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Shareholder Values

"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
    May 2016

"[In British Columbia] 75 per cent of millennials say they are interested in SRI, but have yet to invest"
Vancity (Canada)
    April 2017

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




Global Ethical Investing News & Commentary



Commentaries by Ron Robins  E-mail us your feedback

Links may only be valid for a limited time   May 29, 2017

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UK Ethical investing sector held back by lack of awareness, says new survey. "More than half of the UK population want their wealth to have a positive impact on society but are unsure where to turn to for help, highlighting a knowledge deficit in the area of ethical investing.

The survey, conducted by positive savings platform Ethex, shows lack of knowledge, understanding and confidence in what is on offer is holding many investors back from investing in ethical products.

50 percent of those asked did not feel they know enough about positive investment and savings, although 45 percent were willing to learn more. In addition, 39 percent did not know whether to expect a stronger or weaker financial return from positive investments when compared to traditional ones and 55 percent did not think they were wealthy enough to make positive investments."

[COMMENTARY] Most investors in the developed world have for over two decades wanted to be invested in ethical, socially responsible, and sustainable companies. It's always been the vested interests in the mainstream financial industry that never got the message -- until quite recently.

It's peculiar how an industry priding itself in its marketing and customer relations has been so out-of-touch with its clients -- and for such a long time. I've always asked, whatever happened to the 'know thy client' rule.
Ethical investing sector held back by lack of awareness, says new survey, by Miranda Wadham, May 25, 2017, The Investment Observer, UK.

Key ESG Trends. "From a geographic perspective, the GSIA data showed that European and Canadian assets were more diversified across different implementation strategies: in addition to negative screening, there were a higher proportion of assets using norms-based screening, corporate engagement, and integration approaches. Within the United States, the primary forms of implementation were integration, negative screening, and corporate engagement."

[COMMENTARY] This post has some fascinating charts on ESG investing globally. However, one figure that stands out -- and I believe questionable -- is the proportion of sustainable assets vs total managed assets in Europe at 58.896%. There is an explanatory note but to me, it seems to obfuscate the issue.
Key ESG Trends, by Blake Pontius, May 23, 2017, William Blair Blog, USA.

27% of asset managers doubt future of ethical investing as costs rise, survey, BNP Paribas Securities Services. "A further 28% of asset managers admitted they were concerned they didn’t have the ability to meet the demand for ESG investments from clients currently, and worried they wouldn’t in the future. The research report, titled ‘Great Expectations: ESG – What’s next for asset owners and managers’, also found more than half (55%) of those surveyed felt the lack of robust data on ESG investments was the biggest barrier to its adoption in strategies."

[COMMENTARY] What should've been the headline is that 55% of those surveyed felt the lack of robust ESG data as the biggest barrier to fully implementing ESG criteria.
Asset managers doubt future of ethical investing as costs rise, by Louise Hill, May 24, 2017, Portfolio Advisor, USA.

New Report Reveals 86% of Americans Expect Companies to Take Action on Social, Environmental Issues. "Most interestingly, the study considers consumer behavior in light of today’s political climate and shows that 67 percent of Americans believe progress on social and environmental issues will slow in the absence of government regulation — and their confidence in organizations to drive change is low. As a result, 43 percent of consumers believe individuals present the greatest potential to solve social and environmental issues, followed by nonprofits (18 percent), government (17 percent) and business (13 percent)."

[COMMENTARY] President Trump needs to tread carefully on social and environmental regulations, or he risks a considerable public and political backlash. This survey by Cone Communications illustrates that the majority of Americans want their government active in social and environmental change.
New Report Reveals 86% of Americans Expect Companies to Take Action on Social, Environmental Issues, by Libby MacCarthy, May 18, 2017, Sustainable Brands, USA.

UK Savers clueless about what their banks do with their money. "Triodos: The sustainable and ethical bank surveyed 2,003 people who have some savings. The research reveals that the transition to a low-carbon economy is the top priority for savers wanting to make a positive difference. Nearly half (47 per cent) said they would like their money to be used to help develop renewable energy, while four out of ten (41 per cent) wanted to support energy efficiency.

Savers also identified social housing (41 per cent), community/society groups (28 per cent), human rights and labour rights (28 per cent), urban regeneration (24 per cent) and sustainable business (23) as areas they would like their money to be invested in... "

[COMMENTARY] Of course the savers were talking about their bank deposits here and how they should be used. At the ethical UK bank, Triodos, they actually publish the details of who they make loans too.
UK Savers clueless about what their banks do with their money, by Marina Gerner, May 12, 2017, Money Observer, UK.

