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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
    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
    Association (RIA)
    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
(UK) June 2015




Global Ethical Investing News & Commentary

Commentaries by Ron Robins  E-mail us your feedback

Links may only be valid for a limited time   March 23, 2019

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Ethical Funds Have Never Been Cheaper As Vanguard Spurs Fee War. "The price war has come to socially conscious investing. BlackRock (BLK), Vanguard Group and Deutsche Bank's (DB) DWS Group have slashed fees for exchange traded funds that track companies performing well on environmental, social and governance criteria."

[COMMENTARY] Finally, ethical fund fees are coming way down with the advent of new players.
Ethical Funds Have Never Been Cheaper As Vanguard Spurs Fee War, by Bloomberg News, March 21, 2019, USA.
Also, an insightful writeup on Vanguard's new Global ESG Select Stock fund by Morningstar's Jon Hale is worthy of a read.


How to Evaluate Funds that Invest in Women. "Because data around gender was so thin, Andrew Behar, CEO of As You Sow, a California-based nonprofit shareholder advocacy group focused on ESG, says his group worked with Equileap to compile more information about corporate gender policies, including policies like training, career development, safety at work, human rights and other issues...

His group recently created a gender-equality funds tool that analyzes mutual funds and ETFs, taking into account these different gender attributes and giving each fund a score."

[COMMENTARY] Good article on this subject. Behar and colleagues' work sounds most interesting. It'll be fascinating to watch how they're able to execute their findings and the returns they achieve.
How to Evaluate Funds that Invest in Women, by Debbie Carlson, March 21, 2019, US News, USA.


Large fund firms' support for combating climate change is all talk, as proxy voting record shows bottom performance. "A data analysis released by Ceres in early March shows that when BlackRock and Vanguard are measured on their up-or-down votes on climate change resolutions at stockholder annual meetings, they have among the worst voting records in the fund industry."

[COMMENTARY] The data would appear irrefutable that the largest American fund companies don't 'walk the talk.' However, I tend to believe -- and hope -- that senior manager's prognostications of incorporating ESG analysis throughout their organizations perhaps hadn't yet filtered down to the managers making the proxy decisions who are likely engaged with other concerns. I expect that the 2019 and 2020 proxy seasons will show much-improved results.
Large fund firms' support for combating climate change is all talk, as proxy voting record shows bottom performance, by Eric Rosenbaum, March 19, 2019, CNBC, USA.


Investors Lose a Major Justification for Holding Tobacco Stocks. "In recent years, a flurry of European pension funds and insurers have begun divesting their holdings, putting pressure on the share prices. BAT had its worst year on record last year, slumping 50 percent, as the U.S. Food and Drug Administration toughened its stance toward the tobacco industry. Philip Morris slumped 37 percent."

[COMMENTARY] I've been arguing for many, many years, that the days were numbered for big tobacco. In July 2010, I wrote an editorial, Sin or Ethical Investing: Which Pays Best? There, I said, "Over the next five to ten years, and with the effects of the sovereign debt crises upon us, I suspect that ethical stock portfolios could outperform both the sin and conventional variety."
Investors Lose a Major Justification for Holding Tobacco Stocks, by Lisa Pham, March 13, 2019, Bloomberg, USA.


Who runs the world? The global status of women in leadership. "Regardless of progress at the board level, the glaring reality is that the world’s largest corporations are stalled in second gear when it comes to hiring women in C-suite leadership roles. Top senior executive officers with the letter C in their title (CEO, CFO, CIO, COO, CSO) lag behind on gender in all markets."

[COMMENTARY] Although several reputable studies have shown that having women and diversities on boards and in management generally leads to superior financial performance, corporations generally have been slow to include them. The study published by Corporate Knights provides terrific insight into this reality.
Who runs the world? The global status of women in leadership, by Sophie L'Helias & Adria Vasil, March 9, 2019, Corporate Knights, Canada.


