Good for Harvard, good for the world: Why HMC
embraced ESG with a passion. "Harvard
Management Corporation (HMC) signed up to the
UN-supported Principles for Responsible Investment
(PRI) less than a year ago, but the company that
manages the $36 billion Harvard University endowment
is already moving rapidly to build environmental,
social and governance (ESG) factors into every
investment decision it makes."
Harvard's endowment fund integrating ESG into all
its investment decisions sends a strong message to
all asset managers that they should do it too! For
ethical investors, it means more money flowing into
the stocks and bonds they're already invested in.
It's good news ethical investors.
Good for Harvard, good for the world: Why HMC
embraced ESG with a passion, by Simon Hoyle, Top
1000 Funds, USA.
Green bonds to exceed $40 billion in 2014.
"The market for green bonds has existed in one form
or another since about 2007, but only recently
exploded. According to Bloomberg, $18 billion of
green bonds has been issued as of early August 2014.
That already matches, in seven months, the total
volume done from the inception of the market in 2007
to the end of 2013, a six-year period. At this pace,
the market will exceed $40 billion this year."
This article provides a good overview of what's
happening with the green bond market.
Green bonds to exceed $40 billion in 2014, by
Suzanne Buchta, October 27, 2014, GreenBiz, USA.
Survey: half of surveyed financial
professionals have offered SRI options to clients.
"But Major Perception "Gender Gap" About SRI Seen
Among Brokers, Investment Advisors; Broad Agreement
Found that 'Millennial Investors' Will Require Major
Changes by Financial Industry."
This surveys findings are valuable reading for all
financial professionals. What is also interesting is
that most of the financial professionals who offered
SRI options did so because clients requested it.
Again, it's the market (clients) who lead and not
the mainstream investment industry! In any case,
it's great that it is happening regardless of the
reticence exhibited by most investment
Survey: half of surveyed financial professionals
have offered SRI options to clients, press
release, October 23, 2014, First Affirmative
Financial Network, USA.
Insurer Climate Risk Disclosure Survey Report
& Scorecard: 2014 Findings & Recommendations.
"Amid growing evidence that climate change is having
wide-ranging global impacts that will worsen in the
years ahead, Insurer Climate Risk Disclosure Survey
Report & Scorecard: 2014 Findings & Recommendations,
ranks the nation's 330 largest insurance companies
on what they are saying and doing to respond to
escalating climate risks. The report found strong
leadership among fewer than a dozen companies but
generally poor responses among the vast majority."
Anyone who invests in insurance companies or who has
insurance policies (probably everyone) might want to
read this review. Obviously, if a costly climate
event occurs and the company can't payout your
policy, you might want to know the financial
preparedness of the insurer before continuing to pay
Insurer Climate Risk Disclosure Survey Report &
Scorecard: 2014 Findings & Recommendations,
Mark Carney (Governor of the Bank of England):
most fossil fuel reserves can't be burned.
"The governor of the Bank of England has reiterated
his warning that fossil fuel companies cannot burn
all of their reserves if the world is to avoid
catastrophic climate change, and called for
investors to consider the long-term impacts of their
decisions. According to reports, Carney told a World
Bank seminar on integrated reporting on Friday that
the 'vast majority of reserves are unburnable' if
global temperature rises are to be limited to below
I just saw (October 23) this report courtesy of The
Responsible Investment Association (Canada). As one of the
world's top central bankers, this is truly
astonishing! Can anyone imagine Janet Yellen, Chair
of the Board of Governors of the Federal Reserve,
ever making a remark like that! She'd be 'fried
alive.' As readers here know, I've long argued that
many fossil fuel companies could have significant
write-downs and losses as the affects of climate
impact government policies entailing the reduction
of our carbon footprint.
Mark Carney: most fossil fuel reserves can't be
burned, by Jessica Shankleman, October 13, 2014,
The Guardian, UK.
