] "According to a study released earlier this month, the implementation of a low-carbon fuel standard in the U.S. would increase global greenhouse gas emissions by up to 19 million metric tonnes because it would force U.S. refiners to import more oil in tankers from the Middle East, Venezuela and elsewhere." This is a twist on conventional thinking. Of course the study was done by the undoubtedly biased National Petrochemical and Refiners Association. It would be useful to see any independent studies on this issue.
Credibility 'Gap'  August 31, 2010, The Calgary Herald, Canada.

Banks Getting Concerned About Environmental Risks. - [COMMENTARY] "After years of legal entanglements arising from environmental messes and increased scrutiny of banks that finance the dirtiest industries, several large commercial lenders are taking a stand on industry practices that they regard as risky to their reputations and bottom lines." Ethical investors might like to monitor what the banks are doing and perhaps adjust their holdings as they see fit.
Banks Grow Wary of Environmental Risks, by Tom Zeller Jr., August 30, 2010, The New York Times, USA.

A Tale Of Woe For ShoreBank, A Socially Responsible US Bank. - [COMMENTARY] "It's been a week since the Federal Deposit Insurance Corporation swept away ShoreBank's bad assets (cost: $367.7 million), changed its name to Urban Partnership Bank, and left it largely in the hands of the same people (and investors) who ran it before... Distinctions need to be made to fully understand what transpired. ShoreBank, the community development lending institution and bank with a presence in Chicago, Detroit and Cleveland, was owned by a holding company: ShoreBank Corporation. The bank failed, but not the holding company, which still oversees some community development nonprofits,"

Shorebank had often been held-up as a model for socially responsible banking. It is unfortunate to see these developments.
Did Green ShoreBank Escape Bankruptcy? By Paul Chesser, August 27, 2010, National Legal and Policy Center, USA.

US Employees Losing Faith In Their Employer's Green Efforts. - [COMMENTARY] "The Green Confidence Index, which is derived from a monthly online survey of approximately 2,500 Americans aged 18 and over, measures Americans' attitudes towards and confidence in how leaders and institutions are perceived to be addressing environmental issues, the adequacy of information available to them to make informed decisions, and their past and future purchases of green products." I wonder if this might be related to companies' belt tightening activities?
Employees Losing Confidence in Companies' Green Commitments, August 26, 2010, GreenBiz, USA.

Something Different: The Quest For Gross National Happiness.  - [COMMENTARY] "In Bhutan, the economic challenge is not growth in gross national product, but in gross national happiness (GNH). I went to Bhutan to understand better how GNH is being applied. There is no formula, but, befitting the seriousness of the challenge and Bhutan's deep tradition of Buddhist reflection, there is an active and important process of national deliberation." This is the kind of debate all societies need. Human induced climate change, excessive debt, and resulting recessions and depressions, are the result of not first finding lasting fulfillment within ourselves.
Happy growth in a Buddhist economy, by Jeffrey D Sachs, August 28, 2010, TODAYonline, USA.

Shareholders With 3% Or More Shares Can Nominate Directors, Says US SEC. - [COMMENTARY] "The Securities and Exchange Commission today adopted changes to the federal proxy and other rules to facilitate the rights of shareholders to nominate directors to a company's board... Under the rules, shareholders will be eligible to have their nominees included in the proxy materials if they own at least 3 percent of the company's shares continuously for at least the prior three years."

This is great news for all those interested in environmental, social and governance (ESG) issues. It means it will be easier to get ESG oriented directors nominated, and hopefully on the boards of companies.
SEC Adopts New Measures to Facilitate Director Nominations by Shareholders, August 25, 2010, U.S. Securities Exchange Commission, USA. Also, New US proxy access rules a “win-win”, says CalPERS, by Daniel Brooksbank, August 26, 2010, Responsible Investor, UK.

Apple Refuses to Participate In UK Cell Phone Green Ranking. - [COMMENTARY] "The UK has started up its own green ranking system for mobile handsets, but Apple wants no part of it. The company has refused to allow the iPhone to be included in the system by O2, but its reasons for declining the opportunity aren't exactly clear... But Apple doesn't want to take part. A spokesperson from Apple wouldn't clarify the reasons, either, only citing Apple's online environmental reports for its products (which provide very, very limited information about the products life cycle analysis)."

Does Apple have something to hide? Do they fear their iPhone would show poorly in the rankings?
Apple Refuses To Take Part In UK's First Green Cell Phone Ranking System, by Jaymi Heimbuch, August 25, 2010, Treehugger, USA.

Canadian Managers VanCity & Bâtirente Campaign For More Women On Boards. - [COMMENTARY] "Corporations around the world should increase the number of women on boards of directors, according to a coalition of global investors managing more than $73 billion (US) in assets, including Canada’s Vancity Investment Management and Bâtirente, who recently issued a joint press release on the topic." The firms say that studies show there is a correlation between a company's profitability and board diversity.

