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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."
--
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"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."
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  (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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Links may only be valid for a limited time   September 20, 2018

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Only 20% of rich Britons hold ethical assets, study finds. "UBS says Britons were second-least likely to buy into sustainable investments after Americans... Just 12% of wealthy people in the US had more than 1% of their fortunes held in sustainable investments – a broad term which includes renewable energy and companies which have committed to pay employees fairly.

... 60% of Chinese HNWIs had at least 1% of their assets held in sustainable funds, followed by Brazilians and people from the United Arab Emirates."

[COMMENTARY] The divide between institutional and retail investors concerning sustainable assets is still wide, especially in the developed world. I believe this problem rests mostly with the investment advisor/broker community. Most still don't or want to understand, the potential impacts of climate change on their client portfolios. In the USA particularly, it’s probable that advisors/brokers are largely 'climate change deniers.'
Only 20% of rich Britons hold ethical assets, study finds, by Rupert Neate, September 19, 2018, The Guardian, UK.

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Most Investors Are Going Green to Make Money, HSBC Says. "Financial returns were cited as the biggest reason to have a strategy focused on the environment, social issues and governance, known as ESG, according to a survey of 868 institutional investors by the U.K.’s largest bank. Nearly three quarters of companies with this focus said that this was their number one driver, followed by tax incentives."

[COMMENTARY] 'Financial returns' could also be code for using ESG criteria to screen for potential material issues. As such, it reflects what other surveys of this nature report. It's encouraging to see such huge numbers of institutional investors so engaged.
Most Investors Are Going Green to Make Money, HSBC Says, by Anna Hirtenstein, September 12, 2018, Bloomberg, USA.

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Two-thirds of institutional investors utilize ESG policy – report. "Two-thirds of institutional investors and almost half of companies globally have an environmental, social and governance policy in place, according to survey of 1,731 companies and institutional investors, sponsored by HSBC Holdings and conducted by East & Partners."

[COMMENTARY] The numbers here are somewhat higher than most recent similar surveys. Of course, survey questions may differ significantly, thus skewing the results. If true, this ESG survey would mean ESG has become truly mainstream.
Two-thirds of institutional investors utilize ESG policy – report, by Paulina Pielichata, September 12, 2018, Pensions & Investments, USA.

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Sustainalytics Launches its ESG Risk Ratings. "Materiality-Driven ESG Ratings Framework Enables Investors to Better Understand the Unmanaged ESG Risks Facing Companies."

[COMMENTARY] Sustainalytics may well be launching a new ESG ratings' platform that could become an industry standard in the years to come. It'll be fascinating to see how it is received and to track its results.
Sustainalytics Launches its ESG Risk Ratings, press release, September 12, 2018, Sustainalytics, The Netherlands.

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[UK] Government to demand greater transparency on pension investments. "Savers will be able to see at a glance if their pension money is held in ethical and socially responsible investments under measures to be unveiled today by the government."

[COMMENTARY] This is terrific news. It sets an example for governments and regulators globally to follow. However, one suspects it might be a while before such action occurs in the USA.
[UK] Government to demand greater transparency on pension investments, by Josephine Cumbo, September 11, 2018, FT, UK.

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ESG outperforms in European large caps and U.S. small caps. "Data compiled by Arabesque S-Ray show companies that score high in Arabesque's proprietary ESG rating algorithm outperform lower scoring peers, particularly among large-cap European firms and small-cap U.S. firms."

[COMMENTARY] The unique aspect of this study is the segregation of ESG performance according to a company's market size and geographical orientation.
ESG outperforms in European large caps and U.S. small caps, Charles McGrath, September 11, 2018, Pensions & Investments, USA.

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Deutsche Bank Subsidiary Launches ESG Money Market Fund. "The launch of the fund is a credit positive event because DWS is the first to bring ESG selection criteria into the $531 billion prime money market fund industry."

[COMMENTARY] With the launch of this fund, possibly all major asset classes now have ESG options. This is really good news and DWS will probably be followed by many more such funds.
Deutsche Bank Subsidiary Launches ESG Money Market Fund, by Ben Hernandez, September 10, 2018, ETF Trends, USA.