SRI in Latin America: early stages.
"The financial world of socially responsible
investing (SRI) is gaining support in Latin America.
Governments, banks and investors are beginning to
understand the importance of shifting assets into
activities which support the triple bottom line.
Sustainalytics, a sustainability research and
analysis firm, recently published Inversión
Responsabley Sostenible, a report that describes the
context, growth and opportunity for SRI in Latin
America, dividing it into three levels of
involvement: Brazil as the first group, Chile,
Colombia, Perú and México as the second, and the
remaining countries in the third."
Latin America could be become a significant area for
ethical investing. This is a brief overview of the
current state of affairs there for SR-ethical
SRI in Latin America: early stages. By Julie
Fahnestock, October 21, 2014, 3BL Media and Just
Good Money Week: 83% of young Brits not
familiar with sustainable investment. "A poll
commissioned by the UK Sustainable Investment and
Finance Association (UKSIF) has revealed that the
majority of 18-24 year olds do not know what
sustainable investment is – with 37% even unsure of
what a bank actually is."
A mammoth hole in developed countries' education is
that of money management. It's truly startling that
one of the most important areas of life is not
taught in school. Mind you, where money education
exists, the curriculum is hugely influenced by
establishment interests such as banks! Thus, though
I'm in favour of money education, I'm not if it's a
one-sided viewpoint promoting establishment
Good Money Week: 83% of young Brits not familiar
with sustainable investment. By Ilaria Bertini,
October 20, 2014, Blue & Green Tomorrow, UK.
The 2014-2015 Ethics In Finance - Robin
Cosgrove Prize For People Under 35. "The
global Prize aims to promote greater awareness of
the importance of ethics in finance among young
people with an interest in accountancy, banking and
financial services. This is the fifth edition of the
Prize, originally launched in 2006, well before the
topic of 'ethics in finance' became fashionable. The
global financial crisis has since shown the
relevance of the theme and the significance of the
Prize. The Prize for Innovative Ideas for Ethics in
Finance is open to young people, aged 35 years or
younger, from throughout the world."
[COMMENTARY] This is a very worthy
endeavour and I encourage those under 35 with an
interest in this subject to submit their ideas. See
Global Ethics Prize Builds on Success. Website:
(UK) ‘Ethical’ funds still pouring money into
coal, oil and gas, new report finds. "Report
by advisers Barchester Green names winners and
sinners of ethical and environmental funds
[COMMENTARY] I suspect this is the
same in most countries. Ethical funds do this
sometimes because some energy companies are
diversifying into renewable/alternative energies and
also by holding shares ethical funds may have some
influence on how these companies operate. However,
with the fossil fuel divestment movement growing,
the potential for carbon taxes or caps as climate
change advances, and the possibility of balance
sheet write-down's due to 'stranded assets,' fossil
fuel investments might become problematic for many
‘Ethical’ funds still pouring money into coal, oil
and gas, new report finds, by Rupert Jones,
October 18, 2014, The Guardian, UK.
Why clean energy might be cheaper than you
think. "Wind and solar power often get a bad
rap for being more expensive than energy produced
from fossil fuels. But what happens when you factor
in, say, the health costs of people breathing smoggy
air? Or the financial impact of climate change’s
effect on ecosystems and precious resources like
Those are some of the questions the European
Commission sought to answer. A new report written
for the EC includes those environmental costs and
more in calculations of the total costs of producing
electricity from various renewable and nonrenewable
sources. The result? Wind and water are the best
bargains for making megawatts."
[COMMENTARY] It's great that a
major governmental body has finally produced these
calculations! Of course, the input data will be
controversial, but the discussion has to start
somewhere. This study provides governments with some
firepower for renewable energy. Incidentally, in their
calculations, solar is not that much expensive than
wind. Gas and coal powered plants are much more
Why clean energy might be cheaper than you think,
by Sam Bliss, October 14, 2014, grist, USA.
