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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

"92% of Canadians say that it's important to choose investments that are aligned with their values. By contrast, only 14% of advisors raised the topic of RI [responsible investing] with their clients."
--
Deb Abbey referring
    to 2014 NEI study
    Investment
    Executive
   
(Canada) April 2015

"70% of people [in UK] want to invest ethically but the financial services industry is failing to respond." Referencing research by Abundance.
--
Acquisition
    International
   
(UK) June 2015

 

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Links may only be valid for a limited time  July 26, 2016

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Alternatives managers split on the benefits of ESG, finds Unigestion. "The survey suggests ESG is growing in importance for hedge funds with 53 per cent of managers saying they currently have ‘no interest’ compared with 60 per cent who 12 months ago said they were ‘reluctant’ to consider ESG as part of their strategies. In addition, some 30 per cent of hedge fund managers surveyed are now actively incorporating ESG into their strategies."

[COMMENTARY] Here is more evidence of the mainstreaming of ESG in the financial community.
Alternatives managers split on the benefits of ESG, finds Unigestion, July 25, 2016, Hedgeweek, USA.

Japan pension fund to try socially responsible stock picking. "Japan's Government Pension Investment Fund will make room in its huge portfolio for domestic companies picked for their environmental, social and governance merits, a move that could lend momentum here to this kind of investing... The GPIF ranks as one of the biggest investors in Japanese equities, with a portfolio worth around 30 trillion yen [appr. US$283 billion)."

[COMMENTARY] More great news for ethical investors with continuing large funds entering the ESG investment space.
Japan pension fund to try socially responsible stock picking, July 22, 2016, Nikkei Asian Review, Japan.

2016 Sustainable Stock Exchange report released. "Euronext Amsterdam tops ranking of 45 global exchanges measured on overall sustainability disclosure...

The study, Measuring sustainability Disclosure: Ranking the World’s Stock Exchanges 2016, finds that of 4469 large companies analysed, only 47 per cent disclosed GHGs, arguably the most closely tracked sustainability indicator. Furthermore, over the 2010-2014 period, the number of large companies that disclosed GHGs nudged up just 12 points from 33 per cent to 47 per cent despite a number of high-profile policy initiatives aimed at sustainability disclosure in the last few years."

[COMMENTARY] Congratulations to Aviva Plc and Corporate Knights for producing this report. It's needed to determine the extent of corporate sustainability reporting by the world's stock exchanges and to see who among them stands out.
2016 Sustainable Stock Exchange report released, July 19, 2016,
Aviva Plc and Corporate Knights, UK/Canada.

Foundations Slowly Come Around to Responsible Investing. "A new study released jointly by the Council on Foundations and Commonfund Institute found that a third of U.S. private, public and community foundations have implemented or are actively considering mission-related investing practices in managing their endowed assets... However, impediments to adoption remain. Concern over returns was the single most commonly reported barrier, with 23% of foundations considering it a significant one and 48% a moderate one."

[COMMENTARY] It seems many foundations are still under the impression that they might have to sacrifice returns for mission-related investments. It's clear they need to familiarize themselves with what current research says: that returns from responsible investment portfolios are comparable to or often better than more 'conventional' ones.
Foundations Slowly Come Around to Responsible Investing, by Michael S. Fischer, July 18, 2016, ThinkAdvisor, USA.

ESG Ratings: Four Myths And A Truth. "Recent criticisms of ESG ratings reflect an outdated and inaccurate notion of the ingredients and value of an ESG rating... Today, applying analytical tools and modeling techniques to wider datasets beyond corporate disclosure has significantly improved the rigour, consistency, and relevance of ESG information to the investment process. "

[COMMENTARY] MSCI's Linda-Eling Lee has written a good article on the state of ESG rating systems today. Recommended reading for all investors.
ESG Ratings: Four Myths And A Truth, by
Linda-Eling Lee, July 13, 2016, Benefits and Pensions Monitor, Canada.

The Fastest-Growing Cause for Shareholders Is Sustainability. "In fact, the largest number of shareholder resolutions filed by investors — the method through which activists work — now concern social and environmental issues. This is a recent phenomenon, according to my research; the number of these resolutions has increased dramatically over the past five years. Political spending, climate change, diversity, and human rights are now some of the most frequent resolutions that investors file."