EU agrees on new rules to counter investment 'greenwashing'. "The European Union agreed on Thursday on a new law that forces asset managers, insurers and pension funds to disclose environmental risks in their investments. The law is meant to spur green investment and to curb 'greenwashing', a practice whereby companies claim to be more environmentally friendly than they really are."

[COMMENTARY] Europe again is at the forefront of what inevitably will be followed by other jurisdictions. Companies and asset managers are now warned to be truthful in their environmental assessments and risks posed. Since many of those affected are global in nature, they're likely to extend these guidelines to their activities well beyond Europe.
EU agrees on new rules to counter investment 'greenwashing', by Francesco Guarascio, March 7, 2019, Reuters, Belgium.


Is your ethical investing app upselling greenwash? "Animal welfare’ funds heavy in animal testing? Low-carbon funds dripping in oil? Your BS-free green guide to 9 SRI apps."

[COMMENTARY] Corporate Knights have produced one of the few really good analytical studies on ethical investing apps for North Americans. They believe there are some good robo apps for Americans, but not so for Canadians. Anyone interested in such apps should also enroll in my 1-hour DIY Ethical-Sustainable Investing Pays Tutorial.
Is your ethical investing app upselling greenwash? by Adria Vasil, March 5, 2019, Corporate Knights, Canada.


Sustainable and ethical standards are in vogue, but only governance is affecting ratings, Fitch finds. "The credit rating agency, however, found that less than one per cent of financial institutions have ESG factors that have actually driven a ratings change, with governance risk being the biggest issue. Governance includes such things as executive pay, audits and efforts to weed out money laundering."

[COMMENTARY] Two key points stand out in Fitch's findings. Firstly, how small an impact ESG is having on credit ratings! It makes me wonder how much credit rating agencies utilize ESG criteria. Secondly, Fitch doesn't say if the analysis was only from their company or if other ratings' agencies were involved. For instance, it would be interesting to know what differences there are in the use of ESG criteria between agencies. Ethical investors, particularly, might find that useful.
Sustainable and ethical standards are in vogue, but only governance is affecting ratings, Fitch finds, by Chad Bray, February 26, 2019, South China Morning Post courtesy of Yahoo!, Hong Kong.


Impact Investment Continues to Grow Rapidly in Canada. "Impact assets under management (AUM) in Canada now total $14.75 billion, up from $8.15 billion reported two years prior. This represents 81% growth over a two-year period, which is nearly double the growth rate of all responsible investment (RI) AUM, which grew by 41.6% over the same period."

[COMMENTARY] Impact investments are quickly becoming an investment class in their own right -- different from socially responsible and ethical investing. Impact investing's priority is the social, environmental good, while making a reasonable return. Whereas, traditional socially responsible-ethical investing still has the social, environmental good, but also has a greater emphasis on returns.
Impact Investment Continues to Grow Rapidly in Canada, report, February 21, 2019, RIA Canada.


Sustainable Investing Goes Mainstream: Morgan Stanley and Bloomberg Survey Finds Sustainable Investing a Business Imperative Among U.S. Asset Managers. "New survey shows that 75% of U.S. asset managers say their firms now offer sustainable investing strategies, up from 65% in 2016. Most asset managers are embracing sustainable investing as a business building approach and believe that financial returns and impact outcomes can go hand in hand.

... Respondents cited several key drivers of success in sustainable investing, including increased investment stability, high client satisfaction, product popularity and possible high financial returns. Despite the recognition of the strategy as a business imperative, almost all asset managers highlighted the need for increased expertise, better data and impact reporting to drive future success in the space."

[COMMENTARY] The good news keeps rolling along. Nothing to add, really.
Sustainable Investing Goes Mainstream: Morgan Stanley and Bloomberg Survey Finds Sustainable Investing a Business Imperative Among U.S. Asset Managers, press release, February 21, 2019, The Morgan Stanley Institute for Sustainable Investing/Bloomberg, USA.