Are Companies Still Committed to
Sustainability? "New Business Models: Shared
value in the 21st century, commissioned by Enel
Foundation, finds that 66 percent of companies
believe there is a link between sustainability and
long-term financial performance (see chart). More
managers also understand the wider importance of
sustainability and increasing efforts to embed it
into their strategies.
The report also shows an increasing minority of
business managers who do not believe there is a link
between sustainability and long-term financial
performance. This is up to 11 percent — an increase
from 6 percent in a similar survey carried out in
[COMMENTARY] The article's headline
gives the impression that many or most companies
were committed to sustainability, but now might be
faltering in that commitment. I would argue that it
is only a small percentage of companies that have
ever been really committed to sustainability and
that number is growing, but not nearly as fast as is
necessary to help mitigate or stem the problems of
climate change. In the US particularly, among
corporate leaders--who are mostly Republican--only a
minority believe in climate change.
Are Companies Still Committed to Sustainability?
October 14, 2014, Environmental Leader, USA.
Fortune 500 companies spend more than $15bn on
corporate responsibility. "The research,
carried out by economic consulting firm EPG, found
that there was a clear difference in how US and
British companies approached CSR, but that on both
sides of the Atlantic spending was dominated by only
a handful of groups. In-kind donations, such as
donating free drugs to health programmes or giving
free software to universities, accounted for 71 per
cent of the $11.95bn US spending on CSR.
In the UK, while donating goods and services
in kind was the largest component of the $3.25bn CSR
activity, it totalled just 46 per cent of the total.
Employee volunteering and fundraising made up 34 per
cent and cash contributions 20 per cent."
[COMMENTARY] This study had a very
narrow definition of CSR: mostly how much companies
and employees give to outside groups. I don't think
the researchers nor the FT should've used the term
CSR, but rather, 'philanthropic contributions'
would've been a more appropriate term. There are
many definitions of CSR, but one that is frequently
used is from
Mallenbaker. Quote, "CSR is about how
companies manage the business processes to produce
an overall positive impact on society."
Though CSR spending using this definition would
be extraordinarily difficult to calculate, it will
be hugely greater than the $15bn mentioned in this
Fortune 500 companies spend more than $15bn on
corporate responsibility, by Alison Smith,
October 12, 2014, The Financial Times, UK.
Ron Robins appeared on America Meditating
radio show, interviewed by Sister Jenna. In the
show I discuss the relevance of spirituality and
Transcendental Meditation® to investing and
economics. I emphasize that gaining individual inner
fulfillment is the only means to solving our
individual and collective financial and economic
Ron Robins on America Meditating radio show,
October 7, 2014, USA.
Impact investing market grows 132% from
2011-2013. "Responsible investment strategies
grew at a much faster rate than the European market
as a whole between 2011 and 2013, according to
research by the European Sustainable Investment
study is useful reading for everyone in the
investment industry. Though you might want to read
it on the weekend! It's a large and extensive
report. I find it particularly interesting that
portfolio strategies excluding particular stocks or
industries involve "41% (€7 trillion) of European
professionally managed assets." Many people
might think it's tobacco and alcohol stocks that are
the largest excluded segments, but no, its cluster
munitions and anti-personnel landmines that are.
It'll be interesting to follow how fossil fuel
divestments gain traction in future years.
Impact investing market grows 132% from 2011-2013,
by Stephanie Baxter, October 9, 2014, Professional
Japanese Investors Adopting New Stewardship
Code (Principles for Responsible Institutional
Investors). "Japanese Financial Service
Agency (FSA) launched a Japanese version of
'Stewardship Code' in February 2014, inviting
institutional investors to sign up. Modeled on the
British Stewardship Code adopted in 2010, these
Principles for Responsible Institutional Investors
were set out as a code of behavior for institutional
investors who hold corporate stocks...