[COMMENTARY] George Serafeim (of Harvard) has written an insightful article about ESG shareholder resolutions. Worth reading by all ethical investors.
The Fastest-Growing Cause for Shareholders Is Sustainability, by
George Serafeim, Jakurski Family Associate Professor of Business Administration at Harvard Business, July 12, 2016, Harvard Business Review, USA.

Does SRI Deliver? "According to a WealthManagement.com survey of 780 advisors across all business channels, while only 35 percent of advisors said they were 'very familiar' with SRI funds, 66 percent said they have offered one to clients, mostly due to client requests. Nearly six in 10 advisors expect it to become a bigger part of their practice in the next five years."

[COMMENTARY] Finally, most advisors are getting the message that they need to be much more understanding of their clients' personal values and utilize that knowledge in assisting them in selecting appropriate SR-ethical securities and funds. Another important article for advisors to read.
Does SRI Deliver? By Diana Britton, July 5, 2016, WealthManagement Magazine, USA.

Unintended Biases in ESG Index Funds. "ESG index strategies can be effective tools for values-based investing, but they may introduce some additional bets that investors may not intend to make."

[COMMENTARY] Morningstar have written a great article examining the biases in the holdings of various ESG index funds. (Incidentally, the same issues are present in ESG ETF funds too.) Investors holding these funds should definitely read this article.
Unintended Biases in ESG Index Funds, by Alex Bryan, July 6, 2016, Morningstar, USA.

US SIF Foundation Releases Report On Impact Of Sustainable Investment. "Sustainable, responsible and impact investors have influenced the investment industry, companies, governments and other actors to address environmental, social and governance (ESG) challenges in four major areas, according to The Impact of Sustainable and Responsible Investment, a report released today by the US SIF Foundation."

[COMMENTARY] This is a good compilation of the many successes of sustainable, responsible investing over the past 25 years in the US.
US SIF Foundation Releases Report On Impact Of Sustainable Investment, press release, June 29, 2016, US SIF, USA.

The US Civic 50: Civic-minded companies show that community engagement is linked to corporate success. "America’s largest corporations are increasingly turning good intentions into sound business practices. That’s the promising bottom-line from an analysis of the 2016 Civic 50, the annual Points of Light initiative that recognizes and honors the 50 most community-minded companies in America. In the continuing shift to go beyond checkbook philanthropy, this year’s Civic 50 honorees affirm the trend that companies are supporting community engagement through policies, core business functions, and incentives that indicate sustainable long-term commitment to addressing community challenges."

[COMMENTARY] For SR-ethical investors concerned about US companies getting more engaged in civic and community affairs, this is an interesting list to peruse. It's also worthwhile to understand the methodology of how they arrive at this list. As always, despite the appearance of objectivity, there's always considerable subjectivity to determine what gets measured -- and how it's measured. Nonetheless, it's good that companies strive to be on this list as in doing so they become better corporate citizens and enhance the morale of their employees.
The US Civic 50, press release, June 28, 2016, Points of Light, True Impact, and VeraWorks, USA.

Has ESG morphed to become just a box-ticking exercise? "The recent moves to assess environmental, social and governance (ESG) performance within fund portfolios are attempting to answer an important question: how do you tell if your asset manager is taking ESG seriously? Difficulties in accurately measuring such an output should not be underestimated."

[COMMENTARY] This article reminds me of a related discussion. Some recent surveys of the use of ESG metrics in investment analysis has shown that though it's now widely used, many analysts believe it doesn't lead to increased alpha. I've commented how this can be so when the preponderance of studies shows that corporate excellence in ESG usually leads to financial and stock outperformance.

Well my theory is this. It is poorly applied by such analysts. Perhaps they resent the extra work and that it's often non-mathematical in nature so it's 'foreign' to these pure number crunchers. What do you think?
Has ESG morphed to become just a box-ticking exercise? by Marianne Harper Gow, June 27, 2016, Investment Week, UK.

CEOs Urged to Talk ESG, Though Wall Street Wants EPS. "CEOs need to ramp up communications about environmental, social and governance (ESG) issues even when Wall Street is more concerned with short-term financial performance like earnings per share (EPS), according to a new report from the Conference Board."

