E-newsletter of Investing for the Soul May 30, 2015
Top ethical investing news for May 2015
Links may only be valid a limited time Commentaries by Ron Robins
Twitter allows me to cover more--and breaking news--to help you do better!
Seven out of 10 companies would turn their backs on unethical investments, finds PwC poll. "A stark 97 per cent of respondents said they expected responsible investment to grow in importance over the next two years, because of increasing concerns over upholding fiduciary duty, reputational risk and corporate values."
[COMMENTARY] This Pricewaterhouse
Coopers (PwC) poll is yet one more indication of the growing importance
of ethical investing. (See my editorial,
How Ethics Benefits Corporate Profits.)
Canada’s 2nd annual Responsible Investment Week, next week, June 1-5. "Responsible Investment Week is a week dedicated to education and awareness about responsible investment (RI). The Responsible Investment Association (RIA) is coordinating a week of events across Canada to promote learning about environmental, social, and corporate governance (ESG) issues that affect investments.
RI Week events will explore opportunities to invest in a more sustainable future, and provide attendees with opportunities to network with industry leaders, hear from ESG experts and catch up on the latest issues, trends and developments in the field."
[COMMENTARY] The main events are
planned in Banff (RIA Annual Conference), Toronto, Montreal, and
Vancouver. I hope the many Canadians visiting this site can attend and
Climate change threat demands reform to financial system – UNEP. "'Blowback' from climate change could wreck the financial system unless regulators rewire it to ditch fossil fuels. So says Nick Robins, former head of HSBC’s climate change unit and author of a UNEP report published today, which urges sweeping reforms to shift multi-trillion flows of international finance to insulate countries from global warming."
UNEP report is the strongest warning yet to the global financial
system concerning how it needs to adjust in the face of stranded and
marked down fossil fuel assets. Also, the report serves as a wake-up
call to all fund managers and investors that losses on their fossil fuel
holdings could be massive were there to be real global action to hold
the world to the 2° C rise that scientists and governments say is
necessary to avert catastrophic climate change.
CorporateRegister.com has released its CR Reporting Awards for best CSR reports. "You can download the full CRRA'15 report, which includes the latest statistics and trends, from the banner on our home page at www.corporateregister.com (Free registration/Sign in required to download)."
[COMMENTARY] Their report is well worth reviewing to see how the best corporate reports handle carbon disclosure, materiality issues, etc. Click here to register/download it.
Socially Responsible Investors Focus Most on the Environment. "Investors who wish to promote social responsibility are most focused on the environment and invest accordingly."
[COMMENTARY] Millionaire Corner is
doing a great job with their surveys revealing how the affluent invest
(or not) in SR-ethical investing.
Oxford Joins Cambridge With Ethical Move on Investments. "Oxford University, one of the world’s oldest schools, has joined the ranks of British universities shunning investments in carbon-intensive energy projects... This follows a decision by Oxford’s arch-rival, Cambridge University, to appoint a new committee to beef up its 'socially responsible' investment policy."
[COMMENTARY] With such prestigious
academic institutions taking an ethical stand against fossil fuel
investments, the fossil free divestment movement gains additional
momentum. It seems these great universities are also applying ethical
criteria to other investments as well. SR-ethical investing -- which
when I started familiarizing myself with it over forty years ago -- has
come a long way!
Shareholders’ Votes Have Done Little to Curb Lavish Executive Pay. "It’s been five years since the Dodd-Frank law required that companies let investors vote on their executive pay practices. The idea, lawmakers said, was to give shareholders a chance to sound off when compensation plans are not in their best interests.
But has putting these matters to a vote done anything to rein in executive pay? Not a chance. Since these votes started being tallied, C.E.O. pay has risen on average 12 percent annually."
[COMMENTARY] We have what is akin to the 'tulip mania' in executive compensation -- everyone pushing the compensation envelope as far it will go. As is noted in the article, unless such shareholder resolutions are binding on companies, not much will change.
Furthermore, executive compensation committees -- themselves usually
executives at other companies -- recommend management compensation
packages that try to outdo their competitors. Also, shareholders largely
believe that the companies they invest in should offer the biggest pay
packets to attract the best talent. Hence, the say on pay laws and
resolutions, though nice in theory, have proved useless in halting the
RepRisk and CSRHub study finds link between perceived Corporate Social Responsibility (CSR) performance and reputational risk. "In addition, the data indicates that companies that have strong CSR programs as measured by CSRHub, in the areas of Human Rights and Supply Chain, Leadership Ethics, and Resource Management, seem to have lower risk exposure, whereas those companies who have strong programs in Community Development and Philanthropy, Environment Policy and Reporting, or Compensation and Benefits seem to have higher risk exposure."