As of May 2014, three months after it was
launched, 127 institutional investors had announced
their intention to adopt it. The number of the
investors increased to 160 as of August 2014. The
Government Pension Investment Fund (GPIF), managing
about 130 trillion yen (about U.S.$1.29 trillion),
is the biggest among them."
[COMMENTARY] Unlike some other
'stewardship codes' the Japanese version does not
explicitly cover environmental or sustainability
issues. Nor is the code legally binding.
Nonetheless, it does codify important governance
factors regarding corporate behaviour that should be
helpful for ethical investors.
Japanese Investors Adopting New Stewardship Code
(Principles for Responsible Institutional
Investors), by Junko Edahiro, October 6, 2014,
Japan for Sustainability, Japan.
War – a minefield for ethical investors.
"'The world is changing,' says Ron Robins, a
Niagara Falls, Ont.-based analyst who founded an
ethical investing advice website called Investing
for the Soul. 'Investors in sin industries may see
their returns suffer due to government austerity
programs,' he says.
Governments facing deficits, unfunded pension
liabilities and rising health-care costs find it
irresistible to boost taxes on the sin industries,
particularly tobacco, alcohol and gaming, he says,
eventually driving away consumers. Meanwhile, more
socially responsible portfolios typically include
sectors that are on the rise in the 21st century, he
adds – finance, technology, medical equipment, clean
energy, consumer gadgets and so on."
[COMMENTARY] I was pleased the writer,
David Israelson, used these quotes of mine,
especially because I believe most conventional
investors seriously underestimate the ramifications
of most governments' mammoth unfunded liabilities as
well as the financial impacts of required
adjustments concerning climate change. Thus I
suggest that ethical investors are in a superior
position to 'sin' or conventional investors with
regards to long-term investment returns.
War – a minefield for ethical investors, by
David Israelson, October 6, 2014, The Globe & Mail,
New Numbers Show Increased Profits from ESG,
Climate Action, and Sustainability Communications. "A recent study by New Amsterdam
Partners finds that stocks with higher ESG ratings
deliver superior returns and lower price
volatility... CDP, formerly the Carbon Disclosure
Project, has released a study that shows... an 18
percent higher return on equity by companies
addressing climate change over their peers, and a 67
percent higher return than companies that do not
disclose on climate change. Dividends to
shareholders were also higher, by 21 percent."
[COMMENTARY] With report after report
showing that companies rated highly on ESG factors
perform better financially and offer superior stock
returns, when will mainstream investors wake-up and
fully integrate ESG criteria for picking stocks?
This demonstrates how structurally impaired is
the mainstream investment world. Ethical investors
can now enjoy their 'superiority'.
New Numbers Show Increased Profits from ESG, Climate
Action, and Sustainability Communications, by John Howell, October 2, 2014, 3BL
Pension funds still concerned activist stance
could damage returns. "Two-thirds of the
pension funds surveyed – 35 in total, with nearly
€1.2trn in combined assets – agreed that the
greatest ESG risk facing a board was that of
underperformance due to ethical investment
[COMMENTARY] This is the central issue
for getting pension funds onside for ESG-ethical
investing. And it goes back to fiduciary duties and
how they're interpreted. If they invest for ethical
reasons and the investment turns sour, the pension
fund boards feel they could be found irresponsible
in their fiduciary duties. So, the real point
is--and it depends upon jurisdiction and whom
they're managing the funds for--they must be able to
demonstrate financially sound reasons when investing
with an ESG-ethical investing focus. And that, in
most cases, should not be too hard to do. Let's face
it, many boards are just too conservative and don't
want to 'rock-the-boat' to reorient themselves even
to potentially higher returns by investing with an
Pension funds still concerned activist stance could
damage returns, by Dominic Gane and Jonathan
Williams, October 1, 2014, IPE, UK.
Will There Be Enough ESG Opportunities To Meet
Demand? "But even as 87% of asset managers
surveyed in the report, The Cerulli Edge: U.S.