ESG investing does not cost more, research shows. "Pension funds performing well on environmental, social and corporate governance (ESG) factors don’t incur higher asset management costs, according to research. Research by Dutch consultant Gaston Siegelaer indicated that improvements to investors’ ESG policies did not increase costs either."

[COMMENTARY] These were Dutch pension funds that were studied. I think most of us would agree that at the retail level ESG investing in some cases does cost more. However, the big differential that once existed is significantly reduced.
ESG investing does not cost more, research shows, by Frank van Alphen, February 19, 2019, IPE, UK.


'Increasing maturity': PwC poll highlights growth of ESG and sustainable investing. "the consultancy giant's fourth annual Private Equity Responsible Investment Survey published today draws on the views of 162 respondents from 35 countries and territories, including 145 private equity houses. It found almost 81 per cent of respondents are currently reporting ESG matters to their boards at least once a year, while just over a third are reporting on ESG even more frequently."

[COMMENTARY] This reputable survey provides insight as to what is happening at the board level with regard to ESG matters. And it's promising -- despite some other recent reports of boards largely disinterested in ESG concerns.
'Increasing maturity': PwC poll highlights growth of ESG and sustainable investing, by Michael Holder, February 19, 2019, Business Green, UK.


How socially conscious young investors are putting their money where their ideals are. "An influx of young investors are leading a charge of socially responsible and sustainable investing, experts say, funneling their money into investments and projects that serve the greater good. According to a 2018 Harvard Kennedy School study, socially responsible investing now accounts for $26 trillion."

[COMMENTARY] The Harvard study is a terrific review of how sustainable-ESG investing has evolved and what it is today. Brandon Gomez, writing for CNBC, has also done a good job in describing and promoting SRI-sustainable investing.
How socially conscious young investors are putting their money where their ideals are, by Brandon Gomez, February 17, 2019, CNBC, USA.


Investors getting a taste for lucrative sustainable stocks, says BlackRock report. "ESG funds in emerging markets recorded a total annualised return of 5.7% from 2012 to 2018, compared to the 4.3% traditional equity index funds delivered over the same period."

[COMMENTARY] This is new data from BlackRock. The article doesn't specify what funds were included in the research though.
Investors getting a taste for lucrative sustainable stocks, says BlackRock report, by Londiwe Buthelez, February 11, 2019, Business Day, South Africa.


The 100 Most Sustainable U.S. Companies. "How much of a company’s journey toward sustainability is driven by the personal passions of its CEO? Based on the conversations Barron’s had recently with several corporate chieftains, quite a lot. That’s one of the insights from our second annual sustainability ranking of public companies."

[COMMENTARY] Barron's list is compiled by the well-known and respected SRI fund company, Calvert Research and Management. Hence, it's to be respected.
The 100 Most Sustainable U.S. Companies, by Leslie P. Norton, February 8, 2019, Barron's, USA.


Major funds launch toolkit to help investors measure SDG impact. "Cambridge University’s Investment Leaders Group has developed a framework that allows investors to measure the impact of their investments against the Sustainable Development Goals."

[COMMENTARY] Companies associated with this effort include the likes of PIMCO and Zurich Insurance. This toolkit could be a gamechanger for many investors interested in sustainability. It'll be fascinating to see how widespread its adoption becomes.
Major funds launch toolkit to help investors measure SDG impact, by Terry Slavin, February 6, 2019, Ethical Corp, UK.


Change the Conversation: Redefining How Companies Engage Investors on Sustainability. "Drawing from our interviews with Ceres investor partners, Change the Conversation highlights key trends in investors’ evolving expectations for corporate sustainability. It presents nine recommendations to guide companies toward more meaningful and effective investor engagement on ESG issues, helping them to not only meet investor expectations, but also capture competitive advantage." Download report here


New Report Makes Case for Tobacco Divestment. "Genus Capital Management, Canada's leader in fossil free and impact investing, today released a report on tobacco divesting, showing that divesting from tobacco stocks would not have negatively affected returns over 20 years."

