Ethical Investing News/Commentaries
Commentaries by Ron
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Swiss Voters Approve Binding Say On Pay!
"The vote gives shareholders of companies listed in
Switzerland a binding say on the overall pay
packages for executives and directors. Pension funds
holding shares in a company would be obligated to
take part in votes on compensation packages. In
addition, companies would no longer be allowed to
give bonuses to executives joining or leaving the
business, or to executives when their company was
taken over. Violations could result in fines equal
to up to six years of salary and a prison sentence
of up to three years."
This is an historic event! It gets around the
cozy relationship of directors mutually reinforcing
inappropriate pay raises for each other. However, I
don’t yet see such a move occurring in too many
Swiss Voters Approve a Plan to Severely Limit
Executive Compensation, by Raphael Minder, March
3, 2013, The New York Times, USA.
New: Dow Jones Sustainability Emerging Markets
"Financial information firm Dow Jones and
sustainable investment specialists RobecoSAM have
developed a joint index that looks to measure the
sustainability performance of companies from
emerging economies." This is good news for
ethical investors looking for companies in emerging
markets. Seeing what companies are in this index
will provide clues as to what companies might be of
interest to them.
Dow Jones launches ‘first′ sustainability index for
emerging markets, by Ilaria Bertini, February
27, 2013, Blue&Green Tomorrow, UK.
Breakthrough Regarding Legal Liability of
Canadian Mining Corporations for Abuses Overseas.
"In an important precedent-setting development for
the accountability of Canadian mining companies for
alleged overseas human rights abuses, victims of
rape and murder at a Guatemalan mine are now able to
sue a Canadian mining company in Canadian courts."
This is precedent setting. It could have a powerful
effect on encouraging miners to fully engage and
cooperate with communities in the developing world.
Breakthrough Regarding Legal Liability of Canadian
Mining Corporations for Abuses Overseas,
February 25, 2013, SRI Monitor, Canada.
Eurosif & National SIFs Launch New Version Of
European SRI Transparency Code.
"Tracing its roots to the European Transparency
Guidelines unveiled in 2004, the European SRI
Transparency Code (the Code), first launched in May
2008, primarily aims at increasing accountability
and clarity of SRI practices for European investors.
The principle driving the Code is that asset manager
signatories should be open and honest, and disclose
accurate, adequate and timely information to enable
stakeholders, in particular retail investors, to
understand the policies and practices of a given SRI
This is a worthy project and has my full support!
I hope that North American SRI funds adopt this code
Eurosif and the national SIFs launch a new version
of the European SRI Transparency Code, February
22, 2013, Ethical Investment Association, UK.
Proxy Voting Survey Reveals Growing Support
For Shareholder Proposals In Canada.
"A growing number of shareholders are paying more
attention to how they vote on key issues, according
to SHARE’s annual proxy voting survey. Several votes
in 2012 registered 20% or more of shareholders
voting against management recommendations."
Active, engaged, shareholders are absolutely
necessary if most companies are to be encouraged to
optimize their ESG potential. So, this is positive
voting survey reveals growing support for
shareholder proposals, by Doug Watt, February
21, 2013, SRI Monitor, Canada.
Finding The Value In ESG Performance,
"The empirical evidence to date most strongly
suggests that: 1. The average investor (not only the
ESG-focused investor) is paying attention to ESG
when things go wrong and the company is in the
limelight and usually under duress. 2. It is likely
that the investor reaction to negative ESG events
will continue to
increase as more investors pay attention and
increasingly understand what these events can mean
for a company. 3. Disclosure of ESG performance can
partially protect against drops in shareholder value
when things do go wrong."
However, I find this statement in their report
most interesting, "Claims of sustained
outperformance of an index are inherently
questionable because, if true, investors will
quickly arbitrage away the effect. Two notable
recent review papers suggest that past conclusions
on a potential long term financial impact of ESG
management should be interpreted with caution
because many researchers use faulty methods or
questionable data.17 Based upon a set of
papers using what the researchers deem more credible
methods, they find that over longer time periods ESG
performance affects financial performance (both
accounting measures and stock returns), but that on
average the impact is minimal."
I’m not sure I believe the ’arbitraging away’
point made above. However, Deloitte’s claim that
researchers showing ESG corporate outperformance
with regard to stock prices without controlling for
other factors could be right. Overall, this is a
good study for the ethical investors to read and
Find the Value in ESG Performance, Issue 12
Bullion Management Group Joins Canada’s Social
"BMG is Canada’s first, precious metal’s company to
join the SIO. BMG seeks to continually pursue the
highest global standards for bullion purchase,
storage, integrity, transparency and security for
its clients and has already been accepted as an
Associate Member of The London Bullion Market
Association (LBMA)." I’m sure that this new
associate corporate member is causing a stir among
some SIO members. However, the idea of ’ethical
bullion’ to me is sound and should be encouraged. I
think SIO has taken a brave position here and I
commend them for it.
Bullion Management Group Joins Canada’s Social
Investment Organization, press release, February
20, 2013, Bullion Management Group, Canada.
The Deplorable Ethics Of US Regulators &
Government Exposed By Elizabeth Warren--New
Member Of The Senate Banking Committee. Ms.
Warren asks, ’why have too big to fail [financial
institutions] become too big to trial?’ It’s obvious
from the testimony that US financial regulators and
the federal government have put financial interests
above ethics and morality. The moral hazard created
by this total neglect of ethics and justice will
lead to even bigger financial crisis in the years to
Elizabeth Warren EMBARRASSES Bank Regulators At
First Hearing, February 14, 2013, You Tube, USA.
