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Shareholder Values

 
"Forty-five percent of U.S. households prefer an environmental, social and governance (ESG) approach to investing… Among those between the ages of 30 and 39, this increases to 64%, and for those younger than 30, it is 67%."
-- Cerulli Associates
 
 (USA)
    October 2018

"The vast majority of Canadian investors are interested in responsible investments (RI) that incorporate environmental, social and governance (ESG) issues, and they would be more likely to choose responsible investments if their financial advisor suggested suitable RI options for them."
-- Responsible
    Investment
    Association (RIA)
 
  (Canada)
    June 2017

"70% of people [in UK] want to invest ethically but the financial services industry is failing to respond." Referencing research by Abundance.
-- Acquisition
    International
   
(UK) June 2015

 

Events

 

Global Ethical Investing News & Commentary

Commentaries by Ron Robins  E-mail us your feedback

Links may only be valid for a limited time   July 16, 2019

***List your event on our Events Page***

ESG ETFs Are Beginning to Turn Heads. "According to Morningstar data, U.S. funds that consider ESG factors attracted a net $8.4 billion in net inflows over the first half of the year, the Wall Street Journal reports. The inflows over the first six months already beat out the previous annual record of $5.4 billion."

[COMMENTARY] It seems that finally, retail investors are buying ESG funds! Only time will tell if this is a blip or represents a serious positive change in investors attitudes.
ESG ETFs Are Beginning to Turn Heads, by Max Chen, July 13, 2019, ETF Trends, USA.

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US bonds present ESG problem. "Schroders global head of stewardship Jessica Ground told a media briefing in Sydney recently that US corporate bonds present challenges to responsible investors... Using the example of the opioid epidemic, Ground explained that some of the companies with the worst exposures to these issues were included in US corporate bonds."

[COMMENTARY] This is a perspective I hadn't seen before and does make sense for ethical investors.
US bonds present ESG problem, by Elizabeth Mcarthur, July 15, 2019, Financial Standard, Australia.

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Climate change lawsuits expand to at least 28 countries around the world. "Joana Setzer, research fellow at the Grantham Research Institute on Climate Change and the Environment at the London School of Economics and Political Science, and co-author of the report, said:

'Holding government and businesses to account for failing to combat climate change has become a global phenomenon.'"

[COMMENTARY] All investors, not just ethical and sustainable investors, will soon judge companies on their climate change impact and adaptation reports -- or lack thereof! No doubt it'll eventually be reflected in a company's stock price as well -- just as stranded assets are now likely negatively affecting the stock prices of fossil fuel companies.
Climate change lawsuits expand to at least 28 countries around the world, press release, July 4, 2019, London School of Economics, UK.

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European individual investors show growing SRI interest but little investment so far - BNPP AM research. "In particular, some 64% of the respondents expressed to be interested in investing part of their savings in SRI funds. Italy emerged as the country where individual investors had the highest interest in SRI (80%). Italy was followed by Germany (65%), Belgium (63%), France (57%) and the Netherlands (52%).

However, despite the survey indicated a 5% year-on-year increase in SRI appetite, it found that just between 5% to 7% had actually invested in this type of investment products."

[COMMENTARY] This data replicates findings in the US, Canada, and the UK. It's the institutions that are adopting ESG-ethical-sustainable investing and the general investing public is far behind, though there are promising signs that the retail investor is coming on board.
European individual investors show growing SRI interest but little investment so far - BNPP AM research, by Eugenia Jimenéz, July 5, 2019, Investment Europe, UK.

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U.K. Business, Politicians Back Environment-Risk Reporting Push. "U.K. businesses, accountants, and politicians broadly endorsed the government’s plan to require public companies to detail climate-related risks in their financial reports. But the accounting profession also said standard measurement practices for climate risks still need to be developed."

[COMMENTARY] Will such regulations include foreign companies operating in the UK? Or, those foreign companies interlisted on UK and non-UK stock exchanges? This could get most interesting if US fossil fuel companies are included! What will President Trump say?
U.K. Business, Politicians Back Environment-Risk Reporting Push, July 5, 2019, Bloomberg Tax, UK.

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Rating agencies ratchet up pressure on insurers over ESG risk. "Insurers face increasing pressure to address environmental, social and governance risk as Moody’s and other credit rating agencies warn of looming vulnerabilities for the sector. Earlier this week, Moody’s published a report that highlighted multiple ESG problems at insurers, and warned that some companies would struggle to meet their financial obligations without swift action."

