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Ethical Investing News/Commentaries
December 2015 |
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Commentaries by Ron
Robins
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Investment Managers Raising ESG Offerings
To Meet Demand, Study Says.
"Over 75 percent of
investment managers are increasing their use of
environmental, social and governance products and
impact investing to meet customer demand, according
to a survey released this week by Tiburon Strategic
Advisors."
[COMMENTARY] The
75% figure is the highest I’ve seen among such
surveys. Seeing that it was reported by a reputable
advisors magazine, it has some credibility.
Investment Managers Raising ESG Offerings To Meet
Demand, Study Says, by Ted Knutson, December 31,
2015, Financial Advisor, USA.
50 Best (US) Workplaces for Diversity.
"Fortune and Great Place to Work partnered with
Essence and People en Español to survey companies
that make inclusiveness a top priority. Rankings
were determined by employee feedback and the
representation of racial and ethnic minorities and
women."
[COMMENTARY] Among
public companies, the top three are: Camden Property
Trust (which was ranked #1 over all); Ultimate
Software (#4); and Workday (#6). This is a must see
list for those ethical investors who rate diversity
highly when selecting investments.
50 Best (US) Workplaces for Diversity, Forbes,
December 2015, USA.
Climate Bonds releases new Standard V2.0
- post COP21 global guidance for green bond market
participants.
"Climate Bonds
Initiative has released the Climate Bonds Standard
V2.0, the next iteration of an overarching
multi-sector standard that allows investors and
intermediaries to easily assess the environmental
integrity of bonds claiming to be green and funding
the low carbon and climate resilient future.
Standard V2.0 has been built on consultation with
market actors, incorporates the latest amended Green
Bond Principles and is a key part of Climate Bonds′
work to mobilise debt capital markets and develop
sound and sustainable international green bond
frameworks."
[COMMENTARY] As
the market for green bonds escalates, it’s
imperative that some standards be incorporated in
their structure, issue and marketing. I greatly
welcome the Climate bonds initiative in this
direction.
Climate Bonds releases new Standard V2.0 - post
COP21 global guidance for green bond market
participants, by Sean Kidney, December 22, 2015,
Climate Bonds Initiative, UK.
Largest-ever analysis of ESG investment
studies sees ‘well-founded′ relation to profit.
"The analysis of more than 2,200
academic studies and more than 60 review studies
published since the early 1970s concludes that
investment based on ESG criteria has a positive
effect on corporate financial performance (CPF) that
is ‘stable over time′.
The authors, including Timo Busch of the
University of Hamburg, Alexander Bassen of the
University of Reading and Gunnar Friede of Deutsche
Asset and Wealth Management, say that 90 percent of
the studies they reviewed showed a non-negative
relationship between ESG investment and corporate
financial performance. They also say the ‘large
majority′ report positive findings."
[COMMENTARY] This
is a phenomenal study and should put-to-rest any
argument about ESG being unimportant to corporate
profits. It might well win next year’s Moskowitz SRI
Prize! (Download study
ESG & Corporate Financial Performance, PDF.)
Largest-ever analysis of ESG investment studies sees
‘well-founded′ relation to profit, by Adam
Brown, December 24, 2015, IR Magazine, UK/USA.
Pension funds agree ESG is vital to
investment returns. "The vast majority
of pension funds (93%) say that environmental and
social governance (ESG) issues are linked to
investment returns, a significant increase since
2013, when only 81% viewed the link.
The Pensions and Lifetime Savings Association has
released its annual survey which also found that
there is near universal agreement that pension funds
have stewardship responsibilities (98%)."
[COMMENTARY] Again,
more evidence of the rise of ESG in the investment
community. The massive belief of the surveyed fund
managers that they have stewardship responsibilities
for their investments is also highly encouraging to
the hearts of ethical investors.
Pension funds agree ESG is vital to investment
returns, December 21, 2015, Funds Europe, UK.
IBE Survey Highlights Key Public Concerns
in Business Ethics.