Advisor Interest In SRI Nearly Doubles Since Last Year, Survey Says. "Forty percent of advisors now report that socially responsible investing is important to them and their clients, compared to only 21 percent who said that in 2016."

[COMMENTARY] This is wonderful news. Soon SRI-ethical investing will be quite normal for advisors and investors alike. Perhaps a day might come when nearly all investing is SRI-ethical-ESG compliant!
Advisor Interest In SRI Nearly Doubles Since Last Year, Survey Says, by Karen Demasters, May 11, 2017, FA Magazine, USA.

Fostering Long-Termism in Investing. "Khan, Serafeim, and Yoon (KSY)9: found that portfolios made up of companies with high KLD10 sustainability scores weighted by SASB11 materiality scores outperformed portfolios of companies with low KLD sustainability scores weighted by SASB materiality scores by average annual return gaps ranging from 3.1%/yr. to 8.9%/yr. over 20+year observation periods, depending on the degree of portfolio concentration.12 They observed their results were notably different from the mixed results of previous ESG studies that did not include the materiality dimension."

[COMMENTARY] I've used the above quote as a leader to encourage all my readers to read this extraordinarily insightful piece that strongly argues for long-term, participatory, sustainable, and focused investing!
Fostering Long-Termism in Investing, by Keith Ambachtsheer, May 9, 2017, Benefits & Pensions Monitor, Canada.

6 benefits to companies that issue green bonds. "Last year, almost twice as many green bonds as expected were issued, and in the first quarter of 2017, issuance stood at $21.76 billion, up nearly 42 percent from the same period last year. What's more, a new report by the Organization for Economic Co-operation and Development (OECD) estimated that the green bond market could increase to $4.7 trillion to $5.6 trillion in outstanding bonds by 2035, with annual issuances of $620 billion to $720 billion."

[COMMENTARY] With investors appetite for green bonds rising sharply and outstripping demand, green bond yields often command relatively lower yields. As lower yields frequently mean reduced interest costs to companies it increases the attractiveness for companies to issue them vis a vis regular bonds. It's a win for companies and a win for ethical investors.
6 benefits to companies that issue green bonds, by Rochelle J. March, May 5, 2017, GreenBiz, USA.

10 reasons Wealth Managers are following investor demand to ESG. "But investors are even more attuned to ESG than advisors are, which makes ESG savvy a competitive advantage in today’s managed money world."

[COMMENTARY] The reasons given for advisors to engage in ESG issues with their clients are many had the key ones are covered in this post. Furthermore, surveys and studies back the reasons discussed.
10 reasons Wealth Managers are following investor demand to ESG, by TruValue Labs. May 2, 2017, USA.

Finally – A Meaningful Deciphering of what “ESG Integration” Really Means. "The problem, however, is that 'integrating ESG' has become a meaningless mantra. Firms were using 'integrating ESG' to mean everything from mandatory consideration of the most sophisticated analysis to superficial greenwashing....

Sustainalytics, an independent ESG research firm, [has] developed a typology of how organizations use ESG. Do they use centralized staff or distribute ESG analysis responsibilities to the portfolio teams? Is ESG considered on a portfolio-company-by-portfolio-company basis, or more thematically, for instance looking at potential investments in the water sector? Is ESG research mandated to be considered, or just made available to the investment teams? Do the organizations modify external research or use it as is?"

[COMMENTARY] The Investor Responsibility Research Center Institute (IRRC) commissioned Sustainalytics for this research and Sustainalytics has now shone a light on how ESG criteria are used by asset owners and managers. The results are fascinating and important for all responsible-ethical investors to understand.
Finally – A Meaningful Deciphering of what “ESG Integration” Really Means, by Jon Lukomnik, May 1, 2017, HUFFPOST.

The 2017 100 Best Corporate Citizens. "Compiling the 18th annual list of the 100 Best Corporate Citizens began with our research team documenting 260 data points of disclosure and performance measurements for the entire Russell 1000. The data was gleaned from publicly available information and each company was ranked in seven categories."

[COMMENTARY] This is a great list compiled by people who really know the subject. Hasbro, Inc,; Intel Corp; and Microsoft Corporation are the top three. See the rankings here.
The 2017 100 Best Corporate Citizens, April 21, 2017, CR Magazine, USA.

