Ethical Investing News/Commentaries
Commentaries by Ron
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Stock exchange aims to reinvent investing for
birds, bees and trees. "Intrinsic Value
Exchange’s (IVE) mission is ’transform intrinsic
value into financial capital for natural and
societal assets — things like clean air, water,
wildlife and human potential,’ according to its
website. ’This transformation provides direct
incentives to protect and invest in these assets and
opens a powerful pathway to sustainable economic
growth that is in step with ecological and societal
Continuing, "Launched in May with a
crowdfunding campaign on Indiegogo, IVE would create
an online trading exchange where investors could buy
and sell these assets in the same way as a
traditional stock or commodity futures market.
Originally slated for a beta release late last year,
the San Francisco-based organization now hopes to
begin testing its first products by June, said IVE
co-founder Douglas Eger."
Wow! What an extraordinary and worthwhile
concept. Can it really be done? I guess we’ll know
in the next few years. Meanwhile, I wish them every
success. I’m sure that many ethical investors will
want to participate in this.
Stock exchange aims to reinvent investing for birds,
bees and trees, by Heather Clancy, January 31,
2014, GreenBiz.com, USA.
Concept of CSR in new Indian law differs from
that in the developed world. "Under the new
Companies Act, CSR will become mandatory for
companies... from April 1, 2014... [16,245
registered companies above a certain size] will have
to spend at least two percent of their three-year
average profit every year on CSR activity...
anything done [for] the employees is not CSR, it is
a human resource activity. Compliance with any rule
or regulation is not CSR... The old way of writing a
cheque for religious cause or an activity that
benefits their own workers will not be considered
It’s obviously a product of different
environments and income levels, but India’s new CSR
legislation appears to have a particularly large
focus on philanthropic endeavours. There are
numerous definitions of CSR, but one I like is by
Lord Holme and Richard Watts of the World Business
Council for Sustainable Development. They write that,
"Corporate Social Responsibility is the continuing
commitment by business to behave ethically and
contribute to economic development while improving
the quality of life of the workforce and their
families as well as of the local community and
society at large."
CSR will be mandatory for corporates from April 1,
by Ians Chandigarh, January 29, 2014, Deccan Herald, India.
Most execs believe in sustainability, but half
don’t act. "Companies largely have accepted
the importance of addressing sustainability issues,
yet a large gap persists in translating that
awareness into action. So says a new global study by
MIT Sloan Management Review and the Boston
Consulting Group (BCG)... two-thirds of executives
rated environmental or social issues as significant
or very significant, yet only 40 percent reported
their companies were ’largely’ addressing them. Just
10 percent reported their companies were ’fully’
addressing these issues."
Interestingly, the study says that industrial
goods makers and utilities do much better on
sustainability issues than ’light’ industries such
as media. But the study also finds something else,
something I’ve been concerned about for years: if it
involves planning and or spending for things
more than 3-5 years out--forget it! Again, it
reflects the dominant short-term mentality in
corporate management today. Too many managers today
are like day-traders!
Most execs believe in sustainability, but half don’t
act, by Nina Kruschwitz, January 28, 2014,
Reward Canadian mining companies for social
responsibility, expert says. "A former mining
executive says that if financial analysts better
understood corporate social responsibility, worthy
companies would see their stocks soar."
Mining companies aren’t on the radar for many
ethical investors. Yet, they’re delighted with their
new Chevy Volt which requires enormous new mineral
resources and extraordinary amounts of energy to
produce. Until we’re able to recycle everything--or
give up our vehicles, bicycles, etc.--there’s no
choice but to accept the need for mining.
Fortunately, when mining is done in an
environmentally and socially responsible way--as
many miners do today--it’s a win for everybody.
Unfortunately, it’s the relative few ’bad apples’
that gives mining its bad rap. This mining executive
is right. Investors and financial analysts need to
understand and appreciate those companies employing
great CSR/ESG policies.
