Ethical Investing News/Commentaries
Commentaries by Ron
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Ethical Lapses on Wall Street.
"The second annual survey of Wall Street ethics (or
the lack thereof) from the law firm Labaton Sucharow
generated much interest but few surprises for me.
Did you really believe Wall Street changed for the
better since 2010 when the Dodd-Frank Act was passed
The results of the Labaton Sucharow survey serve
a good purpose: they remind us that for all the 'high
ethical' talk of Wall Street leaders, their industry
is plagued with unethical behaviour requiring
significant regulatory oversight. However, what is
also a pity is that the regulators are often 'in
bed' with those they regulate and the regulatory
agencies are purposely starved of funds by their
political masters who rely on Wall Street for their
Ethical Lapses on Wall Street, by Daniel Solin,
July 25, 2013, US News & World Report, USA. For the
Labaton Sucharow report,
'Comply or explain' urged for manager research
on long-term investing.
"UK – Asset managers that fail to allocate money to
long-term investment research should be forced to
explain their lack of commitment, a UK parliamentary
committee has argued."
This is good news for UK ethical investors with
implications for us all. Asset managers, despite
their management of long-term funds, all too often
focus only on short-term results. This psychology
forces companies to think short term profits--often
at the expense of long-term, more profitable
opportunities. I hope that Britain's Financial
Conduct Authority (FCA) moves on this issue as do
other regulatory agencies globally.
'Comply or explain' urged for manager research on
long-term investing, by Jonathan Williams, July
25, 2013, Pensions & Investments Europe, UK.
Intel, Microsoft And Kohl’s Top EPA’s Green
"Intel again topped the EPA's Green Power lists of
partner organizations using renewable electricity.
As the most aggressive private-sector partner, the
tech giant uses more than 3.1 billion kilowatt-hours
(kWh) of renewables annually. On the EPA's National
Top 50 List, Intel was followed in order by
Microsoft, Kohl's, Whole Foods Market, Wal-Mart, the
Department of Energy (DOE), Staples, the city of
Houston, Starbucks and Apple. First-timers to that
ranking, released Tuesday, include Unilever,
JPMorgan Chase and EMC Corporation."
If companies aren't part of EPA's Green Power
Partnership program--they're not covered. Hence,
companies not part of EPA's program such as IKEA and Google--and all doing great things in green
energy--aren't included in the rankings.
Intel, Microsoft and Kohl’s top EPA’s Green Power
list, by Christina DesMarais, July 24, 2013,
Non-Financial Reporting Falls Short, Investors
"Corporate non-financial reporting by European
companies is not transparent or adequate enough for
investors, according to a survey conducted by the
European Sustainable Investment Forum and the
Association of Chartered Certified Accountants...
Some 93 percent of investors surveyed believe
non-financial disclosure is insufficient to assess
As I've said on many occasions, until ESG
reporting is in a standardized format and
independently audited by regulated auditors--much
like financial reporting--we will continue to have
Non-Financial Reporting Falls Short, Investors Say,
July 23, 2013, Environmental Leader, USA.
Sustainable Investment Organization Releases
Guide For Retail Investors To Address Climate
"Today the US SIF Foundation released Investing to
Curb Climate Change: A Guide for the Individual
Investor. This guide seeks to meet the increasing
interest of a wide range of investors in using their
investment dollars to address the risks of climate
change and to help generate solutions... The US SIF
Foundation will also release a Guide for
Institutional Investors on July 29." I haven't
had the chance to review this guide yet, but I'm
sure it'll be worthwhile reading! Apparently, it's
the first of a series of guides for socially
Sustainable Investment Organization Releases Guide
for Retail Investors to Address Climate Change,
press release, July 22, 2013, US SIF, USA.
Obama Enters Impact Investing Arena With New
"At the G8 Social Impact Investing Forum last month,
the Obama Administration announced an initiative to
spur economic growth and job creation through
enterprises that reflect the triple bottom line of
social, economic and environmental performance."
This is a good article outlining the Obama
administration's first real program for encouraging
Obama enters impact investing arena with new
program, by Michael Kramer, July 22, 2013,
Finance Giant UBS: ‘Sustainable Investment Has
Entered The Mainstream.’
"Leading financial services firm UBS has released a
report that outlines its commitment to sustainable
investment – which it says “has entered the
mainstream”. The report uses research projects that
have been carried out within the firm. It draws upon
the conclusions of these to reiterate the
significance of sustainability and the value that
such practices can bring to the business." This
is what all ethical investors have been waiting for!
Finance giant UBS: ‘sustainable investment has
entered the mainstream,’ by Nicky Stubbs, July
22, 2013, Blue & Green Tomorrow, UK.
Social Responsibility Most Important To
Generation Y Investors, Says Survey.
"Younger investors are more concerned about making
socially and environmentally responsible
investments, according to a survey by investor
website Millionaire Corner. Its study found that in
49% of millionaire investors from Generation Y, also
known as the Millennial Generation, social
responsibility is a factor in their investment
decisions." This is good news for the future of
ethical investing. As these youngsters move into
management, it may indicate a keener
interest in the future for really dealing with issues such as
sustainability and equity on a wider scale.
Social responsibility most important to Generation Y
investors, says survey, by Tom Revell, July 12,
2013, Blue & Green, UK.