The Ethics & Trust in Finance Prize -- Formerly Ethics in Finance, Robin Cosgrove Prize. "[The prize] promotes greater awareness among young people throughout the world concerning the benefits of ethics in finance, and encourages high-quality management of banking, insurance and financial services based on trust and integrity.

Launched in 2006 and now in its 6th Edition, the global competition for the Prize for Innovative Ideas for Ethics & Trust in Finance is open to young people, aged 35 years or younger, from throughout the world. The competition invites creative papers, which may be submitted in English or French, setting out analyses or proposals for innovative ways to promote ethics & trust in finance. The Jury allocates the prize money of USD 20,000 among the winners."

[COMMENTARY] I've been promoting this prize almost since it's inception. It's a very worthy endeavour and I encourage those under 35 with an interest in this subject to submit their ideas! The fact that Christine Lagarde, IMF's Managing Director has been involved, demonstrates the importance of what the prize is attempting to do. For entering the competition or information on the prize, go to Ethics & Trust in Finance Prize.

Hermes finds 'clear relationship' between ESG and credit spreads. "Companies with the weakest ESG credentials, as captured in low QESG scores, tended to trade with the widest CDS [credit default spreads] spreads, Hermes found – indicating a higher risk of default."

[COMMENTARY] It makes sense that companies with bad ESG characteristics are poor credit risks. And that's why their financing costs are higher too. As companies understand that good ESG performance means lower financing and human resources' costs with potentially higher prices for their shares, they'll increasingly strive to improve their ESG performance.
Hermes finds 'clear relationship' between ESG and credit spreads, by Susanna Rust, April 19, 2017, Investment & Pensions Europe, UK.

US companies rank miserably low on the UN’s new corporate responsibility rankings. "The SDG Commitment Report 100... is the first-ever analysis to use annual reports as the sole metric to assess corporate commitments to the UN’s 17 sustainable development goals. Analysts argue that the corporate annual report, a legally-required document, is a higher—and better—standard to judge a company’s commitment to sustainability than any voluntary corporate responsibility report.

... Apple is joined at the bottom of the gilded heap by more than a dozen companies who also ignored sustainable development in their annual reports, including Disney, Walmart, and General Electric."

[COMMENTARY] This report is deeply embarrassing for those multi-national corporations priding themselves in their good social and environmental activities. Obviously, the UN wants to shame these corporations to significantly engage in their Sustainable Development Goals.
US companies rank miserably low on the UN’s new corporate responsibility rankings, by Dan Morrison, April 19, 2017, OrbMedia, USA.

ESG increasingly important in global shift towards sustainable economy. "In a bid to better understand the mindset of investors globally, EY recently surveyed, for its 'Is your nonfinancial performance revealing the true value of your business to investors?' report, part of the global investment community, which included 320 participants, of which one-third have more than $10 billion under management."

[COMMENTARY] This EY survey is revealing in showing how far the investment community has come concerning the importance of climate change and sustainability in assessing potential investments. For instance, the concept of stranded assets -- unknown just a few years ago -- has become a major concern to investors.
ESG increasingly important in global shift towards sustainable economy, April 13, 2017, Consultancy.uk, UK.

Green Bonds Awards, Environmental Finance. They cover banks, underwriters, companies, etc.

[COMMENTARY] An interesting list, particularly for those in the investment industry. Provides good insight into the growing importance of the green bond market.
Green Bonds Awards, Environmental Finance, press release, April 13, 2017, Environmental Finance, USA.

Arabesque Combines Big Data and AI to Launch Unique Corporate Transparency Tool. "A new tool that allows investors, regulators, NGOs, corporates, and consumers to monitor the sustainability of over 4,000 of the world’s largest corporations has been launched today. Arabesque S-Ray™ is designed to streamline vast amounts of environmental, social, and governance (ESG) information into one easy-to-use, smart application. Its unbiased diagnostic technology processes countless data points to evaluate companies in three ways...

Arabesque S-Ray™ is the first tool of its kind to score corporate performance on the normative principles of the United Nations Global Compact: Human Rights, Labor Rights, the Environment, and Anti-Corruption."

[COMMENTARY] Another great analytical tool for ethical investors. However, the free version is pretty basic.
Arabesque Combines Big Data and AI to Launch Unique Corporate Transparency Tool, press release, April 11, 2017, Arabesque, UK.

Academic Research Based on RepRisk Data Shows That Negative ESG News Increases Credit Risk. "A new academic study shows that negative news linking a company to environmental, social, or governance (ESG) issues increases credit risk. The study used data from RepRisk, a leading provider of ESG risk analytics and metrics. Researchers at ETH Zurich, MIT Sloan, and the University of Hamburg performed the research which was published by the prestigious peer-reviewed journal 'Strategic Management Journal.'"

