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"Almost three-quarters of investors (74 percent) would be more likely to work with an advisor who could give them competitive investment returns from investments that also made a positive impact on society and 65 percent of investors would be more likely to stay with an advisor who could discuss responsible investing with them."
--
TIAA Global Asset
    Management
(USA)
    May 2016

"The vast majority of Canadian investors are interested in responsible investments (RI) that incorporate environmental, social and governance (ESG) issues, and they would be more likely to choose responsible investments if their financial advisor suggested suitable RI options for them."
--
Responsible
    Investment
    Association (RIA)
 
  (Canada)
    June 2017

"70% of people [in UK] want to invest ethically but the financial services industry is failing to respond." Referencing research by Abundance.
--
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Global Ethical Investing News & Commentary

 

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Commentaries by Ron Robins  E-mail us your feedback

Links may only be valid for a limited time   June 24, 2018

***List your event on our Events Page***

Another Way ESG Investing Can Boost Portfolios. "Research, appearing in The Atlantic magazine that the average holding time for stocks fell from eight years in 1960 to eight months in 2016 and that 80% of the CFOs say they would sacrifice economic value of their firm to meet quarterly expectations.

The results are high turnover in investments, which involves trading costs that can reduce gains; more share buybacks by corporations instead of investments in capital equipment or employees; and increased risks in those stocks, according to the report [by Merrill Lynch Wealth Management]."

[COMMENTARY] Merrill concludes companies focusing on long-term results will likely outperform those with a short-term focus. And ESG, by it's nature, has a long-term view. Thus, investors with a long-term ESG perspective could have better returns than those having a short-term non-ESG orientation. Hopefully, market participants will begin to understand this message and the mania surrounding quarterly results will ebb!
Another Way ESG Investing Can Boost Portfolios, by Bernice Napach, June 18, 2018, ThinkAdvisor, USA.

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84% of investors apply, or are considering, ESG – Morgan Stanley. "Among the 70% of owners who already are incorporating environmental, social and governance factors into their investment decisions, 60% began doing so in the past four years and 37% within the past two years."

[COMMENTARY] Another survey indicating that ESG analysis is now mainstream. It seems that most investors now realize there can even be some alpha with ESG. I've waited several decades for this era.
84% of investors apply, or are considering, ESG – Morgan Stanley, by Meaghan Kilroy, June 18, 2018, Pensions & Investments, USA.

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Do Investors and Advisors Have a Failure to Communicate? "Interestingly, the top sustainable holdings differ by generation. Younger millennials invest in banking and finance (banks helping communities), housing and water preservation, whereas boomers hold clean technology, health care and pharmaceutical sustainable investments."

[COMMENTARY] This survey for OppenheimerFunds is important reading for all advisors. It details the investment priorities of investors and what advisors think investors want. There are many misalignments.
Do Investors and Advisors Have a Failure to Communicate? By Ginger Szala, June 15, 2018, ThinkAdvisor, USA.

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FTSE Russell Study Highlights Investment Opportunities in Green Economy. "Over the last five years, green companies generated higher returns than the broader stock market."

[COMMENTARY] The study suggests the growth of the green economy could see green stocks continuing to increase their capitalization faster than the economy as a whole. President Trump should take note.
FTSE Russell Study Highlights Investment Opportunities in Green Economy, by Leila Mead, June 8, 2018, International Institute for Sustainable Development, USA.

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Why a Tobacco Company Made the 2018 100 Best Corporate Citizens List. "We do have a qualitative screen to catch companies that have had reputation concerns or behave as bad actors in the relevant calendar year. This past year we used the UN Global Compact as such a screen. Twelve wonderful companies got red or amber signals, flagging negative issues, and we published that information as well.

But Altria didn’t happen to get a warning flag in 2017—what gives? They weren’t a party to any serious flagged issues in the calendar year of the ranking. If our flag included products that are associated with health concerns, most food, beverage, CPG, entertainment, transportation and product manufacturing companies would be caught." (Underlining added for emphasis).

[COMMENTARY] Most retail investors don't know or understand that almost all ESG-ethical-responsible-sustainable company ratings and rankings don't consider the social, environmental, or health aspects, etc., of a company's products! However, a few indices veer in that direction, usually measuring the percent of company revenues considered 'green' or similar. The FTSE Russell Green Revenues Index Series is one such index.

(Incidentally, investors can learn how to deal with these issues in my DIY Ethical-Sustainable Investing Pays Tutorial.)
Why a Tobacco Company Made the 2018 100 Best Corporate Citizens List, by Jen Boynton, June 13, 2018, TriplePundit, USA.