[COMMENTARY] It seems inevitable that insurers would fall behind the curve on this. And that anyone invested in them needs to be very careful.
Rating agencies ratchet up pressure on insurers over ESG risk, by Billy Nauman, July 4, 2019, Financial Times, UK.

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Are ESG factors correlated with sovereign spreads? Yes and no... "Separate research from BlueBay Asset Management and Hermes Investment Management has shown that countries with the lowest ESG scores tend to have the widest credit spreads... governance was the best indicator of credit spreads, showing that lower governance scores had a positive correlation with a high credit spread. "

[COMMENTARY] Helpful research in understanding how ESG ratings affect sovereign debt spreads.
Are ESG factors correlated with sovereign spreads? Yes and no... by Sam Benstead, July 2, 2019, CityWire Selector, UK.

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How To Read The European Union's New Guidelines On Sustainable Investing. "Under the proposed taxonomy regulation, institutional investors marketing environmentally sustainable investment products would be required to explain whether, and how, they used the taxonomy criteria.

Alternatively, investors could disclose their own preferred approach to determine that their investment is environmentally sustainable. These proposed rules would apply to a range of products, from European mutual funds (UCITS funds) to alternative investment funds and from securitization funds to index funds."

[COMMENTARY] For fund managers engaged in the European markets these could be important rules that'll govern their activities in those markets.
How To Read The European Union's New Guidelines On Sustainable Investing, by Bhakti Mirchandani, June 20, 2019, Forbes, USA.

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How to Build Your Own ESG Portfolio. "By putting your savings in funds that assess how a company is addressing (or worsening) environmental, social, and governance, or ESG, factors, you hitch your investments to good corporate citizens, and may earn above-average returns. But turning the concept into a practical investment portfolio without compromising on investing mandates such as diversification and due diligence comes with a unique set of challenges."

[COMMENTARY] Some great points are made in this post but looking at their portfolio looks overly diversified. Also, no-doubt it'll include sectors that won't please many ethical and sustainable investors. I suggest those DIY investors first take my one-hour DIY Ethical-Sustainable Investing Pays Tutorial and then review what said in this article.
How to Build Your Own ESG Portfolio, by Karen Hube, June 21, 2019, Barron's, USA.

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ESG: green bonds have a chicken and egg problem. "Everyone wants to buy green bonds but many issuers, concerned about cost and complexity, don't want to sell them. Non-green issuers could be all too ready to fill the void."

[COMMENTARY] A comprehensive article on the subject. Worthwhile reading for all ethical and sustainable investors.
ESG: green bonds have a chicken and egg problem, by Louise Bowman, June 19, 2019, Euromoney, UK.

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Impact investing doesn't require sacrificing returns, GIIN survey shows. "More than 90% of impact investors -- those that seek to combine financial returns with positive social and environmental outcomes -- said their deals have met or exceeded their expected financial and impact performance so far, according to the 2019 survey of data and insights collected by the Global Impact Investing Network and released on Wednesday."

[COMMENTARY] Great news -- and will help power impact investing to new heights.
Impact investing doesn't require sacrificing returns, GIIN survey shows, by Luis Garcia, June 19, 2019, Private Equity News, UK.

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Pot Firms Seek to Transition From Sin Stocks to Ethical Darlings. "A group of 45 companies operating in the cannabis industry has crafted a set of standards that they hope could one day transform them from sin stocks into ESG darlings."

[COMMENTARY] This will be fascinating to watch! Can pot companies be sold as health producing ESG focused entities to institutional investors?
Pot Firms Seek to Transition From Sin Stocks to Ethical Darlings, Kristine Owram, June 18, 2019, Bloomberg, USA.

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Fund Managers Are More Moral Than You'd Think. "A new survey of ESG adoption rates, from UBS Group AG's asset management unit and Responsible Investor Research, covers more than 600 asset owners in 46 countries, responsible for more than 19 trillion euros ($21 trillion) of assets."

[COMMENTARY] The survey shows impressive numbers of asset managers incorporating ESG. Some say that the numbers in the US lag the rest of the world due to fiduciary regulations there that ESG can't be a major criterion for investing.
Fund Managers Are More Moral Than You'd Think, by Mark Gilbert, June 17, 2019, Bloomberg Opinion, USA.