[COMMENTARY] These findings aren't surprising. After all, if a company has ESG issues creditors less likely to continue lending to that company as if there are no problems. Anyway, it's good to see these findings as it further incentivizes companies to perform better on ESG issues. And that benefits companies and investors.
Academic Research Based on RepRisk Data Shows That Negative ESG News Increases Credit Risk, press release, April 5, 2017, RepRisk, Switzerland.

2017 Future 40 Responsible Corporate Leaders in Canada ranking. "Shifting the spotlight to medium-sized corporate sustainability leaders across Canada."

[COMMENTARY] An interesting and useful list, particularly for Canadian ethical investors. It includes many public companies.
2017 Future 40 Responsible Corporate Leaders in Canada ranking, April 6, 2017, Corporate Knights, Canada.

This Man Will Purify Your Portfolio. "Portfolios were far from [Michael] Jantzi's ambitions when he landed degrees from Canadian universities in economics and international affairs. He was going to help humanity via a career in the foreign service. But those jobs were scarce. He was partway through the process of getting licensed in securities sales when he had a revelation. If he must sell out to Wall Street, why not feed its less avaricious appetites? He would do research on ethical investing."

[COMMENTARY] This is a terrific overview of the career to-date of Michael Jantzi, one of the world's true pioneers in ethical investing and presently CEO of Sustainalytics, a global leader in ESG ratings.

Under Mr. Jantzi's direction, Sustainalytics has recently made a great breakthrough in bringing their individual ESG company ratings directly to the investor through Scotia iTRADE, the large Canadian discount broker. It's likely only a matter of time before many more brokers offer this service and the retail public finally has direct inexpensive access to quality individual company ESG ratings and research.
This Man Will Purify Your Portfolio, by William Baldwin, April 3, 2017, Forbes, USA.

Sustainable strategies on growth track in U.S. "Assets under management in U.S. mutual funds and exchange-traded funds using an environmental, social and governance-only approach reached $200 billion at the end of February, up 5.8% from Dec. 31 and up 17% from year-end 2015, Morningstar Inc. data show. The data do not include institutional separate accounts or ESG assets managed internally by U.S. pension plans."

[COMMENTARY] Good overview by Mr. Diamond of US funds utilizing ESG criteria. Also, it's great to see Morningstar collecting and publishing fund/ESG data since they have a such a terrific database to mine for it. Their benchmarking will be particularly useful.
Sustainable strategies on growth track in U.S, by Randy Diamond, April 3, 20-17, Pensions&Investments, USA. (Subscription required.)

President Trump & Congress get a letter: One thousand companies and investors have signed the Business Backs Low-Carbon USA statement. "We want the US economy to be energy efficient and powered by low-carbon energy. Cost-effective and innovative solutions can help us achieve these objectives. Failure to build a low-carbon economy puts American prosperity at risk. But the right action now will create jobs and boost US competitiveness. We pledge to do our part, in our own operations and beyond, to realize the Paris Agreement’s commitment of a global economy that limits global temperature rise to well below 2 degrees Celsius."

[COMMENTARY] Clearly, a good number of American companies support a low-carbon economy. Despite President Trump's present anti-climate rhetoric, a broad-based business case for low-carbon initiatives might eventually reduce the President's antipathy towards it.
Business Backs Low-Carbon USA, press release, March 2017.

More Catholic capital flows toward impact investing. "Pope Francis may be only the world’s third-greatest leader (behind Theo Epstein and Jack Ma, according to Fortune), but his 2014 endorsement of impact investing was still a big deal. Last year, the Vatican doubled down at a second conference to explore how the church and faith-based institutions can 'harness the power of impact capital to attain and sustain their social mission.'"

[COMMENTARY] Religious leaders of almost all faiths are increasingly promoting the importance of private capital in assisting in their faith's social, economic, and environmental goals. This account of Catholics' increasing impact investing investments demonstrates what is happening today.
More Catholic capital flows toward impact investing, by Marina Leytes, Impactalpha, USA.

Clearing the Deck For ESG Integration. "Advisors are rapidly running out of excuses to avoid, environmental, social and governance investing (ESG)... A recent survey by State Street, voluminously titled The Investing Enlightenment: How Principle and Pragmatism Can Create Sustainable Value through ESG, casts light on the increasing client demand of ESG investments and financial viability of integrating ESG factors into active investment strategies.