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The 2018 Best 50 Corporate Citizens in Canada ranking. "Corporate Knights has decided once again, with sponsorship support from the Canadian Industry Partnership for Energy Conservation (CIPEC), to carry forward the annual Best 50 Corporate Citizens in Canada ranking into its 17th year. CIPEC helps organizations increase profits by improving energy efficiency and reducing greenhouse gas emissions."

[COMMENTARY] Always a terrific ranking. It's admirable that Corporate Knights continues, year after year, with this uniquely valuable endeavour for investors.
The 2018 Best 50 Corporate Citizens in Canada ranking, June 7, 2018, Corporate Knights, Canada.

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(1) How Advisors View Socially Responsible Investing & (2) SRI: Where Are the Clients? "A lot of financial advisors say their clients just aren’t interested... That’s partly the conclusion of the 2018 Wealthmanagement.com survey on SRI investing, where lack of client demand, even more so than a perceived negative impact on portfolio returns, was cited as the primary factor keeping advisors from using these types of investment funds.

Dan Goldie, president of the high-net-worth-focused, $875 million AUM Dan Goldie Financial Services in Palo Alto, Cal., [says], “I have a few, maybe 1 percent of my clients, who are interested in investing that way,' he says. 'I think it’s admirable, but I also think it’s ineffective in having an impact on companies. Individual investors are too small to have any influence on what a company does.'”

[COMMENTARY] These two posts on WealthManagement.com and the survey (see slides) cited in them provide good insight into the psychology of most advisors. It seems that very few advisors ask their clients about personal values in relation to investing. Also, though we know that SRI funds can produce highly competitive returns, advisors themselves seem unaware of that. Again, a negative advisor bias and lack of knowledge about SRI (and possibly ESG-ethical investing) demonstrate itself in this survey.
How Advisors View Socially Responsible Investing and SRI: Where Are the Clients? June 8, 2018, WealthManagement.com, USA.

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Green economy now ‘approximately same size as fossil fuel sector.’ "The global green economy now represents a total market share similar to that of the fossil fuel sector. That’s according to FTSE Russell, which says it makes up 6% of global markets and is worth approximately $54 trillion (£40.3tn). The stock indices organisation says the sustainable economy is growing, compared to the shrinking fossil fuel market."

[COMMENTARY] I wonder if President Trump and his administration truly realize how really fast the fossil fuel horse they're backing is aging.
Green economy now ‘approximately same size as fossil fuel sector,’ by Jonny Bairstow, June 4, 2018, Energy Live News, UK.

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Responsible Investment Association Australasia (RIAA) reports big gains in funds interested in ESG. "81% of Australia’s largest super funds are committed to responsible investment (up from 70% in 2016), and 62% report annually on activity, highlighting how deeply responsible investing has become part of Australian investment markets."

[COMMENTARY] The media release linked to below demonstrates that responsible investing is growing fast in Australasia.
Aussie super funds take up the gauntlet to improve company behaviour, media release, May 30, 2018, Responsible Investment Association Australasia (RIAA), Australia.

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Millennials are leading an investment revolution — here's what makes their generation different. "Some 92% of millennials agreed with the statement 'I care more about having a positive impact on society than doing well financially' compared to 52% of nonmillennials."

[COMMENTARY] This survey by Nuveen illustrates the sharp differences between the way millennials and non-millennials think about their lives, work, consumption, and investing. Again, as in so many other surveys, it's noteworthy how millennials are so much more likely to be ESG-based investors.
Millennials are leading an investment revolution — here's what makes their generation different, by Kara Chin, Jacqui Frank and Sara Silverstein, May 29, 2018, Business Insider, USA.

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Ethical funds reach record high in the UK. "Investors bought £138m in ethical funds in March 2018 compared to just £32m at the same point last year, according to the most recent data from the Investment Association. Ethical funds still make up a small proportion of the total at 1.3 per cent. But the number is growing, from 1 per cent in 2015."

[COMMENTARY] In most developed economies, ESG-ethical funds are gaining ground. And we can rejoice in that. However, everywhere, they still represent a tiny fraction of the retail fund space. Only when advisors really apply their 'know thy client' rule to also consider the personal investing values of their clients will things change rapidly.
Ethical funds reach record high in the UK, by Kate Beioley, May 23, 2018, FT, UK.

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[US government's] GAO Urges Removal Of Roadblocks To ESG Investing In Retirement Plans. "ESG (Environmental, Social and Governance) investing roadblocks in retirement plans should be removed, the Government Accountability Office (GAO), the investigative arm of Congress, urged in a report today. 'Asset managers and state and municipal plans using ESG strategies report enhanced risk management and other benefits,' the report said."