Reward Canadian mining companies for social
responsibility, expert says, by Marco
Chown Oved, January 22, 2014, Toronto Star, Canada.
CSR ‘More Deeply Embedded in Firms.′
"Some 60 percent of companies have a corporate
social responsibility executive, a 74 increase over
what firms reported in 2010, a study says. Almost a
third of these CSR execs are within one level of the
chief executive and almost 100 percent of companies
have a CSR budget, compared to 81 percent in 2010,
according to the Carroll School of Management Center
for Corporate Citizenship report."
Clearly, companies increasingly see the
importance of CSR to their bottom line or it
wouldn’t be as prevalent as it is today!
CSR ‘More Deeply Embedded in Firms,′
January 21, 2014, Environmental Leader, USA.
New website by business academics promotes
ethical business research. "EthicalSystems.org
is a non-profit collaboration of researchers, most
of whom are based in American business schools. We
all share the conviction—backed up by research—that
in the long run, good ethics is good business. We
believe that integrity in business can be enhanced
by wise leaders who take a systems approach to their
organizations and the environments in which they
operate. All collaborators participate as a public
service, dedicated to a common mission."
This site--which became public January 14--is
terrific news for inspiring greater ethical conduct
in business. Also, it aids the goals of ethical
investing. The site details considerable research in
this area. It’s well worth reviewing.
Google tops Fortune’s list of best companies
to work for. "Fortune released its 17th
annual list of the 100 best companies to work for.
This year′s list includes some of the usual suspects
— ahem, Google — alongside a few first-timers like
The Cheesecake Factory and Hyatt Hotels. And while
some of the companies are techy newcomers, with
trendy perks like fitness incentives and stock
options, others are more traditional companies that
offer top-notch health care benefits and competitive
What is common to all these companies are that
they are tops in CSR, generally highly profitable
and with great stock market performance. CSR equates
with higher employee loyalty, often reduces staff
costs due to lower staff turnover which usually
higher productivity--and profits! Thus, ethical
investors like these companies too.
Google tops Fortune’s list of best companies to work
for, by Danika Fears, January 16, 2014, Today
Climate change a long-term threat to
investment, UN tells investors. "More than
500 investors have been told by the UN′s climate
chief [Christiana Figueres] to invest in low-carbon
technologies in order to avoid losing money over the
long-term because of economic risks posed by climate
change... ’Institutional investors who ignore the
risk face being increasingly seen as blatantly in
breach of their fiduciary duty to their beneficial
owners – men and women who have worked hard all
their lives to put away something for their
retirement and for their children.’"
Those invested in fossil fuel companies might
have to seriously consider how much they want to be
in them for the long term--for several reasons.
Firstly, the global fracking revolution is
bringing to market huge new quantities of oil and
gas that might lower fossil fuel
prices. Secondly, as global warming is appreciated
as a threat to humanity’s survival, government’s
everywhere will induce carbon taxes and possible
fossil fuel quotas. Thirdly, the increasing
competitiveness of renewable energy production.
Fourthly, pension funds and other asset owners, as
Christiana Figueres says, due to their fiduciary
duty might have to sell stocks in fossil fuel
As a result of the above many fossil fuel company
reserves might become stranded assets: i.e. they will
have to be marked down and appear as significant losses
to their companies.
Thus, absent wars and oil supply restrictions,
those invested in fossil fuel companies are
forewarned of some potentially huge headwinds ahead
Climate change a long-term threat to investment, UN
tells investors, by Ilaria Bertini, January 16,
2014, Blue & Green Tomorrow, UK.
10 ways to generate $36 trillion of green
investments by 2050, by Ceres, and
This chart makes it painfully obvious that climate
deniers are ridiculous, finding that, "Only
one — ONE — of the 9,137 authors of peer-reviewed
climate change articles rejected anthropogenic
[human induced] global warming."