It questioned almost 600 institutional investors and 750 individual investors about incorporating ESG factors into investing and business decisions. In doing so, it also identified a single major sticking point preventing widespread acceptance of ESG analytics — 'a lack of transparent, standardized and quality data.'"

[COMMENTARY] This article is a great, brief read on the results of an important and extensive study by Robert Eccles (Chairman, Arabesque Partners) and Mirtha Kastrapeli (Head of Sustainable Investment Research, State Street). There are some surprising statistics in their study for the responsible-ethical investment industry to digest!
Clearing the Deck For ESG Integration, by David H. Lenok, March 27, 2017, Wealth Management, USA.

Global RI assets surpass US$22.89 trillion, a 25% increase from 2014. "The largest responsible investment strategy globally is negative/exclusionary screening (US$15.02 trillion), followed by ESG integration (US$10.37 trillion) and corporate engagement/shareholder action (US$8.37 trillion). Negative screening is the largest strategy in Europe, while ESG integration leads in the United States, Canada, Australia/New Zealand and Asia ex Japan.

Japan’s primary RI strategy is corporate engagement and shareholder action. The fastest growing strategy, although also the smallest in absolute dollar terms, was impact/community investing."

[COMMENTARY] The continuing rapid growth of RI assets is great news. It's interesting to see that globally negative/exclusionary screening comprises 65.62% of these assets! I suspect that ESG integration and engagement/shareholder actions will rise as a proportion of RI assets in the years ahead.
Global RI assets surpass US$22.89 trillion, a 25% increase from 2014, press release, March 27, 2017, The Global Sustainable Investment Alliance.

ESG-oriented millennials may have too-high hopes. "Citing the 2016 Schroders Global Investors Survey, Waterman told attendees at the ALFI European Asset Management Conference that investors aged 35 and under expected an average of 10.2% per year in returns, compared to a global stock market performance of 3.75% at the time of the survey...

Waterman noted a general trend toward 'short-termism' as investors planned to hold their investments for an average of just 3.2 years. Among all respondents, just 18% said they would hold their investment for more than five years. Zero in on millennials, and the statistic shrinks to just 8%, while 41% said they would invest for under a year."

[COMMENTARY] Despite all the good things being said about millennials interest in ESG-focused investing, their expectations on investment returns and holding periods are troubling.
ESG-oriented millennials may have too-high hopes, by Leo Almazora, March 24, 2017, Wealth Professional, Canada.

Think tank questions PRI signatories' ESG capacity. "Dedicated ESG specialists are rare at institutions signed up to the Principles for Responsible Investment (PRI), in particular at asset owners, according to analysis carried out by climate and energy think tank E3G... E3G said this meant that over 500 PRI signatories directly employed one or no ESG staff. There are more than 1,700 signatories to the PRI."

[COMMENTARY] Many people, myself included, wonder how many of the PRI dignitaries take ESG seriously and how much is for PR purposes. Now E3G has provided some insight into that. It's clear that a large number of those institutions who signed the PRI aren't too serious about implementing ESG.
Think tank questions PRI signatories' ESG capacity, by Susanna Rust, March 21, 2017, IPE, UK.

ESG factors can indicate overall stock risk, says AQR. "In AQR Capital Management’s new paper – 'Assessing Risk through Environmental, Social and Governance Exposures' – the firm said it found a strong positive relationship between companies’ ESG exposures and the statistical risk of their equity."

[COMMENTARY] In surveys where investment managers are asked about why they use ESG criteria, they frequently say to manage future risk. Now, AQR provides confirmation of that belief. With research appearing almost daily supporting the application of ESG in investment decisions, it seems that investors everywhere should be applying it. (To read the actual study, click here.)
ESG factors can indicate overall stock risk, says AQR, by Rachel Fixsen, March 20, 2017, IPE, UK.

Webinar--Mission-Aligned Investing: What New Positive Deviance Research Can Tell Us About What Moves Institutional Investors to Action. "Presenter Abigail Abrash Walton, Ph.D, will share: Research findings related to mission-aligned investing, leadership, and the decision-making process to divest from fossil fuels by philanthropic organizations with assets under management from $5 million to $1 billion; what factors supported decision makers in moving to mission-aligned investing while simultaneously exercising their fiduciary duty to steward institutional assets; how the divestment decision affected the decision makers personally and their organizations."