"The
Institute of Business Ethics (IBE) recently released
the findings of its latest survey on the British
public′s opinion about business behavior. The survey
revealed that the people′s general opinion about
ethical business conduct has not shown any
improvement over the last three years, with nearly
40 percent of the respondents still saying they
believe British business behaves unethically."
[COMMENTARY] Possibly
the percentage of people behaving unethically -- in
some manor -- is probably similar to the 40% of UK
public thinking that business behave unethically.
After all, since businesses employ the majority of
adults, they must largely reflect the ethics of those it employs.
IBE Survey Highlights Key Public Concerns in
Business Ethics, by Vikas Vij, December 11,
2015, Justmeans, USA.
Special note: Due to personal affairs
there were no postings in mid December.
So, what do you think of these seemingly
two contradictory studies! (Are they
looking at the same parameters CSR versus ESG?)
1) How Ethical Compliance Affects
Portfolio Performance And Flows: Evidence From
Mutual Funds. "Using an asset-weighted
composite CSR fund score based on firm-level
ratings, we find that funds with high CSR scores
display poor performance and strong performance
reversal. Furthermore, high-CSR funds exhibit weaker
performance-flow relationships and slightly stronger
flow persistence."
[COMMENTARY] Well,
funds with "high CSR scores display poor
performance." Now go to 2).
How Ethical Compliance Affects Portfolio Performance
And Flows: Evidence From Mutual Funds, Sadok El
Ghoul, University of Alberta and Aymen Karoui,
University of Quebec at Montreal (UQAM), December 4,
2015, Canada.
2) Responsible Investing Is Hot: ESG AUM Hits
$21 Trillion. "According to HSBC, companies
with significantly improving ESG indicators
outperformed those who lagged by 26pp since 2008.
So, by investing responsibly, you could also improve
your returns."
[COMMENTARY] Furthermore,
"HSBC′s analysis is in line with the broader
academic literature, where 80% of studies have shown
that prudent corporate sustainability programs tend
to boost company performance."
Responsible Investing Is Hot: ESG AUM Hits $21
Trillion, by Rupert Hargreaves, December 10,
2015, Valuewalk, USA.
Two-thirds of (UK) investors don′t know
if they are investing ethically.
"Sixty-three per cent of investors surveyed by
Triodos Bank said they did not know whether or not
the activities of the companies they are investing
in are ethical.
Only a quarter (25%) said they were actively aware
of how ethical their investees are. Investments made
through pension funds, stocks and shares ISAs, for
example, can lead consumers to inadvertently finance
activities they ethically or morally object to."
[COMMENTARY] This
survey could’ve been even more illuminating if they
had asked if the investors who didn’t know if they
were investing ethically, plan to actually
investigate the ethical character of their
investments. At least some responders to the
questionnaire might to do that.
Two-thirds of investors don′t know if they are
investing ethically, by Daniel Hunter, December
11, 2015, freshbusinessthinking.com, UK.
Northern Trust Survey: Majority of
Institutional Investors Expect to Introduce Climate
Risk Profiling Within Two Years.
"Eighty percent of
institutional investors surveyed at a recent event
hosted by Northern Trust (Nasdaq: NTRS) in Stockholm
expect their firm to introduce climate risk
profiling within the next two years.
“The Nordic region has for many years had a strong
emphasis on sustainable business, with many
institutional investors demonstrating strong
leadership addressing climate change risks.” More
than 30 Nordic institutional investors were surveyed
including some of the largest and most sophisticated
asset owners in the world about their perspectives
on sustainable investing and maintaining investment
oversight."
[COMMENTARY] Scandinavia
has a history of leading in CSR/ESG issues, so it’s
unsurprising that the survey got such good results.
However, there’s no doubt that ESG/climate change
corporate initiatives are gaining ground. The COP21
Paris climate change talks are also infusing a new
thrust for sustainability in corporations
globally. The future is bright for ESG!
Northern Trust Survey: Majority of Institutional
Investors Expect to Introduce Climate Risk Profiling
Within Two Years, press release, December 8,
2015, Northern Trust, UK/Sweden.
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