Ethical Investing News/Commentaries
Commentaries by Ron
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Diversity, ESG relatively low scheme
governance priorities: survey. "Board
diversity, ESG investing, and external reviews are
relatively low governance priorities for pension
scheme trustees and managers, according to a report.
It was produced by Winmark, which runs professional
member networks to facilitate peer learning, and
Sackers, a law firm. It was based on a survey of 84
pension schemes – trustees and pension managers –
and 13 in-depth interviews with chairs of trustee
boards and other pensions experts."
It could be that many UK pension schemes are
relatively underperforming as so many scheme
trustees appear ignorant of the potential returns
that a focus on ESG might bring to their schemes.
Diversity, ESG relatively low scheme governance
priorities: survey, by Susanna Rust, May 28,
2017, IPE, UK.
UK Ethical investing sector held back by
lack of awareness, says new survey.
"More than half of the UK population want their
wealth to have a positive impact on society but are
unsure where to turn to for help, highlighting a
knowledge deficit in the area of ethical investing.
The survey, conducted by positive savings
platform Ethex, shows lack of knowledge,
understanding and confidence in what is on offer is
holding many investors back from investing in
50 percent of those asked did not feel they
know enough about positive investment and savings,
although 45 percent were willing to learn more. In
addition, 39 percent did not know whether to expect
a stronger or weaker financial return from positive
investments when compared to traditional ones and 55
percent did not think they were wealthy enough to
make positive investments."
Most investors in the developed
world have for over two decades wanted to be
invested in ethical, socially responsible, and
sustainable companies. It’s always been the vested
interests in the mainstream financial industry that
never got the message -- until quite recently.
It’s peculiar how an industry priding itself in its
marketing and customer relations has been so
out-of-touch with their clients -- and for such a long
time. I’ve always asked, whatever happened to the
’know thy client’ rule.
Ethical investing sector held back by lack of
awareness, says new survey, by Miranda Wadham,
May 25, 2017, The Investment Observer, UK.
Key ESG Trends. "From a
geographic perspective, the GSIA data showed that
European and Canadian assets were more diversified
across different implementation strategies: in
addition to negative screening, there were a higher
proportion of assets using norms-based screening,
corporate engagement, and integration approaches.
Within the United States, the primary forms of
implementation were integration, negative screening,
and corporate engagement."
This post has some fascinating charts on ESG
investing globally. However, one figure that stands
out -- and I believe questionable -- is the
proportion of sustainable assets vs total managed
assets in Europe at 58.896%. There is an explanatory
note but to me, it seems to obfuscate the issue.
Key ESG Trends, by Blake Pontius, May 23, 2017,
William Blair Blog, USA.
27% of asset managers doubt future of
ethical investing as costs rise, survey, BNP Paribas
Securities Services. "A further 28% of
asset managers admitted they were concerned they
didn′t have the ability to meet the demand for ESG
investments from clients currently, and worried they
wouldn′t in the future. The research report, titled
‘Great Expectations: ESG – What′s next for asset
owners and managers′, also found more than half
(55%) of those surveyed felt the lack of robust data
on ESG investments was the biggest barrier to its
adoption in strategies."
What should’ve been the headline is that 55% of
those surveyed felt the lack of robust ESG data as
the biggest barrier to fully implementing ESG
managers doubt future of ethical investing as costs
rise, by Louise Hill, May 24, 2017, Portfolio
New Report Reveals 86% of Americans
Expect Companies to Take Action on Social,
Environmental Issues. "Most
interestingly, the study considers consumer behavior
in light of today′s political climate and shows that
67 percent of Americans believe progress on social
and environmental issues will slow in the absence of
government regulation — and their confidence in
organizations to drive change is low. As a result,
43 percent of consumers believe individuals present
the greatest potential to solve social and
environmental issues, followed by nonprofits (18
percent), government (17 percent) and business (13
President Trump needs to tread carefully on social
and environmental regulations, or he risks a
considerable public and political backlash. This
survey by Cone Communications illustrates that the
majority of Americans want their government active
in social and environmental change.
New Report Reveals 86% of Americans Expect Companies
to Take Action on Social, Environmental Issues,
by Libby MacCarthy, May 18, 2017, Sustainable
UK Savers clueless about what their banks
do with their money. "Triodos: The
sustainable and ethical bank surveyed 2,003 people
who have some savings. The research reveals that the
transition to a low-carbon economy is the top
priority for savers wanting to make a positive
difference. Nearly half (47 per cent) said they
would like their money to be used to help develop
renewable energy, while four out of ten (41 per
cent) wanted to support energy efficiency.