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Fossil fuel divestment funds rise to $6tn. "Insurance companies lead the sell-off of coal, oil and gas stocks over climate change and financial fears – oil majors now cite divestment as a risk to them."

[COMMENTARY] Yes, the oil majors should be worried and that's why many of them are actively pursuing alternative energy. Despite President Trump's attempts, these majors will continue to grow such energy sources.
Fossil fuel divestment funds rise to $6tn.,  by Damian Carrington, September 10, 2018, The Guardian, UK.

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Sustainable investment not core investment consideration for institutional investors. "Investing sustainably remains a minor factor in the investment decision-making process despite institutional investors’ expectations it will grow in importance, according to Schroders' Institutional Investor Study 2018."

[COMMENTARY] Sustainability wasn't even a minor consideration for investors not so long ago! Now, increasingly, it's on the radar for most of them.
Sustainable investment not core investment consideration for institutional investors,
September 3, 2018, Institutional Asset Manager, UK.

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ESG Investing Rarely Underperforms the Market, Study Finds. "The report also found that investment portfolios with high-scoring ESG companies outperformed their benchmarks by between 81 to 243 basis points over a four-year period (between 2014-2018)."

[COMMENTARY] More news supportive of ESG based investing.
ESG Investing Rarely Underperforms the Market, Study Finds, by Paul Davies and Michael D. Green, Latham & Watkins, September 3, 2018, Lexology, USA.

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PRI develops guide to identifying ‘mainstream’ impact investments. "The goal was to help asset owners and fund managers better assess opportunities in this market, the United Nations-backed investor organisation said."

[COMMENTARY] This guide is useful for all asset managers. PRI, Principles for Responsible Investment, has been working for many years developing this guide. For the guide, click here.
PRI develops guide to identifying ‘mainstream’ impact investments, by Susanna Rust, August 30, 2018, IPE, UK.

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3 Challenges for Getting ESG Funds Into Retirement Plans. "CalSavers recently announced the selection of State Street Global Advisors to manage the investment lineup using existing SSGA funds or combinations thereof but said there won't be an ESG fund in the plan, at least not initially. The reason? The ESG options were too expensive."

[COMMENTARY] Jon Hale, at Morningstar, outlines the steps that could've been taken by CalSavers to get inexpensive ESG options included in its lineup. The points Jon makes are important for all fund managers to be aware of.
3 Challenges for Getting ESG Funds Into Retirement Plans, by Jon Hale, August 30, 2018, Morningstar, USA.

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Should impact investors aim for market returns? "Impact investing launches are increasingly shedding the caveat that deep social impact results in a sacrifice of financial returns."

[COMMENTARY] Though this article discusses impact investing in the UK environment, the arguments presented are universally applicable.
Should impact investors aim for market returns? By Nicola Brittain, August 23, 2018, Portfolio Adviser, UK.

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US SIF Foundation Releases 2018 Money Manager Roadmap: "Moving Forward with Sustainable, Responsible and Impact Investing: A Roadmap for Money Managers." "The report provides best practices and practical steps asset managers can take to develop and enhance sustainable investing strategies."

[COMMENTARY] The US SIF always produces excellent guides and information.
US SIF Foundation Releases 2018 Money Manager Roadmap: "Moving Forward with Sustainable, Responsible and Impact Investing: A Roadmap for Money Managers, August 15, 2018, US SIF, USA.

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New: The Big Book of SI by Robeco. "In our new, 102-page, The Big Book of SI, we analyze the present status of sustainability investing and the big trends that are shaping its future. The book also zooms in on sustainability reporting and the link between ESG and performance."

[COMMENTARY] Netherlands-based Robeco has long been a pioneer in sustainable investing. The information and reports they produce have a great reputation.
New: The Big Book of SI by Robeco, August 13, 2018, Robeco, The Netherlands.

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Report: time to rethink ESG index construction. "Traditional index construction not effective because it makes it difficult for investors to assess source of outperformance."