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[UK] Savers favour ethical investments in pensions. "Seven in ten (72 per cent) defined contribution pension members want their scheme to include ethical investments in its default fund."

[COMMENTARY] They also asked if savers would still invest ethically if their returns were lower. 42% said yes. This question always annoys me as it suggests to the savers that ethical investing implies lower returns -- which is generally not the case of course.
Savers favour ethical investments in pensions, by Amy Austin, June 10, 2019, FT Advisor, UK.

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ESG integration delivers returns with lower volatility. "Integrating environmental, social and governance (ESG) factors into the investment process can significantly lower volatility without sacrificing the desired returns, leading to a better overall result for long-term investors such as insurers, said Pascal Zbinden, co-head of SAA & market at Swiss Re."

[COMMENTARY] Such findings have been found before, but it's great to see Swiss Re -- one of the world's biggest reinsurers and insurers -- come to this conclusion in their own ESG research.
ESG integration delivers returns with lower volatility, by Adam Leach, June 6, 2019, Insurance Asset Risk, UK.

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The 2019 proxy season: How investors are stepping up on ESG. "While 2018 was a record year for investor support of environmental and social shareholder proposals, 2019 promises to become the year environmental and social issues take center stage."

[COMMENTARY] At last ESG issues are not only coming to the fore but also getting real action.
The 2019 proxy season: How investors are stepping up on ESG, by Sara Dal Lago and Sara Dal Lago, June 3, 2019, GreenBiz, USA.

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Corporate Knights' 2019 list of Canada's best 50 and 50 best non-Canadian corporate citizens.

[COMMENTARY] Always a good list to review -- especially for Canadians. However, non-Canadians might find some useful investment ideas among the winners too.
Corporate Knights' 2019 list of Canada's best 50 corporate citizens and Top non-Canadian foreign corporate citizens of 2019, June 4, 2019, Corporate Knights, Canada.

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Britain aims high with launch of Impact Investing Institute. "The government-backed Impact Investing Institute will be steered by Elizabeth Corley, former chief executive and vice-chair at Allianz Global Investors, and Harvey McGrath, former chairman of Man Group, the alternative asset manager. 'We see an enormous opportunity to collect money and direct it to some of the biggest social challenges we have,' Ms Corley told the Financial Times."

[COMMENTARY] Governments are realizing that they might be able to employ significant private funds to advance public and social development. Expect to see such government- backed institutes in numerous countries in the years ahead.
Britain aims high with launch of Impact Investing Institute, by Jennifer Thompson, June 3, 2019, Financial Times, UK.

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Unintended Consequences of Investing According to Environmental, Social and Governance Principles. "The implementation of ESG criteria should be undertaken with care, however, as their use can have unintended consequences depending on the specific criteria that underlie an institution's approach to ESG investing.

For example, U.S. institutions and even non-U.S. institutions that have U.S. public clients (e.g., state pension funds) that are considering leveraging well-known ESG criteria used by European institutions should be aware of potential issues under U.S. federal and state antiboycott measures that penalize entities that refuse to transact with or invest in Israel and Israeli companies."

[COMMENTARY] This is a further elaboration of something I've previously discussed that for fiduciary reasons, particularly in the US, fiduciaries cannot simply make investment decisions based on SRI without possibly incurring legal problems. This article illustrates two cases where issues became problematic.
Unintended Consequences of Investing According to Environmental, Social and Governance Principles, by staff, June 3, 2019, Dechert LLP, USA.

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Disclaimer: This website does not make investment recommendations. Nothing in this site should be interpreted as a recommendation or solicitation to buy/sell any securities or investments. Investing for the Soul is a source of general information and resources for ethical investing and socially responsible investing (SRI). Investors should consider their actions thoroughly and consult their financial advisers and other professionals, prior to taking any investment action. This website does not necessarily agree with the opinions expressed in articles on its pages or offered on the web pages to which it might be linked. Such opinions are the responsibility of the writers themselves. Furthermore, this site does not offer or provide any warranties, representations, guarantees, implied or otherwise, as to the accuracy, legality, copyright compliance, timeliness or usefulness of the information, materials or services on this, or other sites, to which it is linked. Also, Mr. Ron Robins is not an investment advisor, nor is he licensed with any professional investment related body, and thus is not able to, nor does he make, any investment recommendations.

 

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