[COMMENTARY] The information presented in this webinar -- now online to view anytime -- is useful information for anyone interested in mission-aligned investing.
Webinar: Mission-Aligned Investing: What New Positive Deviance Research Can Tell Us About What Moves Institutional Investors to Action, March 2017, Intentional Endowments Network, USA.

Are Sustainable Funds More Expensive? "Funds with an ESG mandate tend to be a bit more expensive than other funds, but the differences are not large. There are reasonable explanations for this pattern. Most ESG funds are not very large, so they are not able to benefit from the economies of scale found in funds with huge asset bases; as ESG funds gather more assets, more of them should be able to lower costs for shareholders.

Also, funds with an ESG or impact mandate usually have extra costs for shareholder advocacy and similar activities that aim to move companies in a positive direction... There are plenty of cheap ESG options for investors who seek them out, including a growing number of sustainable index funds and exchange-traded funds."

[COMMENTARY] There's been little in-depth objective analysis comparing the costs of buying and holding ESG funds versus those of conventional funds. Morningstar has done a great service here in delving into them. This is an important article for all investors to review.
Are Sustainable Funds More Expensive? By David Kathman, March 17, 2017, Morningstar, USA.

‘Climate is King’ Says BlackRock; Companies Must Now Address Risk. "The world’s largest asset manager is stepping up pressure on companies to address how climate risk will affect its portfolios. In a recent post on its website, BlackRock said it believes climate risk is a “systemic issue” and that corporations should be compelled to develop disclosure standards."

[COMMENTARY] Such remarks from the world's largest asset manager are bound to influence corporate climate change policies globally. Furthermore, Blackrock is backing-up its remarks with actions as it seeks to discuss these issues with the companies it invests in.
‘Climate is King’ Says BlackRock; Companies Must Now Address Risk, by Jan Lee, March 16, 2017, TriplePundit, USA.

ESG growing in importance, ERM survey reveals. "Over 95% of investors believe their company portfolios contain untapped environmental, social and corporate governance (ESG) opportunities, according to a recent survey by London-headquartered global environmental consultancy ERM." 

[COMMENTARY] The article reviews the results of a survey that show extraordinarily positive views among private equity managers regarding the importance of integrating ESG in investment decisions.
ESG growing in importance, ERM survey reveals, March 15, 2017, Environmental-Analyst, UK.

Ethisphere Announces 124 Companies to Make the 2017 World’s Most Ethical Companies List. "Ethisphere’s notion that the financial value and ethics are inexorably tied together has been explained through an analysis of how the stock price of publicly-traded 2017 honorees compare to the S&P 500 over the last two years. The analysis demonstrates a 6.4% premium Ethisphere refers to as an ‘ethics premium.’"

[COMMENTARY] I like Ethisphere's work. Their list is always worth a review.
Ethisphere Announces 124 Companies to Make the 2017 World’s Most Ethical Companies List, press release, March 13, 2017, Ethisphere, USA.

Why and How Investors Use ESG Information: Evidence from a Global Survey. "Survey data from more than 400 senior investment professionals provides insights into why and how investors use environmental, social, and governance (ESG) information as well as the challenges in using this information. This study also documents what investors believe will be important ESG styles in the future...

The primary reason survey respondents consider ESG information in investment decisions is because they consider it financially material to investment performance. ESG information is perceived to provide information primarily about risk rather than a company’s competitive positioning."

[COMMENTARY] A study concerning ESG co-authored by Harvard's George Serafeim is always an important read. The co-author Amir Amel-Zadeh of Oxford University's Saïd Business School has impressive credentials as well.
Why and How Investors Use ESG Information: Evidence from a Global Survey, by Amir Amel-Zadeh and George Serafeim, March 13, 2017, Harvard Business School Working Knowledge, USA.

The World’s Leading Companies on Human Rights. "One clear leader, as mentioned throughout the study, was Marks and Spencer (M&S). The U.K. retail giant...  Ranking slightly behind M&S were H&M and Adidas."

[COMMENTARY] This article details important research for everyone particularly interested in the 'S' of ESG in many of the world's largest companies. The study cited in the article was compiled by Aviva Investors, the Human Rights Resource Center (BHRRC), and various non-profits and European governments.
The World’s Leading Companies on Human Rights, by Leon Kaye, March 13, 2017, TriplePundit, USA.

How 'Responsible' Are Europe's Mega-Managers Investing $22.4 Trillion? "Research conducted by ShareAction, a non-profit group in the U.K. that campaigns for responsible investment, ranks the 40 mega-managers who, between them, invest over €21 trillion ($22.4 trillion) ... The top five performers (scoring out of a possible 90 points) are: Schroder Investment Management (82), Robeco Group (81), Aviva Investors (80), Amundi (77.5), and Standard Life Investments (76.5).