High-Frequency Trading Is Making A Joke Of The
"Knowingly or not, the HFTs had discovered their
quotes could blind other investors to the true
market price, and this soon became one of their
biggest weapons against the investing public. HFT
firms could afford 10-gigabyte pipelines,
microwave-transmission towers, even tunneling
through Pennsylvania Mountains to ensure they could
be the first to see and react to the "real" price of
assets they were trading. The rest of us were left
to trade on the equivalent of yesterday's prices, as
the HFTs' nanosecond trading made a full second seem
like a full day's advantage!"
Nothing typifies the seeming corruptness of the
regulatory agencies 'governing' the US/European
financial markets than not putting a leash on high
frequency traders. This is a great article on the
High-Frequency Trading Is Making a Joke of the
Markets, by Jon Najarian, July 12, 2013, Yahoo!
Q2 2013 Global Green Investment At $53.1B.
"Bloomberg New Energy Finance reported that global
green energy investment grew to $53.1 billion in the
second quarter of 2013. That’s a 39 percent
improvement from the first quarter’s four-year low
of $43.6 billion, and was driven almost entirely by
quarter-over-quarter growth in the United States
($9.5 billion, up 155 percent) and China ($13.8
billion, up 63 percent)." The overall numbers
are good. They are blemished though, as European
green investment slumped with the raising of German
feed-in tariff rates, solar manufacturers there
going bankrupt, and the EU recession impacting the
Q2 2013 Global Green Investment at $53.1B, by
Jeff St John, July 11, 2013, greentechmedia.com,
Thomson Reuters Extel And UKSIF 2013 SRI &
Sustainability Survey Results.
"The 2013 Survey represents the views of over 500
investment professionals from 29 countries, making
it the most extensive assessment of socially
responsible investing (SRI) in the European
investment community. Voting was conducted from 26
March to 3 May 2013. It reflects a contribution from
215 buy-side firms and 26 brokerage firms/research
houses." Checkout the results with the link
Thomson Reuters Extel And UKSIF 2013 SRI &
Sustainability Survey, press release, July 12,
2013, Thomson Reuters Extel/UKSIF, UK.
Companies With Women Board Members May Have An
Edge In Performance And Stock Price.
"According to the study ['Mining the Metrics of
Board Diversity' by Thomson Reuters] on average,
companies with mixed boards have marginally better,
or similar performance to a benchmark index, such as
the MSCI World, particularly over the past eighteen
months. Companies with no women on their boards
underperformed relative to organizations with women
board members, and had slightly higher tracking
errors, indicating potentially more volatility."
The Thomson Reuters study confirms what some other
studies have also found--that women on boards add
real value to boards, to their company's and to
Companies with women board members may have an edge
in performance and stock price, press release,
July 10, 2013, Thomson Reuters, USA.
‘Ethical index’ Launched To Measure Italian
Banks Against International Standards.
"The Standard Ethics Italian Banks Index will
monitor the stock market’s reaction to the
organisations’ corporate governance, according to
principles indicated by the UN, the EU and the
Organisation for Economic Co-operation and
Development (OECD). The index is the third in a
series that will provide tools to scrutinise the
sustainability of banks, starting from 2013. The
other ones are the Italian Index and the Best in
To measure a bank's CSR standards against
internationally acceptable CSR standards is a great
idea. I hope that this concept becomes widely
adopted. It's great for ethical investors.
‘Ethical index’ launched to measure Italian banks
against international standards, by Ilaria
Bertini, Blue & Green, UK.
Ratings And Rankings: How Competition Promotes
"The field of ratings and rankings has grown
significantly in the last decade. According to
research by SustainAbility, the number of indices
jumped from 21 ratings in 2000 to 108 in 2010.
That’s more than a five-fold increase. Why the
sudden explosion of “green” leadership tables and
indices? The short answer is stakeholder pressure.
Socially responsible investing has prompted many
investors to look beyond balance sheets and earnings
reports." This is a good article on the
Ratings and rankings: How competition promotes
corporate sustainability, by Christopher Thomas
and Sarah Corrigan, July 3, 2013, GreenBiz, USA.
SRI Remains Divided By Personal Opinion.
"An Ethical Investment Research Service (Eiris)
survey found that 82 per cent of UK customers want
financial product providers to pay more attention to
environmental, social and governance issues (ESG).
Participants said they would be more likely to
invest in a company if they consider things like
climate change, environmental management, human
rights and employee relations."
There is tremendous interest among investors for
ethical investments. It is also fine that what is
ethical is different from person to person. However,
some underlying traits such as environmental
sustainability and ethical governance are common to
SRI remains divided by personal opinion, by Isabelle Sheldrake, July 4, 2013, FT Advisor, UK.
U.S. Investment Industry Groups Scuffle Over
"Wall Street's brokerages would spend an average of
$8 million each to implement a plan being considered
by the U.S. Securities and Exchange Commission to
impose higher ethical standards on brokers who give
financial advice, according to estimates by the
securities industry's largest trade group."
The core issue is that, "brokers
are compensated by sales commissions and must only
meet a 'suitability' standard by suggesting
investments that are suitable for their clients [and
frequently exclude non-firm products]. But RIAs,
typically paid by clients, must be fiduciaries -
they must put their clients' interests above their
own at all times. The SEC is considering whether to
streamline those standards through a new rule."
It's about time that US brokers put
clients' interests first--and not their own
U.S. investment industry groups scuffle over ethics,
costs, by Suzanne Barlyn, July 3, 2013, Reuters,
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