[COMMENTARY] The Conference Board believes that CEOs need to be much more proactive in talking about their sustainability issues as it is now one of the top five concerns of CEOs, says the Conference Board. As we know, most analysts are primarily concerned with short-term, quarterly financial reporting, so sustainability activities which are mostly long-term in nature, aren't often brought-up.
CEOs Urged to Talk ESG, Though Wall Street Wants EPS, by Dave Armon, 3BL Media CMO, June 22, 2016, USA.

Canada's RIA Guide to Responsible Investment. Not only great for Canadian investors, but insights into RI for investors anywhere.
Canada's RIA Guide to Responsible Investment, June 2016, RIA Canada.

Allianz: investor attitudes towards ESG. "45% of respondents incorporate environmental, social and governance factors into their investment decision-making. Ethics was cited as the top reason for ESG integration (38%), followed by corporate policy at 31% and minimizing reputation and litigation risk at 19%.

At the same time, however, only 43% of respondents believe ESG implementation has improved investment performance and only 26% believe it will lead to higher risk-adjusted returns."

[COMMENTARY] I find the latter statistic that only 26% of respondents believe ESG implementation into the investment process will lead to higher risk adjusted returns strange. So why do most respondent do it if they don't believe it'll improve performance? Is the way they think about ESG and how they go about integrating it a factor? Their belief also runs counter to most ESG research showing it generally positive for improving returns -- risk adjusted or otherwise.
Allianz: Equity markets, risk-adjusted returns top investor concerns, by Meaghan Kilroy, June 21, 2016, Pensions & Investments, USA.

World Federation of Exchanges releases second annual sustainability survey. "More than 90% of responding exchanges have an ESG, or sustainability, programme in place, primarily focused on education initiatives for issuers and/or investors, but also including products such as 'green bonds';

Nearly 100% of respondents believe they should monitor the long-term sustainability of their listed companies, and actively participate in developing better ESG reporting metrics;

Growing number of respondents (over 50% compared with 30% in 2014) are including ESG disclosures as part of their own reporting framework."

[COMMENTARY] If anyone still needs convincing of the value of corporate ESG reporting they need look no further than what global stock exchanges are requiring from their listed companies! ESG reporting has made it.
World Federation of Exchanges releases second annual sustainability survey, press release, June 14, 2016, World Federation of Exchanges, UK.

FTSE Russell launches green revenue benchmark. "According to a press statement, the FTSE Russell Green Revenues Index Series – based on the low carbon economy (LCE) data model – measures the green revenues of 13,400 public companies, which represent 98.5% of total global market capitalisation...

FTSE Russell touts its framework as comprehensive, one which allows analysts and investors to gauge the environmental impact of the goods and services from which companies derive revenue."

[COMMENTARY] Potentially history making in the field of corporate ESG measures, this is the first index to actually determine the real environmental value of the goods and services of a company. Now, for instance, this will ensure tobacco and fossil fuel companies who often rate highly on various ESG indices, will unlikely be so rated in this new FTSE Russell index!
FTSE Russell launches green revenue benchmark, June 13, 2016, Asia Asset Management, Hong Kong, China.

Green Bonds: A Surging Market for Socially Responsible Investing. "The green bond market could double in size this year, boosted by issuance from China and U.S. corporations like Apple."

[COMMENTARY] At last ethical investors will see a great increase in green bond offerings that they might incorporate into their portfolios. However, my continuing concern is still the lack of standardization of what describes a green bond. Until those standards are in place, the 'greenness' of a bond will always be suspect.
Green Bonds: A Surging Market for Socially Responsible Investing, by Bernice Napach, June 13, 2016, Think Advisor, USA.

New Study from Calvert Investments Highlights the Alpha-Generating Potential and Value of Integrated ESG Analysis. "Calvert Investment Management, Inc., a leading responsible investment manager, has partnered with Professor George Serafeim of the Harvard Business School to publish “The Financial and Societal Benefits of ESG Integration: Focus on Materiality.” This study, which is the second paper in the Calvert-Serafeim series, explores how systematic analysis of material environmental, social and governance (ESG) data may be able to help portfolio returns without adding additional risk."

[COMMENTARY] This is a great new study demonstrating the potential alpha when incorporating ESG into investment analysis.
New Study from Calvert Investments Highlights the Alpha-Generating Potential and Value of Integrated ESG Analysis, press release, June 13, 2016, Calvert Investments/George Serafeim, Associate Professor of Business Administration at Harvard Business School, USA.