Monthly Product Trends (August 2014), said they
viewed the growing awareness about ESG investing as
a secular trend, the vast majority of them said it’s
only somewhat important to offer it. Does that mean
they’ll be slow to roll out products or invest in
[COMMENTARY] It seems a strange
headline, but what they're saying is that if most
asset managers go for ESG screened portfolios, there
might not be enough ESG eligible stocks around.
Well, what a great day that'll be! I think the study
authors might be overlooking the fact that when
company's see their peers with higher ESG ratings
and higher stock prices, they will gravitate to
improve their own ESG performance. Ideally, the
majority of companies would then also become high
ESG performers. True, this would likely have the
effect of lowering ESG stock premiums--but hey,
it'll mean higher profits too for most companies,
and thus, higher stock prices everywhere.
Will There Be Enough ESG Opportunities To Meet
Demand? October 1, 2014, FA Magazine, USA.
How solar can become the world’s largest
source of electricity. "One, with the right
policies in place, solar could be the largest
provider of global electricity by 2050.... The
second interesting bit is that IEA [International
Energy Agency] has gotten much more bullish on PV
[photovoltaic], even since May. The agency now sees
it providing 16 percent of total global electricity
by 2050 (in the 2DS scenario), up from less than 1
[COMMENTARY] The fact that the
establishment's energy agency, the IEA, is now so
very bullish on solar should say to all the doubters
that they should give up their doubts. The IEA
observes that, "Based on its competitive
advantage in distributed applications, PV is
unbeatable by any generation technology, distributed
or not." Still, ethical investors have to be
careful. In any burgeoning technology there are
always winners and losers. But this is great news
for the environment.
How solar can become the world’s largest source of
electricity, by David Roberts, September 29,
2014, grist, USA.
Ethiquette: New interactive responsible
investment Web platform. "Fabien Durif,
professor at UQAM's School of Management and
director of the latter's Responsible Consumption
Observatory (RCO), and Brenda Plant, senior
consultant at Ellio, proudly announce the launch of
Ethiquette, a new, independent, interactive,
educational Web platform dedicated to responsible
investment (RI). The new tool follows in the wake of
the findings of a study entitled 'Québecers and
Socially Responsible Investment: Portrait for 2014'
, published in February of this year. According to
this study, individual investors were found to be
little aware of responsible investment (RI), and
information available to them insufficient to
elucidate the complexity of RI financial products."
[COMMENTARY] This new ethical
investing tool for Québecers could be most helpful
to furthering ethical investing in Quebec and
Canada, generally. I wish the venture every success.
Ethiquette: New interactive responsible investment
Web platform, press release, September 26, 2014,
Launch of Solactive CK Low Carbon Indices.
"The Solactive CK Low Carbon Index family is the
first in the industry to use the Sustainable
Industry Classification System™ (SICS®), established
by the Sustainability Accounting Standards Board® (SASB®)
to categorize industries based on resource
intensity, sustainability impact, and sustainability
A defining feature of these Low Carbon Indices is
that they ensure a minimum 50% reduction in carbon
intensity against the market benchmarks, as verified
by South Pole Carbon."
[COMMENTARY] These new indices
represent a unique and interesting approach for
sustainable investing. Congratulations to the
sponsors. Though launched September 25, I couldn't
find a link to them for current values and holdings.