Why The Fracking Boom May Actually Be An
"Fracking proponents like to use an evocative
economic metaphor in talking about their industry:
boom. The natural gas boom. Drilling is exploding in
North Dakota and Texas and Pennsylvania. Only
figuratively so far, but who knows what the future
holds. The Post Carbon Institute, however, suggests
in a new report [PDF] that another metaphor would be
more apt: a bubble, like the bubbles of methane that
seep into water wells and then burst."
The Wall Street hype around fracking is totally
self-serving. But that’s what you expect from Wall
Street. The report cited here offers some
alternative facts and opinions. I think that most
ethical investors are quite sceptical and concerned
about fracking for a whole host of
reasons--particularly those associated with the
Why the fracking boom may actually be an economic
bubble, by Philip Bump, February 19, 2013,
SRI Performance Still Very Difficult To
"Novethic, a French research centre focused on
Socially Responsible Investment (SRI) and Corporate
Social Responsibility (CSR), has concluded after
analysing SRI funds across Europe that a consistent
standard for performance measurement still needs to
be agreed and implemented across the sector."
Absolutely right! Furthermore, with the standards
for reporting should be independent auditing of how
the data is collected, interpreted and reported,
similar to how financial reports are prepared, etc.
SRI performance still very difficult to measure -
Novethic report, by Caroline Allen, February 19,
2013, Investment Europe, France.
Finding the Value in ESG Performance.
"In its winter edition of the semiannual Deloitte
Review, Deloitte LLP released a study of the impact
of environmental, social, and governance (ESG)
issues on business performance and investor
behavior. ’Finding the Value in Environmental,
Social, and Governance Performance’ reviews evidence
showing that environmental, social, and governance (ESG)
issues can result in fundamental shifts in a
company′s financial health, management, and culture.
Companies that are demonstrably prepared for ESG
shocks are better positioned to mitigate the
There is useful information in the above-cited report.
the theme that sustainable and responsible companies’ stock prices can
Finding the Value in ESG Performance, by Tyler
Collins, February 14, 2013, First Affirmative
Financial Network, LLC, USA.
UN Principles For Responsible Investment (UNPRI)
Publishes Two New Important ESG Related Reports.
Integrated Analysis, on "how investors are
addressing ESG factors in fundamental equity
Aligning Expectations, offering "guidance for
asset owners on incorporating ESG factors into
manager selection, appointment and monitoring."
February 2013, UNPRI.
Go Figure: Sustainability Execs’ Budgets Down,
"There′s a retreat in terms of budgets, and the
state of the economy remains the No. 1 determinant
of companies′ ability to continue or accelerate work
on environmental issues. But there are a few bright
spots: Sustainability staffs are growing and are
looking for a little more public recognition for
recent efforts." It seems to me this is similar
to what’s happening in hiring new labour. Companies
are simply holding the line on all spending.
Go figure: Sustainability execs’ budgets down,
headcounts up, by John Davies, February 14,
2013, GreenBiz, USA.
Despite Growing Engagement, Corporate
Environmental Impacts Continue To Grow, Says Study.
"The most comprehensive assessment of corporate
sustainability activity to date shows that while
companies around the world engage in a wide range of
sustainability initiatives, the costs to the
environment continue to grow. The sixth annual
“State of Green Business” report (download free at
greenbiz.com/stateofgreenbusiness), published by
GreenBiz Group in association with Trucost, measures
the environmental efforts and impacts of 500 U.S.
companies and more than 1,600 of their global
counterparts. It tracks more than 30 metrics – some
never before reported on a global basis."
This is a terrific report for all ethical investors. Get
actual report and a great
Despite Growing Engagement, Corporate Environmental
Impacts Continue To Grow, Says Study - 2013 "State
Of Green Business," February 12, 2013, mondovisione, UK.
Climate Policy Could Knock Off Half The Value
Of Fossil Fuel Companies.
"A recent (subscriber-only) report from HSBC Global
Research helps shed some light on what′s at stake in
the fight over climate policy. Short answer: a hell
of a lot, especially if you′re invested in fossil
I support a completely level playing field and
the elimination of ALL financial supports and
subsidies for energy. That includes everything from
governments insuring nuclear facilities (which would
be totally uneconomical left to market forces) and
everything in between. On that basis, studies I’ve
read would make wind and even solar incredibly
Attention investors: Climate policy could knock off
half the value of fossil fuel companies, by
David Roberts, February 8, 2013, grist, USA.
Globally, People Tuning Out To Climate Change.
"The trend is certainly stark. GlobeScan tracks
public concern on six environmental issues in its
annual Radar global poll. Across eighteen countries,
public concern about all six issues – water
pollution, fresh water shortages, natural resource
depletion, air pollution, climate change and
biodiversity loss – is way down from its peak in
2009, with double-digit falls in the proportion of
the public considering them ’very serious.’"
The author of this article states that our
current economic concerns are trumping those of the
environment and that a new paradigm needs to be
offered to the public without the hyperbole of fear
mongering about the environment. Ethical investors
might want to factor into their investment analysis
what this might mean for their investments.
Why we’re turned off and tuned out to environmental
crises, by Sam Mountford, February 7, 2013,
US Consumers Interest In Buying Green Products
"NMI′s annual LOHAS Consumer Trends Database® (LCTD)
keeps a pulse of how consumer sentiment and behavior
change on a yearly basis. One noticeable trend from
the 2012 LCTD is that negative perceptions of
environmentally-friendly products is keeping an
increasing number of consumers out of the market,
even while more people know about them, and know
where to buy them." We have here fascinating
insights into consumer purchasing behaviour of green
products. Anyone investing in companies making green
consumer products might want to read this article
and related references.
One Step Forward, Two Steps Back, by Gwynne
Rogers, February 5, 2013, LOHAS Online, USA.
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