Best 50 Corporate Citizens in Canada. "Following Vancity on the list is WestJet, a leader in the airline industry on resource productivity and taxes paid. Third place went to the Co-operators group, the insurance provider and perennial contender that finished first in 2011. It performed particularly well on its pension and tax scores, and maintained one of the lowest CEO to average worker pay ratios among the Best 50."

[COMMENTARY] The producers of this review also create Newsweek's green corporate rankings. They are very good at what they do, so this annual review is worth reviewing by investors.
Best 50 Corporate Citizens in Canada, June 2016, Corporate Knights, Canada.

TIAA Exec: ESG Investing A Big Draw With Millennials. "Millennial investors are far more familiar with responsible investing than others. Some 90 percent say they want their investments to make a positive impact on society compared to 74 percent of boomers and Gen Xers."

Furthermore, "61 percent of investors say their advisors did not bring up responsible investing in the past 12 months, 46 percent of advisors say they have never offered responsible investing products to their clients, 35 percent think their clients aren’t interested in responsible investing and 36 percent of advisors don’t know how to accurately evaluate responsible investments."

[COMMENTARY] The data in this article tell me that not only are the millennials wise with regard to responsible investing, but the number of advisors discussing and offering RI-ethical investing products has risen greatly over the years. Years ago the vast majority of advisors hadn't even heard of ethical investing -- let alone selling associated products!
TIAA Exec: ESG Investing A Big Draw With Millennials, by Juliette Fairley, June 8, 2016, Financial Advisor, USA.

The 2016 SustainAbility Leaders. "Unilever continues to be regarded as the global corporate leader on sustainability. It has further increased its leadership margin and was named as a leader by 43% of polled experts. Patagonia, Interface, IKEA and Tesla are also among the top-rated leaders."

[COMMENTARY] NGOs are also seen as leaders with governments coming in last. The survey is extensive and informative on how and what companies and industries are leading in sustainability.
The 2016 SustainAbility Leaders, June 7, 2016, SustainAbility/GlobeScan.

2016 Newsweek Green (Corporate) Rankings. "The Newsweek Green Rankings are one of the world’s most recognized assessments of corporate environmental performance. Based on research from Corporate Knights and HIP (Human Impact + Profit) Investor Inc., the 2016 iteration of the project features eight key performance indicators that are used to assess and measure the environmental performance of the world’s largest publicly traded companies."

[COMMENTARY] This is another really good annual ranking. The top three global companies are Shire PLC, Reckitt Benckiser Group PLC, and BT Group PLC.
2016 Newsweek Green Rankings.  June 2016, Newsweek/Corporate Knights/HIP (Human Impact + Profit) Investor Inc., USA.

Is Competition Between Sustainability Reporting Standards Healthy? "This question has acquired even more relevance with the announcement of the Exposure Draft of the GRI Standards to 'compete' with the existing standards of the Sustainability Accounting Standards Board, SASB, and the Integrated Reporting Framework of the International Integrated Reporting Council, IIRC."

[COMMENTARY] For investors, I believe it's important there be only one recognized standard. Otherwise, we'll continue to be bewildered in attempting to understand the nuances and complexities of each 'standard' and still largely unable to genuinely compare reports from companies using different standards.
Is Competition Between Sustainability Reporting Standards Healthy? By Antonio Vives, June 2, 2016, TriplePundit, USA.

Costs Of Fossil Fuel Divestment – Billions Of Dollars For Endowment Funds. "That transaction and management costs related to divestment – what he refers to as 'frictional costs' – have the potential to rob endowment funds of as much as 12 percent of their total value over a 20-year timeframe. This includes the onetime immediate transactions costs an endowment must endure, as well as ongoing annual management fees to stay in line with the changing definition of “fossil free.”

[COMMENTARY] Fascinating research. I'm sure the fossil fuel industry loves it! It absolutely needs to be replicated by others to see if they find similar divestment costs.
Costs Of Fossil Fuel Divestment – Billions Of Dollars For Endowment Funds, June 1, 2016, ValueWalk, USA.