40% Of Consumers Likely To Test Drive Electric Vehicles. - [COMMENTARY] "Forty percent of consumers say they are likely to test drive an electric vehicle, according to an online survey of American adults from the Consumer Electronics Association (CEA)." Aside from the much increased power grid demands, one of my concerns not yet addressed is the electro-magnetic radiation (EMR) levels that drivers and passengers in these cars might be subjected too.
Study Finds 40% of U.S. Consumers Likely to Test Drive EVs, August 24, 2010, Environmental Leader, USA.

SRI In South Africa Focuses On Infrastructure, Development & Black Economic Empowerment, Study. - [COMMENTARY] "This paper explores whether any investment products or strategies in South Africa take environmental sustainability into account. By looking at how environmental, social, and governance (ESG) criteria are used in investment decision making, we found that most socially responsible investment products and responsible investment strategies largely focus on infrastructure, development, and black economic empowerment."

For additional information on SR/ethical investing in South Africa and Africa generally, see my June 18 column at alrroya.com, "Ethical Investing Shines in Africa as Economy Grows.
Responsible Investment: A Vehicle for Environmentally Sustainable Economic Growth in South Africa, by Lise Pretorius, Martine Visser, and Stephanie Giamporcaro, University of Cape Town, June 2010, South Africa.

Climate Counts Updates Its Corporate Sustainability Scores. - [COMMENTARY] "The latest update to the Climate Counts scorecard, released today by the nonprofit group launched in 2007 with support from Stonyfield Farm, reflect general improvement in sustainability issues, but huge differences remain sector by sector, and industry as a whole is failing to meet the climate challenge." For ethical investors, these findings are always useful to look at.
Pharma Leads, Toy Makers Lag in Latest Climate Counts Scores, by Climate Biz, August 19, 2010.

Faith-Based Funds Outperform Market & Most SRI Funds Says New Study. - [COMMENTARY] "[The study] examines the performance of these faith-based funds over three different five-year periods from May 2001 to February 2008. By applying a comprehensive set of tests, the authors find evidence that faith-based funds mostly outperform the market. The results also suggest that faith-based funds do better than socially responsible investing funds in general."

This looks like a fascinating study. It has been my contention for four decades that investments based on ethics and higher values will eventually demonstrate the best long term returns. But to get a copy of this study costs $45.
The Impact of Faith-Based Screens on Investment Performance, by Esmeralda O. Lyn and Edward J. Zychowicz of the Frank G. Zarb School of Business, Hofstra University, Hempstead, NY, USA.

Harvard Sells Some Israeli Stocks, Furor Created. - [COMMENTARY] "Harvard University has sold millions of dollars in shares in Israeli companies, a move that it insists is purely financial but which has already been claimed by a pro-Palestinian group as a victory in its boycott and divestment campaign against Israel... Harvard said the change had taken place because Israel had been part of its emerging markets portfolio but the country's status had been upgraded to developed market." I will leave it to the reader to make-up their own conclusions.
Harvard insists Israeli shares sale not driven by boycott, by Ewen MacAskill, August 16, 2010, The Guardian, UK.

Islamic U.S. Mutual Funds Flocking to Malaysia: Islamic Finance. - [COMMENTARY] "Malaysia is attracting Islamic investment funds from the U.S. seeking higher returns in Asia as growth in developed economies slows... [Funds include:] Saturna Sdn., Franklin Templeton GSC Asset Management Sdn., Nomura Islamic Asset Management Sdn., and Aberdeen Asset Management Plc." Islamic mutual funds are likely to grow significantly in Muslim countries. For additional insight see my column, Ethical and Sharia-compliant Investing Takes Off.
Islamic U.S. Mutual Funds Flocking to Malaysia: Islamic Finance, by Soraya Permatasari, August 16, 2010, Bloomberg, USA.

Executives, Consumers Doubt Companies Are Going Green.  - [COMMENTARY] "Only 29 percent of Fortune 1000 executives and 16 percent of consumers feel a majority of companies are committed to adopting more environmentally friendly business practices, products or services, according to the 2010 Gibbs & Soell Sense & Sustainability Study. In comparison, 54 percent of executives believe only some are walking the green walk, in addition to 48 percent of consumers participating in the survey." Though not surprising but nonetheless shocking, this survey reflects a widespread feeling that probably not enough is being done to help the environment and climate change.
Executives, Consumers Doubt Most Companies Really Going Green, August 11, 2010, GreenBiz, USA.