[COMMENTARY] This interesting article discusses a study which highlights the difficulty in pointing to ESG factors as a standalone factor in ESG fund alpha. The report suggests ESG funds need improved construction to isolate all causes of outperformance.
Report: time to rethink ESG index construction, by Joe McGrath, August 14, 2018, Expert Investor, UK.

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Companies with strong ESG scores outperform, study finds. "Portfolios in large and medium-sized groups in developed markets, excluding the US, record best results."

[COMMENTARY] Actually, the US portfolios did well too. Just not as well as those in Europe, most particularly. Incidentally, it's interesting to see how the EU and US governments seem to be diverging on encouraging ESG in funds' management.

The US Department of Labor recently issued a sort of warning about pension funds using ESG analysis, while the EU is going full steam encouraging ESG integration in funds' management! I think the US administration has too much of a rear view mirror when it comes to understanding the present and future economy.
Companies with strong ESG scores outperform, study finds, by Jennifer Thompson, August 12, 2018, FT, UK.

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Majority of impact investors satisfied with investment performance: survey. "The majority of impact investors said their investments have met their expectations for both impact (82 per cent) and financial (76 per cent) performance since inception, according to a report by the Global Impact Investment Network."

[COMMENTARY] It's great news that most impact investors are really happy with their investment results. Such data will inspire many more to invest similarly.
Majority of impact investors satisfied with investment performance: survey, August 10, 2018, Benefits Canada, Canada.

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ESG adoption gaining among U.S. asset owners – Callan survey. "More than 40% of U.S. asset owners have incorporated environmental, social and governance factors into their investment decisions, up from 37% in 2017 and 22% in 2013, said Callan's annual ESG survey report, released Wednesday."

[COMMENTARY] Of course, when a respondent says they've incorporated' ESG into their investment decisions, it's difficult to know if that's really the case.

For instance, for a fund manager evaluating governance decisions of a company's management, could suggest to them that they're already incorporating ESG into their investment decisions! However, the fact that this survey shows increasing acceptance of ESG on a yearly basis perhaps argues against this simplistic read of the survey results.
ESG adoption gaining among U.S. asset owners – Callan survey, by Meaghan Kilroy, August 8, 2018, Pensions & Investments, USA.

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Investors ask 500 companies to come clean on treatment of workers. "More than 100 institutional investors, which together manage $12trn in assets, have sent a survey to 500 companies demanding that they disclose detailed information on how they manage their global workforces."

[COMMENTARY] Finally, this issue is receiving the attention of some of the biggest investors on the planet. It'll be quite interesting to see who responds and what the data says.
Investors ask 500 companies to come clean on treatment of workers, by Katie Burton, August 7, 2018, Ethical Corporation, UK.

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Poll shows low adoption of smart beta ESG funds. "Research among 85 clients of Aberdeen Standard Investments and Sustainalytics found that only 24% of the sample group were actively using a dedicated smart beta ESG strategy in their portfolio at present."

[COMMENTARY] At 24%, I don't think the adoption rate is too bad at all. As Doug Morrow at Sustainalytics says, these are relatively early days yet.
Poll shows low adoption of smart beta ESG funds, by Joe McGrath, August 1, 2018, Expert Investor, UK.

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Lack of market ‘plumbing’ holds back sustainable investing. "We need standards, benchmarks and derivatives to make this sector take off."

[COMMENTARY] A thoughtful article by the chairman of UBS on how sustainable investing can become fully mainstream. Also, it's terrific to see a leader such as Mr. Weber participating in the process of advancing sustainable investing.
Lack of market ‘plumbing’ holds back sustainable investing, by Axel Weber (chairman of UBS), July 29, 2018, FT, UK.

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Market Momentum: Impact Investing & High Net Worth Canadians. "There is a high potential market for impact investing amongst high net worth individuals in Canada. One in three HNWIs responded as a current impact investor, with almost 90% expressing interest of investors surveyed, over 52% are investing or intending to invest for impact over the course of the upcoming year. There are some key characteristics of current and prospective impact investors."

[COMMENTARY] BMO, Scotiabank, and Tides Canada are among the major backers of this study. The study is of particular interest to Canadian advisors with HNWI clients. In general, it shows considerable and growing interest among Canadian HNWIs in impact investing.
Market Momentum: Impact Investing & High Net Worth Canadians, July 2018, MaRS and SVX, Canada.