Launch of Solactive CK Low Carbon Indices, press
release, September 25, 2014, Corporate Knights
Capital and Solactive, September 25, 2014,
Socially Responsible Investments Can Match
Broader Market Gains: TIAA-CREF. "A recent
TIAA-CREF white paper authored by Lei Liao and Jim
Campagna found that investors with a conscious don’t
have to sacrifice gains to put their money where
their beliefs are. Liao and Campagna analyzed the
performance of several leading equity-focused SRI
indexes–the Calvert Social Index, Dow Jones
Sustainability U.S. Index (DJSI U.S.), FTSE4Good US
Index, MSCI KLD 400 Social Index, and MSCI USA IMI
ESG Index–in relation to the performance of broader
benchmarks. They found 'no statistical difference'
in the SRI index’s returns when compared to the
[COMMENTARY] Well designed studies on
SRI vs conventional investment portfolios
consistently demonstrate that there's no performance
loss by applying SRI screens. In fact, the majority
of studies using ESG criteria demonstrate superior
stock returns. TIAA-CREF has over $500 billion in
Socially Responsible Investments Can Match Broader
Market Gains: TIAA-CREF, by Teresa Rivas,
September 25, 2014, Barron's, USA.
Montreal Carbon Pledge Attracts Large
Institutional Investors. "A group of large
institutional investors have signed on to the
Montreal Carbon Pledge, agreeing to measure and
publicly disclose the carbon footprint of their
investment portfolios on an annual basis. Overseen
by the UN-backed Principles for Responsible
Investment, the pledge hopes to attract $3 trillion
of portfolio in time for next year’s UN climate
[COMMENTARY] The pledge is good news
for those of us interested in this issue. One
concern though: how smaller listed companies have
the resources to gather such information.
Montreal Carbon Pledge Attracts Large Institutional
Investors, by Doug Watt, September 25, 2014, SRI
US Sustainable Investment Association calls
for US Government to demonstrate leadership in
climate crisis and set price for carbon.
"National governments and multilateral organizations
must create the framework to enable the additional
trillions of dollars in investments needed in
low-carbon technologies and climate change
adaptation. We urge the US government to demonstrate
leadership by supporting multilateral efforts to
impose a meaningful price on carbon and to stop
subsidizing carbon pollution. With these policy
signals, investors can fully rise to the challenge
of building the low-carbon future."
[COMMENTARY] Though I agree with the
above sentiment I first believe that there has to be
a global understanding of what are the real total
societal costs of different types of energy
production--and Britain's Carbon Trust has hit this
nail on the head.
Carbon Trust September 23, 2014, press release,
"The redefinition of the electricity cost
calculation from the most prominently used Levelised
Cost of Electricity (LCoE), to Society’s Cost of
Electricity (SCoE), means additional factors not
normally accounted for are included which presents a
more complete picture on the cost-benefit of energy.
Additional factors include subsidies, grid access
costs, variability costs, social costs, economic
benefits and geopolitical impact."
Were this new definition adopted, many renewable
and alternative energy sources would demonstrate
superior long run financial returns and beneficial
societal and climate impacts. Then, governments will
be able to more easily regulate in ways that favour
renewable and alternative energy. Until then, it's
an uphill battle to convince the likes of US
US Sustainable Investment Association calls for US
Government to demonstrate leadership in climate
crisis and set price for carbon, press release,
September 22, 2014, US SIF: The Forum for
Sustainable and Responsible Investment, USA.
Site of interest: Climate Bonds
Initiative. "The Climate Bonds Initiative is
an international, investor-focused not-for-profit.
It's the only organisation in the world focusing on
mobilizing the $80 trillion bond market for climate
[COMMENTARY] It has several high
level partners, but needs more of them to get off
the ground in a big way. I'm sure it will happen.
The site has some useful resources for ethical
investors under the tab, 'Resources.'
Rockefellers, Heirs to an Oil Fortune, Will
Divest Charity From Fossil Fuels. "John D.
Rockefeller built a vast fortune on oil. Now his
heirs are abandoning fossil fuels. The family whose
legendary wealth flowed from Standard Oil is
planning to announce on Monday that its $860 million
philanthropic organization, the Rockefeller Brothers
Fund, is joining the divestment movement that began
a couple years ago on college campuses."