Investors and Their Financial Advisors Need More Education, More Communication about Responsible Investments -- TIAA Global Asset Management Survey. "Over three quarters (77 percent) of affluent US investors say that they want their assets to have a positive impact on society. Many may see investing as an extension of their focus on social issues, with 86 percent of respondents tending to recycle every day, 71 percent preferring reusable bags, and 61 percent shopping for brands that adhere to sustainable business practices.

Yet with interest in social impact growing, and the availability of more responsible investment options than ever before, greater than one in three investment advisors (36 percent) concede that they are not able to adequately evaluate performance of responsible investments, and two in five affluent investors (40 percent) report they are unsure if they currently own responsible investments within their portfolios."

[COMMENTARY] It's good to have the numbers but there's nothing really new here. All of us engaged in ethical investing have understood for many years the reality described by this survey. Thank you, TIAA for providing the numbers though.
Investors and Their Financial Advisors Need More Education, More Communication about Responsible Investments -- TIAA Global Asset Management Survey, press release, May 31, 2016, TIAA Global Asset Management, USA.

The (UK) Guide to Sustainable Investment May 2016. "Once again, [UK] sustainable funds in our universe of funds have demonstrated outperformance of the relevant benchmarks. This is partly due to the avoidance of resources and oil stocks that have been weak in recent years, and this may reverse at some point, with this tailwind becoming a headwind. However, it is nevertheless encouraging to see so many sustainable funds proving the point that decent performance can go hand in hand with a sustainable investment approach."

[COMMENTARY] This is a great guide for UK ethical investors produced by a very reputable organization.
The (UK) Guide to Sustainable Investment May 2016, Blue & Green Tomorrow, UK.

BlackRock, World Bank team with scientists to assess climate risk (for investors). "Norwegian scientists have teamed up with some of the world's leading investment firms to assess the financial risks associated with global warming.

The new Centre for International Climate and Environmental Research (CICERO) Climate Finance initiative will bring together climate scientists and investors, including BlackRock and the World Bank, to develop tools to help investors more effectively incorporate climate risk into long-term investment decisions."

[COMMENTARY] The establishment of CICERO with major institutional investors could present a new era for investors wanting to know how to assess investments in light of climate change risk. Hopefully, the results of their findings will not be proprietary but open for all to use. Perhaps with the involvement of the World Bank that will be ensured.
BlackRock, World Bank team with scientists to assess climate risk, by Madeleine Cuff, May 25, 2016, BusinessGreen, USA.

Influencing climate policy. "The British non-profit Influence Map has released new research quantifying how much money is spent each year by leading oil majors and trade associations attempting to block climate change policy. It found that ExxonMobil spent an estimated $27 million (U.S.) in 2015, followed by Shell at $22 million. The American Petroleum Institute and two other key trade organizations spent a combined $74 million during the same year.

When extrapolated out to encompass oil majors and other trade associations, Influence Map estimated that global spending could be as high as $500 million a year."

[COMMENTARY] Actually, it's unsurprising that the fossil fuels' industry is spending such sums attempting to protect their profits. It is also good that Influence Map has done the sums. Investors can now make more informed opinions about fossil fuel investments, particularly as many of these companies are now starting to increase their activities in renewables.
Influencing climate policy, May 19, 2016, Corporate Knights, Canada.

Bloomberg Financial Services Gender-Equality Index (BFGEI). "For investors who prioritize gender equality, new market data tools are emerging to help them assess a company’s efforts on this front. This week, Bloomberg launched an index that scores financial-service companies on how well they treat women and whether they are promoting gender equality."

[COMMENTARY] We all know that more women on boards and in management help companies perform better. Thus, this index could be useful in determining which financial firms are better investments for ethical investors.
Bloomberg Financial Services Gender-Equality Index (BFGEI), by Bouree Lam, May 5, 2016, The Atlantic, USA.

When markets ignore vital warning signs. "MSCI was not the only company highlighting governance concerns about VW at the time. At Sustainalytics, which rates companies based on ESG factors, VW ranked in the bottom quartile of businesses globally when it came to governance. Vigeo, the French agency that provides corporate responsibility analysis to investors, also ranked VW far below its peers before the scandal broke."

[COMMENTARY] The information here demonstrates the importance of governance and ESG ratings in helping ethical investors avoid possible disasters in their portfolios.
When markets ignore vital warning signs, by Attracta Mooney, May, 8, 2016, FT, UK.

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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 spiritual investing, 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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