[COMMENTARY] Good to see other arms of the US government are proposing that the recent US Department of Labor's guidance on ESG use in pension funds is not only potentially harmful but even likely injurious to long-term fund returns.
[US government's] GAO Urges Removal Of Roadblocks To ESG Investing In Retirement Plans, by Ted Knutson, May 22, 2018, Forbes, USA.

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A New Measure Captures a Company’s “Total Social Investment.” "In its report 'What Counts: The ‘S’ in ESG, New Conclusions,' CECP, with support from Cisco, introduces an aggregated calculation called 'Total Social Investment (TSI).' The calculation is a forward-looking reflection of the innovative ways companies invest in society. TSI offers a high-level and comparable snapshot for use by investors and other stakeholders to determine the value created by the 'S' efforts in Environmental, Social, and Governance (ESG) measures."

[COMMENTARY] An insightful, new perspective on evaluating the 'S' in ESG. Hopefully, many companies and investors will adopt this measure.
A New Measure Captures a Company’s “Total Social Investment," by CECP, May 16, 2018, USA.

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In Sight of the Clean Trillion. "The Ceres Clean Trillion highlights the need for an additional $1 trillion per year in clean energy investment to avoid the worst impacts of climate change. Now that clean energy has gone mainstream, this 'Clean Trillion' goal is eminently feasible. This report, In Sight of the Clean Trillion, points to significant opportunities for investors to scale up their clean energy investments while simultaneously meeting their risk-return requirements."

[COMMENTARY] Investors should download the full report to get expert guidance on clean energy investment opportunities. Ceres is doing a terrific job!
In Sight of the Clean Trillion, press release, May 10, 2018, Ceres, USA.

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Corporate Responsibility Magazine Announces 2018 100 Best Corporate Citizens. "'CR Magazine is proud to present the only ESG ranking list that doesn't rely on self-reporting,' said Dave Armon, publisher of CR Magazine. 'Each year, the 100 Best Corporate Citizens ranking measures the success of the Brands Taking Stands movement by celebrating the most successful, most transparent companies that report on their responsible practices. We congratulate those honored on this year's list for their commitment to corporate responsibility.'"

[COMMENTARY] The top five 2018 winners are Microsoft Corporation, Accenture plc, Owens Corning, Intel Corp., and Hasbro, Inc. See the full list at the link below.
Corporate Responsibility Magazine Announces 2018 100 Best Corporate Citizens, press release, May 7, 2018, USA.

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Mercer touts ESG integration, SDGs. "We have seen good progress with asset managers since we started assessing ESG integration at the strategy level. In 2010, less than 9 per cent of investment strategies with an ESG rating were ESG1 or ESG2. At the beginning of 2018, more than 15 per cent of active investment strategies achieved a high rating. This highlights that there is still much room for improvement across the market."

[COMMENTARY] A good overview of the state of ESG integration in financial analysis and the need for it, among asset managers.
Mercer touts ESG integration, SDGs, by Sarika Goel, May 7, 2018, Top 1000 Funds, Australia.

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Advisors Stand In Way Of ESG Investing. "When it comes to impact investing, advisors often say their clients do not ask for it. But many clients do not know enough to ask about the possibilities of ESG investing, according to Marlo Stil, managing partner and financial advisor at the Wealth Consulting Group in Nevada...

When clients learn they can invest in a way that promotes their personal goals, '78 percent want to know more,' Stil said during a discussion of environmental, social and governance (ESG) investing at the Invest In Women conference, which is being sponsored by Financial Advisor and Private Wealth magazines and held in Houston."

[COMMENTARY] Regular readers of this column know that I believe the biggest barrier at the retail level to ESG-ethical investing are advisors. I was happy to see two different financial articles in advisor related publications on this subject today, and I thought to post this one. I'm delighted that this discussion is now occurring among advisors.

I could never understand that since the 'know thy client rule' was central to advisors conduct with their clients, that it was rarely, truly, applied. It's as if the client's personal values really didn't matter.
Advisors Stand In Way Of ESG Investing, by Karen Demasters, May 2, 2018, Financial Advisor, USA.

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Disclaimer: This website does not make investment recommendations. Nothing in this site should be interpreted as a recommendation or solicitation to buy/sell any securities or investments. Investing for the Soul is a source of general information and resources for ethical investing and socially responsible investing (SRI). Investors should consider their actions thoroughly and consult their financial advisers and other professionals, prior to taking any investment action. This website does not necessarily agree with the opinions expressed in articles on its pages or offered on the web pages to which it might be linked. Such opinions are the responsibility of the writers themselves. Furthermore, this site 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 on this, or other sites, to which it is 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.

 

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