E-newsletter of Investing for the Soul July 30, 2012
Top ethical investing news for July 2012
Links may only be valid a limited time Commentaries by Ron Robins
Twitter allows me to cover more--and breaking news--to help you do better!
Sustainable Investment Portfolios Significantly Outperform Averages, Says Study. - [COMMENTARY] "Oekom Research looked at companies in its Prime Portfolio Large Caps (PPLC) – a group of 300 major firms with sustainability accreditations – over a seven-year period between 2004 and 2011, and compared their performance against the MSCI World Total Return Index. The results are encouraging. After being weighted by market capitalisation, the PPLC displayed a 30.9% cumulative return on investment. Over the same timescale, the MSCI World achieved 26.8%. This 4.1 percentage point difference equates to a 15.3% higher return for the PPLC."
Here's another confirmation that investing in companies where ESG matters,
pays-off. It's still surprising to me why there is still so much
resistance to ethical investing within the mainstream financial
industry. Perhaps too many in the industry are more interested in making
money by manipulating markets and cheating than caring about offering
sound investment advice based on hard data!
Ethical Misconduct Pervades The New York Fed, Most Financial Industry Regulators & Financial Institutions. - [COMMENTARY] In a series of articles in The New York Times it's revealed how the elites in the financial industry--in London and New York most particularly--are overwhelmed by greed that totally subsumes any trace of ethical behaviour. I suggest that this is not only a problem for the financial industry, but for society in general.
But on a hopeful note, it is interesting that these problems are coming
to light now. Perhaps on some level there's some type of 'phase
transition' in 'collective consciousness' that is bringing this about? I
believe it really could be the case.
How Reliable Is Corporate Carbon Data? - [COMMENTARY] "Max Horster joined South Pole Carbon Asset Management two years ago to design climate-neutral investment portfolios. But there was a problem: Only 3,000 of the world’s 40,000 listed companies published emission figures, and most of those weren’t trustworthy. It’s not that companies are purposely hiding the correct numbers, he said. They just don’t put much effort into it."
I've been saying for years that all sustainability and CSR reporting for
public companies should be independently audited and verified, similarly
to financial statements. How else can you trust them? How else can you
know who's doing best in their industry? Ethical investors ought to be
vociferous in demanding such rules.
Banks Lacking Sustainable Values Face Destabilizing Risk: Report. - [COMMENTARY] "If the 2008 financial crisis laid bare nearsightedness in global financial markets, then the way to prevent future shocks is to give participants 'wider and better quality lenses,' according to a new report published by the International Institute for Sustainable Development (IISD)."
When people lack a sense of inner fulfillment they tend to crave
immediate gratification. Those who most fall into this mindset are in
the investment/banking business. It's a direct reflection of societal
values. Society has to look and change from within first before anything
meaningful will happen to investment/banking industry behaviour!
S&P ESG India Index Outperforms Its
Benchmark Index Since 2008.
- [COMMENTARY] "The S&P ESG India has
returned about 19 per cent, compared with Nifty’s 14.40 per cent this
calendar year so far. Since January 2008, the index gained by 17.10 per
cent, compared with the Nifty’s negative 15.79 per cent." This type
of performance is what will make most companies engage in ESG matters.
And it's happening even in the developing world!
Yet Another Study Shows US Companies Lagging Europe, Japan, On ESG Disclosure. - [COMMENTARY] " According to a new study by The Conference Board, the overall disclosure rate of this type of information by U.S. companies in the Russell 1000 is 10 percent, compared to 19 percent for a global sample of 3000 business organizations tracked by Bloomberg's Environmental, Social, and Governance (ESG) database."
It's almost boring the number of such reports that have appeared in
recent months. What will encourage US companies to engage more in ESG
issues? I suspect it'll really happen when companies realize it's more
profitable to incorporate ESG factors into their business practices and
investors cite increasing preference for companies with outstanding ESG
performance. We're almost there!
ESG Factors Misunderstood, Rarely
Used, In US University & College Endowments, Says IRRC Study.
- [COMMENTARY] "The endowment
community, on the whole, exhibits a very weak understanding of ESG
investing strategies, trends, opportunities, and language." This is
quite a damning report on a community of investors one would think might
be in the vanguard of applying ESG principles. I have no doubt that this
will be a wake-up call to many university and college communities to
re-think their endowment investment practices--especially now it's been
shown that an ESG focus in portfolios usually means better returns.
Yet More Unethical Behaviour In the Financial Industry--Hedge Funds Polling Analysts. - [COMMENTARY] "They are supposed to be among Wall Street’s most closely guarded secrets: changes in research analysts’ views, up or down, of a company’s prospects. But some of the nation’s biggest brokerage firms appear to be giving a handful of top hedge funds an early peek at these sentiments — allowing them to trade on the information before other investors get the word."
Given the revolving door between regulators and those they regulate and that the regulatory agencies are underfunded and understaffed, is it any wonder that the financial industry in its many guises gets-away with mass illegality? Politicians have been helpless to do anything about this since they rely so much on financial industry funds for their election campaigns. What a mess.
At least this stuff is coming out into the open now, and hopefully, a
growing disdain for these practices might create an environment for real
change. We'll see. It might sound harsh, but I believe that a country
gets the government it deserves! Good luck America.
Environmental and Social Investment Implications In The Food Sector, Survey. - [COMMENTARY] "World food prices have reached record levels and show few signs of abating. Low-income consumers in the developing world have been hit especially hard, with ripple effects spreading around the globe. The long-term food outlook is no better. Water stress, resource scarcity, waste management and climate change are having a further destabilizing effect on agriculture, food sourcing and production."
The food sector might well be an outstanding long-term investment option
for many ethical investors--as well as helping to feed the world. Be
careful though. Know what you're doing!
Trust and Ethics in Finance: Innovative ideas from the Robin Cosgrove
Prize, eds. Carol Cosgrove-Sacks and Paul H. Dembinski, Globethics
Publications (2012) Free download.
Note: Articles are linked to the original source. Some sites may require registration, and may, or may not, archive stories. All links were active at the time of publication.
Disclaimer: Neither The Soul Investor nor Ron Robins make investment recommendations. Nothing in this newsletter should be interpreted as a recommendation or solicitation to buy/sell any securities or investments. The Soul Investor is a source of general information and resources for spiritual investing, ethical investing, and socially responsible investing (SRI). Investors should consider their actions thoroughly and consult their professional advisers prior to taking any investment action. The Soul Investor does not necessarily agree with the opinions expressed in articles in its newsletter or offered on the web pages to which it might be linked. Such opinions are the responsibility of the writers themselves. Furthermore, The Soul Investor 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 in this e-newsletter, or other sites, to which it might be 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.
The Soul Investor is a publication of Investing for the Soul, a registered business name in Ontario, Canada. Copyright © 2012 Ron Robins. All rights reserved.