E-newsletter of Investing for the Soul September 29, 2015
Top ethical investing news for September 2015
Links may only be valid a limited time Commentaries by Ron Robins
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NGO: 45 Percent of Corporations Obstruct Climate Change Policy. "Nearly half of the world’s 100 largest companies, including Procter & Gamble and Duke Energy, are 'obstructing climate change legislation,' according to a study released last week by the London-based nonprofit NGO InfluenceMap.
And it gets worse: Almost all (95 percent) of these companies are members of trade associations that act in the same obstructionist manner. The recently formed InfluenceMap uses a new research methodology it developed in conjunction with the Union of Concerned Scientists."
[COMMENTARY] The grading of
companies on their
'InfluenceMap' is important for all ethical investors to view. This
UK organization is providing a valuable function. Its methodology seems
NGO Ranks 155 Companies Across 20 Industries Revealing Significant Supply Chain, ESG Risks for Major Brands. "Most U.S. large-cap companies are still lagging in efforts to affect positive change with regard to global humanitarian issues, but existing technology and solutions can quickly reverse this trend. That is among the conclusions expected to be revealed today by a panel of experts participating in a webinar regarding the release of a major research study into corporate social responsibility and conflict minerals filings with the U.S. Securities and Exchange Commission."
information on the ESG risks for these companies
Corporate responsibility revolution more environmental than social. "Large companies in the US, UK and Germany have made far slower progress in reporting on social responsibility than on their green credentials, a Scottish research project has found.
The three-year study at the universities of Glasgow and Aberdeen, backed by the Economic and Social Research Council, will this week present some of its findings at an Edinburgh seminar staged by Scottish Business in the Community."
[COMMENTARY] This study confirms
what most of us in the ethical investing community have known for
sometime. It's the 'E' in ESG that garners most corporate and investor
VW Sets Aside $7.3 Billion as Emissions Probe Widens. "Volkswagen AG plans to set aside 6.5 billion euros ($7.3 billion) in the third quarter to cover the costs of addressing irregularities in diesel engines installed in 11 million vehicles worldwide, as the scandal that started in the U.S. widens."
[COMMENTARY] I find it extraordinary
that senior managers that authorize such unethical practices would not
realize that at some point they will be found out. The incentives for
them to hide this practice must be substantial. Hence, the real blame
for this is likely with senior management in the way the company
incentivizes its managers.
Green funds finally adding-up, says academic study. "University of Edinburgh Business School academics found green mutual funds, invested in companies with exceptional environmental credentials, now outperform ‘black’ funds – which invest in fossil fuels – by more than 14% over the period 2012 to 2014.
Analysing the performance of more than 1,400 funds between 1991 and 2014, researchers also found green funds delivered no worse returns than ‘conventional’ investment vehicles between 2012 and 2014."
[COMMENTARY] As the concept of
stranded assets becomes an increasing reality for fossil companies --
plus the possibility of continuing low prices for their products, fossil
fuel stocks could continue to underperform. This is especially true as
renewables such as solar and wind gain increasing price competitiveness.
Reputation Institute Announces Top Global Companies for Public Perception of Corporate Social Responsibility. "Reputation Institute today released the Global CSR RepTrak® 100, which highlights the companies that have the best reputations for corporate social responsibility (CSR) among the general public in 15 countries. Google tops the ranking for the second year in a row, with a significant lead over all other companies in the ranking.
The Global CSR RepTrak® 100 reflects public perceptions of corporate performance across three dimensions of reputation: citizenship, workplace, and governance."
[COMMENTARY] This is always a good
ranking by a company with its own good reputation.
Sustainability reporting lacking among world’s largest firms. "According to a study by sustainability adviser Corporate Knights and insurer Aviva.
Only 37 percent of the world’s 4,969 largest listed companies disclose their greenhouse gas emissions, one of seven key indicators, according to a 2015 study based on 2013 data. That’s down from 39 percent in the previous study. Meanwhile, only 10 percent of the companies disclose their injury rates, 12 percent their turnover rates, a fifth reveal waste generated per unit of revenue and 22 percent report on their water usage."
[COMMENTARY] Such lack of data
disallows investors from really understanding corporate behaviour and
negatively impacts their ability to invest according to ESG principles
and factors. Congratulations to Toby Heap and Corporate Knights/Aviva
for compiling this important research.
Dump CSR Departments, Says BP’s Ex-Chief. "Companies should get rid of their corporate social responsibility and public relations departments, according to Lord Browne, the former chief executive of BP. As PR Week reports, Browne was promoting his soon-to-be published book, Connect, on Radio 4’s Today program. The book says managers should take responsibility for their companies and not hide behind PRs and CSR departments."
[COMMENTARY] Lord Browne makes an
interesting point. Every employee in an organization has to imbibe CSR
in everything they do. BP was highly respected by ESG rating
organizations before the Gulf crises -- largely as a result of its great
CSR department. Yet when it came to crunch time the managers in the
field behaved badly.
Lawyers See ESG Risks as Central to Clients’ Interests. "Our latest research shows a 45 percent growth in the number of ESG-related regulations calling for more robust corporate transparency worldwide since 2012.
As Vanessa Havard-Williams, head of global law firm Linklaters’ sustainability practice and co-head of its risk and governance team, explains: 'Regulatory developments around ESG should be watched closely by business and lawyers alike – we are now making the transition from a normative to a compliance framework. Although the regulatory risks of non-compliance with these regulations are often quite limited, the potential reputational and commercial damage from being seen not to comply can be significant.'"
[COMMENTARY] As regulatory
authorities increasingly institute new ESG regulations, lawyers are
involving themselves in corporate compliance. It's terrific to see the
legal profession developing ESG specializations to satisfy corporate
Sustainable investing a fiduciary duty for fund managers, says U.N.-backed study. " U.S. managers were particular laggards in making sure environmental, social and governance (ESG) views were used alongside other financial measures when discussing a company's investability, in part because of an outdated view of fiduciary duty, or acting in the best interests of customers, it [UN study] said."
[COMMENTARY] It's becoming
increasingly clear that fund fiduciaries should not only incorporate ESG
factors in their investment analysis -- but in some cases could be held
legally liable for losses incurred by not paying attention to ESG
Sustainalytics to acquire ESG Analytics. "Sustainalytics has agreed to acquire Zurich-based ESG Analytics, a provider of analysis software that helps money managers and asset owners to analyze and manage ESG risk and opportunities."
[COMMENTARY] Sustainalytics seems
unstoppable in its quest of being the global leader in ESG analysis.
Again, congratulations to Michael Jantzi and his outstanding team.
Corporate responsibility efforts boost more than just reputation. "A study by IO Sustainability and Babson College... determined that well-designed CSR programs have the potential to increase a company’s revenues by up to 20 per cent, strengthen customer loyalty by 60 per cent and allow for premium prices to be charged on products and services."
[COMMENTARY] The financial benefits
accruing to companies with well-designed CSR programs are now virtually
incontestable. We're approaching what could be universal acceptance for
CSR/ESG and ethical programs in companies everywhere -- and
correspondingly much heightened interest of mainstream investors in
investment products geared to taking advantage of this development.
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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 © 2015 Ron Robins. All rights reserved.