Virtue May Now Trump Vice. - [COMMENTARY] "'Up until now, probably the evidence might lean towards the 'sin' category doing a bit better, but I'm not sure going forward that would still be the case,' says Ron Robins, a former investment analyst and founder of the 'Investing for the Soul' website." Out today, a Wall Street Journal article quotes me extensively on my thoughts about sin versus ethical investing. However, you do need a subscription to the Journal to see the full article. Individual copies of the article can also be purchased though.
GETTING PERSONAL CANADA: Virtue May Now Trump Vice, by Monica Gutschi, August 11, 2010, The Wall Street Journal, USA.

Ceres Leads 50 Institutional Investors Asking Oil & Gas Companies To Disclose Their Emergency Plans For Oil Rig Disasters. - [COMMENTARY] "A coalition of mostly institutional investors is demanding oil and gas companies disclose their existing safeguards and plans of action in the event of another offshore rig disaster and possible oil spill like the one experienced by BP PLC and other companies in the Gulf of Mexico." The responses to this request will be watched by the entire investment world. The companies have a duty to be fully transparent and ready for criticism concerning their plans.
Investors Ask Oil, Insurance Groups to Disclose Safety Plans,  August 5, 2010, Nathanial Gronewold, Greenwire in The New York Times, USA.

India May Institute Mandatory CSR Reporting. - [COMMENTARY] "Corporate social responsibility (CSR)... will now be made mandatory for corporate India, sources in the Ministry of Company Affairs told CNBC-TV18. If approved, companies will have to spend 2% of the average net profit on CSR." I have been calling for mandatory CSR reporting for many years. It is great to see both developed and developing countries getting with it. See: A Call for Mandatory Corporate Social Responsibility Reporting and We Need Mandatory Corporate Social Responsibility (CSR) Reporting.
Mandatory CSR not a great idea, feels India Inc., August 5, 2010, moneycontrol.com, India.

China Leading In Cleantech IPOs & Financing. - [COMMENTARY] "In 2009, China accounted for 53% of cleantech IPOs and 69% of IPO money raised in cleantech." This is both terrific--and concerning. Terrific, because China might get really serious about dealing with its pollution problems. Concerning, because it means that cleantech leadership is moving to Asia and further signifying the potential fall of the West in this area.
Insight of the Week, August 5, 2010, cleantech.com, USA.

US Cleantech Venture Funding Comes Back To Life. - [COMMENTARY] "US venture capital (VC) investment in cleantech companies in Q2 2010 hit $1.5 billion in 68 financing rounds, a 63.8% increase in capital and an 4.6% increase in deals compared to Q2 2009, according to an Ernst & Young LLP analysis based on data from Dow Jones VentureSource. This was the highest level of venture funding for cleantech since Q3 2008." Looking at the data it seems to me that $80/barrel oil is a spur to some of this funding.
US VC investment in cleantech continues upward trajectory with $1.5 billion investment in Q2 2010, August 3, 2010, Ernst & Young, USA.

The International Integrated Reporting Committee (IIRC) Plans To Develop Company Annual Reports That Integrate CSR. - [COMMENTARY] "The IIRC’s remit is to create a globally accepted framework for accounting for sustainability. A framework which brings together financial, environmental, social and governance information in a clear, concise, consistent and comparable format - put briefly, in an 'integrated' format. The intention is to help with the development of more comprehensive and comprehensible information about an organization’s total performance, prospective as well as retrospective, to meet the needs of the emerging, more sustainable, global economic model."

This initiative is extremely timely and led by some outstanding individuals and organizations. What they aim for is something I have desired to see accomplished for two or three decades. I wish them great success!
Formation of the International Integrated Reporting Committee (IIRC), press release, August 2, 2010, IIRC, UK.

Matthew Kiernan, Former Head of Innovest Strategic Value Advisors Advocates 'Strategically Aware Investing.' - [COMMENTARY] "... rebranded and conceived as simply strategically aware investing, rather than stigmatized or ghettoized as 'ESG/RI/SI investing' more institutions and asset managers might actually try it. And who knows, if they did, both the planet and the investor/fiduciaries’ risk-adjusted returns would likely be the better for it. Investors, advisors, shake off your current acronyms and embrace SAI —- you have nothing to lose but your (intellectual) chains!" I greatly admire Mr. Kiernan and met him a number of times. He makes some great points as to why his proposed term makes sense.
We’ve got RI, ESG and CSR: now it’s time for strategically aware investing! By Matthew Kiernan, August 3, 2010, Responsible Investor, UK.

Green Consumer Confidence Index Stagnates. - [COMMENTARY] "The past three months showed stagnation in the green economy, at least in consumer perceptions of it, according to the latest quarterly update from the Green Confidence Index. The Index returned to levels of mid-2009, in the depths of the recession." The originators of the index suggest that the index is likely to follow economic trends, both up and down.
Flagging Economy Sinks Green Consumer Confidence, August 2, 2010, GreenBiz, USA.

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