[COMMENTARY] It's informative for all of us in the ethical investment world to see how managers are ranked using criteria related to responsible investment. Now, where are similar rankings for North American or Asian managers?
How 'Responsible' Are Europe's Mega-Managers Investing $22.4 Trillion? By Dina Medland, March 12, 2017, Forbes, USA.

Is the finance sector really equipped to assess climate risks? "10 years after the sub-prime mortgage crisis that triggered a global financial crash, analysts are still largely ignoring long-term financial risks, such as those from climate change, the energy transition and disruptive low carbon technologies...

Although most asset owners analyzed in the report, such as pension funds and insurers, have long-term liabilities of 20 years or more, those managing these assets are far more short-term in their thinking, turning over these portfolios every 21 months on average."

[COMMENTARY] As many of you will agree, a short-term focus concerning portfolio performance may not be compatible with long-term liability management. Although the financial community is starting to embrace ESG, ESG is mostly about long-term performance and so requires a different mindset.
Is the finance sector really equipped to assess climate risks? By Michael Holder, March 9, 2017, GreenBiz, USA.

Responsible Investing Growing in Importance Driven by Ethical Principals, Institutional Investor Demands, and Business Opportunities, Says New Survey from CAIA and Adveq. "More than three quarters (77%) of respondents to the survey agree Responsible Investing1 is more important than it was three years ago, while 78 percent anticipate it will be more important three years from now. Adoption of industry standards (71%), pressure from institutional investors (67%), and positive investment return outcomes (64%) will be the largest drivers of greater adoption of Responsible Investing and ESG approaches, according to survey respondents."

[COMMENTARY] Again, we see more good news regarding the adoption of ESG in the investment industry. However, mentioned in this survey by 69% of respondents, was again the need for "standardized comparable data." When this is finally available ESG will finally take its place at the helm of investment analysis.
Responsible Investing Growing in Importance Driven by Ethical Principals, Institutional Investor Demands, and Business Opportunities, Says New Survey from CAIA and Adveq, press release, March 9, 2017, The CAIA Association and Adveq, USA.

Dalbar: Active Investors Do Better Long-Term; Passive Investors Do Better Short-Term. "The study concludes that the choice of active or passive investing should be based largely on the needs and preferences of the investor and the cost of providing asset allocation and capital preservation strategies that are not available in passive fund."

[COMMENTARY] The predominant trend in recent years has favored passive funds. In fact, active management has been widely ridiculed even by the likes of Warren Buffet. Now comes Dalbar, a highly distinguished research authority on these matters, adding fuel to the debate of active versus passive investing.
Dalbar Announces Active versus Passive Analysis, press release, February 27, 2017, Dalbar, USA.

Socially Responsible Funds Underperform. (Is this true?) "In a new paper that will appear in the April 2017 issue of the Journal of Banking and Finance, a top scholarly journal, the authors study over 2,000 funds. They argue that prior studies on SRI or CSR funds are flawed because those studies simply categorized funds as being either socially-responsible or conventional. This categorization leads to too many other differences between funds, and it ignores the fact that firms can have varying degrees of social responsibility.

So, in the new study, they compare low-CSR funds to high-CSR funds. They find that high-CSR funds underperform relative to low-CSR funds. Their evidence is both compelling and robust."

[COMMENTARY] We'll have to wait til the study is out to truly critique it. Initially, my reaction is how the term 'CSR' is defined. Are the researchers only concerned with social issues? Even with that, how is it defined? Do the researchers include environmental and governance factors? One thing is for sure, it'll likely be quite controversial!
Socially Responsible Funds Underperform, by Kenneth A Kim, February 28, 2017, FA Magazine, USA.

The Evolution of Corporate Social Responsibility Assurance – A Longitudinal South African Study. "Although the extent to which companies have provided independent assurance over their CSR disclosures has steadily grown, the study also revealed that the majority still did not. Although the pool of CSR assurance providers has widened to become more inclusive, contrary to the expectation that the dominance of the Big 4 audit firms would gradually be eroded, the study found that the Big 4 audit firms were actually consolidating their position in this area."