Global investment in clean energy falls for
second year running. "Global investment in
clean energy fell for the second year in a row to
$254bn last year, with green investment in Europe
crashing by 41%, new figures showed on Wednesday.
The drop casts a pall over a high-profile investor
summit at the United Nations on Wednesday. The
summit, organised by the Ceres investor network, was
supposed to build momentum for the shift to a clean
energy economy – a transformation requiring global
investment of some $1 trillion a year by 2030."
The decline in Europe was partly due to much
lower solar panel costs and governments in Germany,
France and Italy, reducing their financial supports
for renewable energy. However, globally, there was a
20% increase in solar installations last year! One
big problem in the US is that
infrastructure to distribute renewable energy--as
compared to natural gas--is hampered by excessive
government regulation. (See:
Here′s another reason why renewables are at an
unfair disadvantage, by Jaafar Rizvi, January
13, 2014, grist, USA.)
Global investment in clean energy falls for second
year running, by Suzanne Goldenberg, January 15,
2014, The Guardian, UK.
Renewable energy set to improve ethical
investing perceptions. "Investors who are
vigilant about recycling and think twice before
taking a domestic flight are still unlikely to have
spent much time worrying about how ethical their
investments are. There is an ingrained preconception
that being ethical doesn’t pay when it comes to
investing... people wanting to avoid investing in
companies that damage the environment. For them,
investments in the renewable energy sector could be
the most attractive."
Some good points are made in this article. What
I would add, though, is that the number of investors
interested in investing in renewable energy
companies is increasing significantly each year.
Renewable energy set to improve ethical investing
perceptions, by Tanzeel Akhtar, January 13,
2014, Interactive Investor, UK.
Investors Swayed by Corporate Social
Responsibility Reputation. "When companies
have a strong CSR record, investors who focus almost
exclusively on financials estimate a company’s
fundamental value to be about 25 percent higher than
those who divide their thinking more equally between
financials and CSR. When a firm has a poor CSR
record, the former group’s estimate is about 9
This is another study--and from a fascinating
perspective--demonstrating that CSR benefits
corporate stock performance. And another positive
factor for ethical investing. Study authors are:
Mark E. Peecher of the University of Illinois at
Urbana-Champaign, who conducted the research;
colleagues W. Brooke Elliott and Kevin E. Jackson of
the University of Illinois; and Brian J. White of
the University of Texas at Austin.
Investors Swayed by Corporate Social Responsibility
Reputation, by Michael Cohn, January 10, 2014,
Accounting Today, USA.
UK records 20% annual increase in amount
invested in ethical funds. "The Investment
Management Association′s (IMA) latest investment
statistics show a 20% increase in the amount
invested in ethical retail funds in the year to
November 2013. This is higher than the 16.4% rise in
assets across conventional funds."
This is welcome news as it continues to show
that UK investors increasingly favour ethical funds.
According to EIRIS, assets under management for UK
ethical funds as of October 30, 2013, totalled £12.2
billion, up £1.2 billion over the previous 12
IMA records 20% annual increase in amount invested
in ethical funds, by Charlotte Malone, January
10, 2014, Blue & Green Tomorrow, UK.
Industry Groups Attempt To Overturn Conflict
Minerals Rule Today. "The aim of the rule,
mandated by the Dodd-Frank Wall Street Reform and
Consumer Protection Act, is to provide transparency
into corporate practices and specifically to reduce
funding for armed groups involved in human rights
violations in the Democratic Republic of the Congo
and surrounding countries."
I believe this Dodd-Frank rule is ethically
sound--though I can see its implementation could be
troublesome for numerous companies, especially for
those that outsource their production to developing
countries. Nonetheless, I hope it stands as it sets
a precedent for corporate ethical conduct. Also,
it’ll help ethical investors to ascertain which
companies they might favour for their investments.
Industry Groups Attempt To Overturn Conflict
Minerals Rule, January 6, 2014, Justmeans, USA.
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