[COMMENTARY] I haven't read the full report, but I'm wondering how dividends from tobacco companies were treated in the study. Their yields are often around 5-7% p.a. and that's why many investors like them.
New Report Makes Case for Tobacco Divestment, press release, February 5, 2019, Genus Capital Management, Canada.


Triple A Scores Became Tougher in Latest CDP [Carbon] Rankings. "For companies vying for the highly prized CDP recognition, 'triple A' scores became much tougher to attain in 2018. While 140 companies were named to the 2018 list, only two, Firmenich and L’Oreal, received triple A scores in performance against all three areas surveyed: climate change, water security and forests.

CDP, formerly the Carbon Disclosure Project, is widely recognized as one of the world’s leading sustainability reporting frameworks. It represents the interests of over 650 investors with assets of $87 trillion."

[COMMENTARY] Any investor interested in how companies engage with carbon needs to see CDP's data.
Triple A Scores Became Tougher in Latest CDP [Carbon] Rankings, by Amy Brown, January 30, 2019, TriplePundit, USA.


Shareholder Activism Report 2018 by Skytop Strategies. "Contents: • New Campaigns Launched & Activity Overview • Campaign Size & Super Campaigns • Sector Weightings • Evolution of Demands." For the report, click here.


Advisers not sold on ESG fund strategies. "A new report from Cerulli Associates, a Boston-based research and consulting company, shows it's fund providers that want these products, not financial advisers. While 46% of issuers see unmet demand for products focused on ESG and socially responsible investing, only 17% of advisers share that view, the survey showed."

[COMMENTARY] Some advisors might have mostly conservative, older clients who they've serviced for years and who know nothing of, nor demand, sustainable-ethical investment-related products. However, survey after survey of investors demonstrates that sustainability and ethically-based investing are their preferred investing paradigms. I believe that many advisors should understand that 'know your client' isn't only about how much the client needs in retirement!
Advisers not sold on ESG fund strategies, January 25, 2019, Bloomberg News/InvestmentNews, USA.


[UK] Investment Association weighs retail product labels for SRI funds. "The Investment Association (IA) is consulting on proposals which would see retail investors provided with product labels for funds linked to sustainability and responsible investing (SRI) products, in efforts to aid investors in achieving 'both their financial as well as their environmental and social goals'."

[COMMENTARY] I can see this idea gaining traction. It might simplify sustainable-ethical investing for the retail client, though I'm sure many in the industry would rebel against it. In particular, making portfolio changes that move the fund from one ranking to another could prove problematic, since investors might have been sold the fund with a specific goal.
Investment Association weighs retail product labels for SRI funds, by Mike Sheen, January 25, 2019, Investment Week, UK.


Study sees safe haven in Islamic equities in crises. "Restrictions on debt and the diverse investment goals for Shariah-conscious shareholders could help provide a shelter in a time of crisis, academics including Sohel Azad of Melbourne’s Deakin Business School wrote in the November issue of the Journal of International Financial Markets, Institutions and Money."

[COMMENTARY] Interestingly, research after the 2008-9 market crash showed ethical investments also held-up better than the general market. Ethics pays.
Study sees safe haven in Islamic equities in crises, January 22, 2019, Bloomberg/Tokyo, Gulf Times, Qater.


Corporate Knights 2019 Global 100 results. "Overview of 2019 Global 100 Most Sustainable Corporations in the World index."

[COMMENTARY] This is always one of the more interesting rankings of sustainability leaders. You'll see companies here you won't find on other such lists and it's a testament as to how much research Corporate Knights do!
Corporate Knights 2019 Global 100 results, January 22, 2019, Corporate Knights, Canada.


Skeptical About ESG? Don’t Be. Here’s Why. "A new Amundi SA study shows out performance by ESG funds in recent years, and Nuveen, with $20 billion in ESG assets, affirms that finding."