Savers also identified social housing (41 per
cent), community/society groups (28 per cent), human
rights and labour rights (28 per cent), urban
regeneration (24 per cent) and sustainable business
(23) as areas they would like their money to be
invested in... "
Of course the savers were talking about their bank
deposits here and how they should be used. At the
ethical UK bank, Triodos, they actually publish the
details of who they make loans too.
UK Savers clueless about what their banks do with
their money, by Marina Gerner, May 12, 2017,
Money Observer, UK.
Advisor Interest In SRI Nearly Doubles
Since Last Year, Survey Says. "Forty
percent of advisors now report that socially
responsible investing is important to them and their
clients, compared to only 21 percent who said that
This is wonderful news. Soon SRI-ethical investing
will be quite normal for advisors and investors
alike. Perhaps a day might come when nearly all
investing is SRI-ethical-ESG compliant!
Advisor Interest In SRI Nearly Doubles Since Last
Year, Survey Says, by Karen Demasters, May 11,
2017, FA Magazine, USA.
Fostering Long-Termism in Investing.
"Khan, Serafeim, and Yoon (KSY)9: found that
portfolios made up of companies with high KLD10
sustainability scores weighted by SASB11 materiality
scores outperformed portfolios of companies with low
KLD sustainability scores weighted by SASB
materiality scores by average annual return gaps
ranging from 3.1%/yr. to 8.9%/yr. over 20+year
observation periods, depending on the degree of
portfolio concentration.12 They observed their
results were notably different from the mixed
results of previous ESG studies that did not include
the materiality dimension."
I’ve used the above quote as a leader to encourage
all my readers to read this extraordinarily
insightful piece that strongly argues for long-term,
participatory, sustainable, and focused investing!
Fostering Long-Termism in Investing, by Keith
Ambachtsheer, May 9, 2017, Benefits & Pensions
6 benefits to companies that issue green
bonds. "Last year, almost twice as many
green bonds as expected were issued, and in the
first quarter of 2017, issuance stood at $21.76
billion, up nearly 42 percent from the same period
last year. What’s more, a new report by the
Organization for Economic Co-operation and
Development (OECD) estimated that the green bond
market could increase to $4.7 trillion to $5.6
trillion in outstanding bonds by 2035, with annual
issuances of $620 billion to $720 billion."
With investors appetite for green bonds rising
sharply and outstripping demand, green bond yields
often command relatively lower yields. As lower
yields frequently mean reduced interest costs to
companies it increases the attractiveness for
companies to issue them vis a vis regular bonds.
It’s a win for companies and a win for ethical
6 benefits to companies that issue green bonds,
by Rochelle J. March, May 5, 2017, GreenBiz, USA.
10 reasons Wealth Managers are following
investor demand to ESG. "But investors
are even more attuned to ESG than advisors are,
which makes ESG savvy a competitive advantage in
today′s managed money world."
The reasons given for advisors to engage in ESG
issues with their clients are many had the key ones
are covered in this post. Furthermore, surveys and
studies back the reasons discussed.
10 reasons Wealth Managers are following investor
demand to ESG, by TruValue Labs. May 2, 2017,
Finally – A Meaningful Deciphering of
what “ESG Integration” Really Means.
"The problem, however, is that ’integrating ESG’ has
become a meaningless mantra. Firms were using
’integrating ESG’ to mean everything from mandatory
consideration of the most sophisticated analysis to
Sustainalytics, an independent ESG research
firm, [has] developed a typology of how
organizations use ESG. Do they use centralized staff
or distribute ESG analysis responsibilities to the
portfolio teams? Is ESG considered on a
portfolio-company-by-portfolio-company basis, or
more thematically, for instance looking at potential
investments in the water sector? Is ESG research
mandated to be considered, or just made available to
the investment teams? Do the organizations modify
external research or use it as is?"
The Investor Responsibility Research Center
Institute (IRRC) commissioned Sustainalytics for
this research and Sustainalytics has now shone a
light on how ESG criteria are used by asset owners
and managers. The results are fascinating and
important for all responsible-ethical investors to
Finally – A Meaningful Deciphering of what “ESG
Integration” Really Means, by Jon Lukomnik, May
1, 2017, HUFFPOST.
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