[COMMENTARY] This is significant! It
brings into public awareness that despite the hoopla
about shale gas and oil, the future for fossil fuels
is growing dimmer. The Rockefellers are to be
congratulated. Their precedent could set the stage
for many others to divest themselves of fossil fuel
investments. It could increase the funds moving
towards alternative and renewable fuels. It's a good
day for investors oriented to sustainable investing.
Rockefellers, Heirs to an Oil Fortune, Will Divest
Charity From Fossil Fuels, by John Schwartz,
September 21, 2014, The New York Times, USA.
Investment giants are demanding climate
action, so why aren't corporates delivering?
"As investors renew calls for climate action, a
survey shows nine out of 10 investors see
sustainability as a competitive advantage - so why
are the firms they invest in not making faster
Yesterday saw the latest intervention from
many of the world's largest institutional investors,
as more than 340 companies with over $24tr (£14.7tr)
of assets under management issued a fresh
declaration calling for world leaders to deliver
'stable, reliable and economically meaningful carbon
pricing' and increased support for clean
[COMMENTARY] My impression is that
most company CEOs believe they're performing better
on sustainability issues, but except for some key
outliers, investors don't see it. Thus, investors
want regulatory changes to force companies to be
more sustainable. This is a good article for ethical
investors to read.
Investment giants are demanding climate action, so
why aren't corporates delivering? By James
Murray, September 19, 2014, BusinessGreen, UK.
New report (from UN Principles for Responsible
Investment) shows that ESG can mitigate risk,
provide value in debt capital markets.
"Analysis of Environmental, Social and Governance (ESG)
issues such as corruption and climate change should
be considered as a natural fit for fixed income
investors as it can help to manage risk and identify
credit strength, according to a new report released
by Principles for Responsible Investment (PRI).
report is intended as a guide for fixed income
investment managers and their clients on how to
incorporate ESG into their investment strategies to
gain the available information advantage."
[COMMENTARY] That latter point, "to
gain the available information advantage," is really
what will increasingly attract fund managers. Not
only have we seem inordinate confirmation of higher
returns when ESG analysis is applied to equities,
but that same type of confirmation is coming with
fixed income investments. Most ethical investors
have only thought of applying ESG to their stocks.
This is a prompt to them that they should also apply
such values and analysis to their fixed income
investments as well.
New report shows that ESG can mitigate risk, provide
value in debt capital markets, September 18,
2014, KFW Group, Germany.
Shares prices boosted by corporate
sustainability policies, says University of Oxford
study. "The University of Oxford’s Smith
School of Enterprise and the Environment and
Arabesque Asset Management, a sustainable investor,
carried out a so-called meta-study of more than 190
academic studies and other literature on the impact
of environmental, social and governance (ESG)
policies on performance.
They found that corporate sustainability helps
to lower a business’s cost of capital and boosts a
company’s operating performance.
In addition, 80pc of studies – 31 out of 39 –
showed a “positive correlation” between
sustainability and stock market performance."
full report) to all those advisors and fund
managers still dubious of socially
responsible-ethical investing! Their claims that
such investing lowers returns are nonsense.
Shares prices boosted by corporate sustainability
policies, by Ben Martin, September 15, 2014, The
Shareholder pressure fails to promote
sustainable practices – survey. "Barely one
in 10 companies feel compelled to improve their
sustainability record, despite pressure from
institutional investors, a study by the UN-backed
Principles for Responsible Investment (PRI) has
[COMMENTARY] The criticism seems to
be that shareholder activism concerning corporate
sustainability efforts is too diffuse, short-term in
nature, and not focused on specific, identifiable
actions that companies can undertake. One great
finding: 80% of executives viewed sustainability as
a key competitive advantage!
Shareholder pressure fails to promote sustainable
practices – survey, by Jonathan Williams,
September 12, 2014, IPE, UK.
Banks showing limited commitment to
responsible investing. "Only 7% of banks
surveyed by Sustainalytics report that the share of
responsible assets is more than 5% of total assets
under management. Nearly all of these institutions
are from Europe, with three from North America and
one from South America.