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Using ESG Ratings to Build a Sustainability Investing Strategy. "Sustainability investing continues to grow in popularity, but the lack of standardization in sustainability reporting poses a challenge for investors wishing to maximize the social responsibility, and minimize the social damage, of their investments. The authors, who previously studied sustainability ratings issued by the mass media, now turn their attention on rankings used by the investing community itself.

The findings indicate that they may be a more reliable barometer of a company’s commitment to environmental, social, and governance impact; nevertheless, further research into the long-term link between sustainable practices and value creation is needed."

[COMMENTARY] To some extent, this research counters the impression offered by the ACCF (see below, "Think tank takes ESG rating agencies to task") that since ESG ratings' methodologies are different among the ratings' agencies that they'll offer widely disparate outcomes. This CPA journal article throws more light on that and comes to some interesting, important, conclusions for ESG oriented investors.
Using ESG Ratings to Build a Sustainability Investing Strategy, by Silvia Romero, Agatha E. Jeffers, Beixin (Betsy) Lin, Frank Aquilino,  and Laurence DeGaetano, July 2018, The CPA Journal, USA.

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For all the Hype, Almost No U.S. Plans Factor in ESG. "Just 12 percent of U.S. corporate and health care retirement plan representatives said they had incorporated ESG criteria into their manager selection processes. When defined contribution plans were excluded, only 6 percent considered ESG. The survey included 69 plan sponsors overseeing 119 defined benefit and defined contribution plans."

[COMMENTARY] Is it laziness, being uninformed, disinterest or what, that is preventing US corporate health and retirement plans from including ESG criteria? It seems to me a similar situation as with numerous advisors who don't understand -- or even -- want to understand, ESG options. Habits and remuneration arrangements are often hard to change.
For all the Hype, Almost No U.S. Plans Factor in ESG, by Amy Whyte, July 23, 2018, Institutional Investor, USA.

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Think tank takes ESG rating agencies to task. "In a report released Thursday, the Washington-based, business-backed think tank argued individual companies 'can carry vastly divergent (ESG) ratings from different (ESG rating) agencies simultaneously, due to differences in methodology, subjective interpretation or an individual agency's agenda.'

...The major ESG ratings agencies analyzed in the report are MSCI, Sustainalytics, RepRisk and ISS...

Concerns raised by the ACCF over the agencies' ESG rating methodologies included variances in scoring systems among the agencies and the agencies' not fully disclosing the indicators they evaluate or the material impact of the indicators."

[COMMENTARY] Just like there's often wide variability in analyst opinions in the interpretation of financial statements, so there should also be variability in ESG opinions. However, setting competitive issues aside, I do agree the rating agencies could be more forthcoming in "disclosing the indicators they evaluate or the material impact of the indicators."
Think tank takes ESG rating agencies to task, by Meaghan Kilroy, July 19, 2018, Pensions & Investments, USA.

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3 takeaways on trends in advisor investing. "Advisors this year, for instance, were asked about their use or recommendation of environmental, social and governance funds. Replies indicate that 26 percent of respondent advisors currently use and/or recommend ESG funds, and 20 percent plan to increase their use/recommendation of them over the next 12 months."

[COMMENTARY] Finally, a significant number of US advisors are using and recommending ESG investments to their clients! (Research cited: 2018 Trends in Investing Survey, Journal of Financial Planning and the FPA Research and Practice Institute.)
3 takeaways on trends in advisor investing, by Marlene Satter, July 16, 2018, Benefits Pro, USA.

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When will “socially responsible investing” become just “investing”? "It may be hard to imagine, thinking back to the freewheeling pre-crisis days, but one legacy of the crisis could be a permanent shift in the finance industry’s moral compass. Yes, really."

[COMMENTARY] Good perspective on how the investment industry has changed -- and adopted socially responsible and ethical investing -- since the financial crises ten years ago.
When will “socially responsible investing” become just “investing”? By Eshe Nelson, July 9, 2018, Quartz, 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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