[COMMENTARY] I think that most
ethical investors assumed such a link, but it's good to get the hard
data to support it and the detail as to what are the most important
Does "Socially Responsible Investing" Mean Anything to You? "In general, the younger the investor, the more familiarity he has with socially responsible investing. Among investors under the age of 36, familiarity with 'socially responsible investing' was at 47.42, and familiarity with 'Impact investing' was at 35.76.
There was also a trend shown that the wealthier the investor, the more familiarity he has with socially responsible investing. Ultra High Net Worth investors with a net worth between $5 million and $25 million reported familiarity with 'socially responsible investing' at 55.11, well above the average, while Mass Affluent investors with a net worth between $100,000 and $1 million were at 42.24."
[COMMENTARY] The data are from the
same survey as the item immediately below. I find the most interesting
aspect here is that the very rich are more aware of SRI than the
Socially Responsible Investing: Who Cares? "More than one quarter of all investors under the age of 45 have at least 25 percent of their investable assets invested in socially responsible companies. Conversely, more than 45 percent of all investors over the age of 45 do not invest in socially responsible companies."
[COMMENTARY] This survey finds what
other similar surveys found: younger investors, particularly female,
How to Avoid the Next Sovereign Debt Crisis. "Applying environmental, social, and governance (ESG) criteria to government bonds can help investors steer clear of the most indebted nations, according to Standard & Poor’s Dow Jones Indices (S&P DJI)."
[COMMENTARY] This coming from S&P-DJ
is a tremendous endorsement for bond ratings utilizing ESG factors!
Since the build-up in sovereign debt has been so extraordinary in
recent years, additional sovereign debt catastrophes are inevitable. All
investors might want to review their bond holdings in the light of ESG
Survey: Adoption of ESG Criteria Growing Among Hedge Fund & Private Asset Managers. "Although the results revealed that 60% of hedge fund managers were still reluctant to introduce ESG criteria into their investment approach, this is a big improvement over the results from the company’s last survey in 2011, when 75% of managers were reluctant. Meanwhile, the percentage of managers that do incorporate ESG criteria has increased significantly from 25% to 40% over the same time span."
[COMMENTARY] Surveys showing greatly
increased adoption of ESG criteria in stock/portfolio selection by fund
managers are everywhere these days. And for good reason as anyone who
follows these studies/surveys knows that they repeatedly show the use of
ESG criteria produces better returns.
(1) Risky management. "85 per cent of the world’s largest
global asset owners are climate 'laggards' that have taken little to no
action to insulate themselves from the growing risks presented by
climate change, says a new report by the Asset Owners Disclosure Project
(2) G20: fossil fuel fears could hammer global financial system. "Top energy watchdog says two thirds of all assets booked by coal, oil and gas companies may be worthless under the 'two degree' climate deal... World leaders are increasingly concerned that a $6 trillion wave of investment into the nexus of oil, gas, and coal since 2007 is based on false assumptions, leaving companies with an overhang of debt and 'stranded assets' that cannot easily be burned under CO2 emission limits...
The G20 has asked the Financial Stability Board in Basel to convene a
public-private inquiry into the fall-out faced by the financial sector
as climate rules become much stricter. All member countries have agreed
to co-operate or carry out internal probes, including the United States,
China, India, Russia, Australia, and Saudi Arabia.
[COMMENTARY for (1) & (2)] We all know how most money managers -- particularly those in North America -- are fossil fuel diehards. Yet, as the world awakens to the fact that the burning of fossil fuels has to be significantly reduced the portfolio losses could be immense. And the wake-up call could come in December from the 2015 United Nations Climate Change Conference in Paris.
Featured New Books
(Investing for the Soul receives commissions on some book sales.)
Investing with Impact: Why Finance is a Force for Good, by Jeremy
Balkin, Bibliomotion 2015.
The Greening of Asia: The Business Case for Solving Asia's Environmental
Emergency, by Mark L. Clifford, Columbia University Press, 2015.
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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.