Another 96 institutions (27%) either have less than
5% of AUM dedicated to RI assets or do not disclose
the value of their RI assets. Two hundred and
forty-one institutions (67%) don’t provide any
evidence of RI assets under management."
[COMMENTARY] The research findings of
the Sustainalytics survey are quite an indictment of
western banking. In comparison with the investment
industry--which is increasingly applying ESG in
stock and portfolio selection--banking institutions
are way behind.
Banks showing limited commitment to responsible
investing, by Doug Watt, September 12, 2014, SRI
Global water availability 'could limit
fracking developments'. "A new report that
looks into the potential environmental effects of
fracking has revealed that drilling and fracturing
shale gas wells poses a 'significant risk' to
freshwater supplies across the globe."
[COMMENTARY] I might add a huge risk
to geological stability (earthquakes) as well. All
the excitement in the US about what fracking means
for their gas and oil supplies could be severely
hampered as the environmental problems associated
with fracking become known and the industry forced
to become liable for environmental and human health
damages and costs. Many companies in this industry
will eventually have 'stranded assets.' That means,
gas and oil assets that has to be written down,
greatly impairing the financial results of many,
many of these companies.
Global water availability 'could limit fracking
developments,' September 9, 2014, edie newsroom,
Swiss pension fund members willing to
sacrifice returns for sustainability. "More
than 70% of pension fund members in Switzerland want
their schemes to apply sustainability criteria when
selecting investments, according to a survey
commissioned by RobecoSAM.
Approximately 40% of the 1,200 participants surveyed
said they would be willing to sacrifice returns in
exchange for sustainable investments, with 20% of
that number willing to give up as much as half the
More than 70% of respondents said they were
convinced the application of ESG criteria would lead
to more cautious investment decisions and probably
even better ones."
[COMMENTARY] Note the latter comment
that plan participants actually expected possibly
superior returns by investing sustainably! Too many
times these types of questionnaires start with the
premise that investing in sustainable, socially
responsible, impact, or ethical investments, must
lower returns. Now we see that not only in this
survey, but in many such surveys, investors/plan
participants probably expect better results from
investing with ESG, etc., criteria. This is why
we're seeing asset/fund managers everywhere
beginning to incorporate ESG analysis in their
portfolio selection criteria. It's about time too!
Swiss pension fund members willing to sacrifice
returns for sustainability, by Barbara Ottawa,
September 9, 2014, IPE, UK.
Study links high ESG ratings to positive
investment portfolio performance. "Asset
managers can create better-performing portfolios by
excluding stocks with lower environmental, social
and governance (ESG) ratings, according to new
research. The study by New Amsterdam Partners used
the Thomson Reuters Corporate Responsibility
Ratings, which screens the ESG ratings of almost
[COMMENTARY] Of course, one needs to
understand all the screening parameters and
methodologies of this study to competently remark as
to its conclusions. Nonetheless, at face value and
considering the reputation of the study's sponsors,
the study appears to offer further confirmation that
screening companies for their ESG performance can be
Study links high ESG ratings to positive investment
portfolio performance, by Tom Revell, September
5, 2014, Blue & Green Tomorrow, UK.
How to make Wall Street notice sustainability
leaders. "As Joel Makower noted in August in
'Why sustainability leaders don’t impress Wall
Street,' (GreenBiz) investors seem unconvinced that
strong sustainability performance delivers
shareholder value. More specifically, he argues that
investors don’t have the data they need to connect
[COMMENTARY] This article harps on
themes I've been talking about for many, many years.
In particular, the lack of ESG reporting
standardization, independent assessment of data, and
direct relevance to corporate success and profits.
Daniel Esty has done a good job in presenting this
case. It's important reading for all concerned with
How to make Wall Street notice sustainability
leaders, by Daniel C. Esty, September 2, 2014,
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