[COMMENTARY] I've covered the Amundi study earlier, see "ESG screening boosts stock market performance, research finds." However, the Nuveen study is also noteworthy. It's shown outperformance in its ESG ETFs and has seen a big leap in inquiries from advisors and investors concerning ESG.
Skeptical About ESG? Don’t Be. Here’s Why. By Ginger Szala, January 22, 2019, ThinkAdvisor, USA.


Defective data is a big problem for sustainable investing. "But performance metrics for ESG are in their infancy compared with financial statements. Almost seven in 10 asset managers say the lack of high-quality information is the biggest challenge in adopting ESG principles. Without progress, the momentum in sustainable investing may stall."

[COMMENTARY] The writer, Huw van Steenis, is a senior adviser to the governor of the Bank of England, and provides a good discussion of the situation. I've long argued that not only must there be generally agreed on ESG criteria and reporting standards, but like financial statements, corporate ESG 'statements' should be independently verified and audited by accredited and regulated auditors.
Defective data is a big problem for sustainable investing, by Huw van Steenis, January 20, 2019, FT, UK.


RepRisk: The Ten Most Controversial Companies of 2018. "The MCC 2018 Report shows how major corporations from different sectors, including airlines, utilities, and banks, had to mitigate reputational and financial impacts resulting from inadequate management of ESG risks. The wide spectrum of ESG issues faced by these companies, and the ripple effects of these issues on the sector as a whole, stresses the global dynamics of ESG incidents."

[COMMENTARY] Interestingly, most are in Asia. See the list on page 7 of the report.
RepRisk Special Report: Most Controversial Companies 2018, January 16, 2019, Switzerland.


Why it makes sense to invest in companies with a healthy gender balance. "A 2017 sustainable investing study from Swiss bank UBS found that companies in the FTSE Developed World Index where women made up at least 20 per cent of the board and senior management had higher returns than their less gender-diverse peers. In addition, firms that retained more than half of their female managers through to senior management had higher returns than those that lost more than 50 per cent of their women in management."

[COMMENTARY] So, how is it that more women on boards improve corporate profits? The full answer is still unclear. However, the evidence showing that women on boards help improve corporate profits is clear! Ethical investors have long believed this to be true. Racial and ethnic diversity of boards can also add to improved corporate profitability.
Why it makes sense to invest in companies with a healthy gender balance, by Alice Haine, January 14, 2019, The National, UAE.


ESG screening boosts stock market performance, research finds. "Amundi, which manages more than €1.47tr worth of assets, looked at investment data from 2010-2017 to analyse the performance of 1,700 companies across five MSCI investment index groups using ESG criteria... Overall, the study found ESG screening does not impact all stocks, but tends to impact the best-in-class and worst-in-class assets."

[COMMENTARY] There are some interesting twists in Amundi's findings. Read the article. The link is below. As a result of their research, Amundi has decided to use ESG analysis across the board in the firm.
ESG screening boosts stock market performance, research finds, by Michael Holder, January 14, 2019, Business Green, UK.


Fitch Ratings launches ESG Relevance Scores. "The new ESG Relevance Scores, which have been produced by Fitch's analytical teams, transparently and consistently display both the relevance and materiality of ESG elements to the rating decision. They are sector-based and entity-specific."

[COMMENTARY] This is an exciting development. What is also noteworthy is that its ESG Relevance Scores will be in the public domain. It'll be most interesting to compare their scores with ESG ratings from firms like Sustainalytics and MSCI. It seems the ratings will be available soon.
Fitch Ratings launches ESG Relevance Scores, staff, January 8, 2019, Institutional Asset Manager, UK.


Putting Faith In Investing. "Whether it’s public or private, pooled fund or individual portfolio, investors seemingly are opting to trade more and more on faith. For faith-based advisors, things should be looking up."

[COMMENTARY] This article is a good overview of current faith-based investing from a US standpoint. I've known the writer, Tom Kostigen, for many years.
Putting Faith In Investing, by Tom Kostigen, January 2, 2019, Financial Advisor, 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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