[COMMENTARY] I've long held that CSR disclosures should be independently audited -- as per financial statements -- and the results available to all stakeholders. Though the above study was South African based, it provides some insight into the possible state of CSR auditing today. Hopefully, similar studies will be done, particularly in the USA, Europe, and Japan.
The Evolution of Corporate Social Responsibility Assurance – A Longitudinal South African Study, by Barry Ackers, February 25, 2017, Social and Environmental Accountability Journal, UK.

The race is on for socially responsible investing in Japan. "The Japanese market is finally moving towards an ESG environment, similar to the mature markets of the US and Europe."

[COMMENTARY] This is good news for ethical investors globally. Historically, Japanese companies have been reticent to disclose much ESG information. This is now changing with Japan's new corporate stewardship code and especially Japanese institutional investors such as their huge Government Pension Investment Fund demanding ESG data.
The race is on for socially responsible investing in Japan, by Seiji Kawazoe, February 20, 2017, FT Advisor, UK.

How to solve the imbalance in ESG investing. "Investors are actively demanding more information about different components of environmental, social and governance investments. As evidence of this, S&P Dow Jones Indices, one of the world’s largest index providers and a division of S&P Global, acquired Trucost Plc, a carbon and environmental data provider, in October.

During a GreenBiz 17 program Wednesday, Dmitri Sedov, vice president of innovation and digital strategy at S&P Global, said the acquisition of Trucost will help solve a gap between the demand for sustainable investing and the supply of these investments."

[COMMENTARY] We see many of the pioneer organizations associated with ethical-ESG investing being acquired by mainstream investment industry behemoths. In time, we will see if these hookups truly benefit investors. Superficially, this deal appears promising for ethical-ESG investors.
How to solve the imbalance in ESG investing, by Keith Larsen, February 16, 2017, GreenBiz, USA.

Global financiers launch green investment criteria. "Nearly 20 global banks and investors have launched a set of criteria for investments to be considered sustainable. The group, which includes Société Générale and Hermes Investment Management and totals around $6.6 trillion (£5.28tn) in assets, outlined the Principles for Positive Impact Finance (PPIF)."

[COMMENTARY] Such developments are welcome news. Developments like this make sustainable investing -- in this instance particularly for institutions  -- a little bit easier.
Global financiers launch green investment criteria, by Jonny Bairstow, February 16, 2017, Energy Live News, UK.

Nearly a Third of Non-Profit Institutional Investors Say They Make "Mission-Related" Investments, According to Cambridge Associates Survey. "In a survey of 159 non-profit institutional investors around the globe, 31% say they're currently engaged in mission-related investing -- making investments designed to align with or advance institutional goals or values as well as provide financial returns. Of that group, 44% say they have increased their mission-related allocation over recent years, and 62% expect to grow their mission-related allocation in the coming five years. None of the institutions that currently make mission-related investments expect to decrease their allocations."

[COMMENTARY] We see continuing good news that non-profit institutional investors are increasingly aligning their investments with their missions. It always surprised me how a charity invested in companies that produced products or services abhorrent to its mission. Often it was blamed on the fund manager’s fiduciary responsibility. However, it was often due to the timidity of the charity in properly instructing their fund managers in what they expected from them.  See my editorial: Unethical Investing by Charities.
Nearly a Third of Non-Profit Institutional Investors Say They Make "Mission-Related" Investments, According to Cambridge Associates Survey, press release, February 15, 2017, USA.

Ethical investment demand outstrips adviser interest. "[UK] Fnancial advisers may be seriously underestimating demand for responsible investment, after research showed wide discrepancies between adviser and consumer attitudes to investing ethically."

[COMMENTARY] This is a problem everywhere and explains why the percentage of ethical retail fund assets is only 2-4% of all retail funds. It's an issue I've written about numerous times over the years. This FT article should be broadcast by all professional brokerage and financial planning organizations.
UK Ethical investment demand outstrips adviser interest. by James Fernyhough, February 6, 2017, FT Advisor, UK.

Canadian RI Assets Surpass $1.5 Trillion, up 49% in two years: Canadian RI Trends Report. "The 2016 Canadian Responsible Investment Trends Report reveals that Canada’s responsible investment (RI) market is continuing to experience rapid growth. Responsible investment refers to the incorporation of environmental, social, and corporate governance (ESG) factors into the selection and management of investments. This report provides a detailed overview of recent trends in Canada’s responsible investment marketplace."

[COMMENTARY] These are terrific results! I'm particularly impressed with the growth of 91% growth of assets among individual investors.
Canadian RI Assets Surpass $1.5 Trillion, up 49% in two years: Canadian RI Trends Report, press release, February 2, 2017, RIA Canada, Canada.

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