EU considering sustainable investing as
fiduciary duty for investors. "The
European Union’s executive has decided to start work
on an impact assessment to assess whether and how
such a clarification could contribute to a more
efficient allocation of capital, and to sustainable
and inclusive growth."
Various advisory groups to the EU are deeply
concerned about the short-term focus of fund
managers at the expense of long-term issues that are
largely ESG related. It's likely the EU will
formally clarify its policy and incorporate the
importance of ESG measures in its guidelines.
That'll be good news for all investors.
EU considering sustainable investing as fiduciary
duty for investors, Susanna Rust, November 13,
2017, IPE, UK.
Advisors Failing To Talk ESG With
Clients. "According to a recent study
by Allianz Global Investors, only 14 percent of
1,061 investors with at least $100,000 in investable
assets who were surveyed had had a conversation with
their advisors about ESG investing, and 61 percent
of the clients had to bring up the subject
Is it that advisors don't keep up-to-date about
investment performance -- so can plead ignorance
about the generally comparable and good results of
ESG investing -- or are they purposefully
withholding important information from their
clients? And, if so, why? I suspect it has mostly to
do with not creating more work for themselves and
present fees/commission arrangements. Tell me if I'm
wrong. Anyway, they're not fulfilling what should be
their number one mandate to know and do their best
for their clients!
Advisors Failing To Talk ESG With Clients, by
Karen Demasters, November 8, 2017, Financial
Just released: new surveys related to ESG
It's clear that the mainstream investment industry
is adopting ESG criteria as important to investment
analysis and attracting millennials to investing.
However, I remain skeptical about much of the
surveys' findings due to the definition of ESG and
what people say and do being two quite different
things. Also, some surveys seem to contradict each
other in their results.
The following surveys have just been released
on the subject.
Responsible Investing: the Evolution of Ownership,
October 30, 2017, RBC Global Asset Management (GAM),
Money Meets Morals Study, press release, October
30, 2017, Harris Poll for Swell Investing, USA.
Responsible Investing & the Persistent Myth of
Investor Sacrifice, October 31, 2017, Hermes
Investment Management, UK.
New Equity Perspectives – Emerging markets, ESG and
the active/passive debate, October 30, 2017,
Over one third of [UK] charities do not have an
ethical investment policy, survey finds, October
30, 2017, Gabriel Research and Management, UK.
Commentary: What’s behind asset owners’ slow
adoption of responsible investment, October 30,
2017, Pensions & Investments, UK.
McKinsey: ESG No Longer Niche as Assets
Soar Globally. "More than a quarter of
the $88 trillion assets under management globally
are now invested according to environmental, social
and governance principles known as ESG, a McKinsey &
Co. study found."
McKinsey doesn't seem to be referring to original
work as the figures they're quoting appear largely
from published works such as the 2016 Global
Sustainable Investment Review. Perhaps they should
state their sources. Anyhow, it's terrific they're
engaged in promoting ESG!
McKinsey: ESG No Longer Niche as Assets Soar
Globally, by Amy Whyte, October 27, 2017,
Institutional Investor, USA.
Companies That Lead on Societal Impact
Reap Financial Benefits. "Companies
that outperform in industry-relevant environmental,
social, and governance (ESG) areas boast higher
valuation multiples and margins, all other factors
being equal, than those with weaker performance in
those areas, according to a new report by The Boston
Consulting Group (BCG)."
BCG's research shows that companies excelling in ESG
outperform others in their respective industries in
profit margins and stock prices, all else being
equal! What more confirmation do companies need to
optimally perform on ESG criteria? Likewise,
investors who’ve been ignoring the importance of ESG
should rethink their stance.
Companies That Lead on Societal Impact Reap
Financial Benefits, press release, October 25,
2017, Boston Consulting Group, USA.
Climate risk exposure falls as companies
boost green action. "Almost a quarter
(23%) of companies have targets to move away from
fossil fuels in energy consumption, while almost all
(98%) have designated climate risk as a board or
senior-management responsibility. The Carbon
Disclosure Project's (CDP) annual analysis for 2017
further found another one in seven have agreed to
set science-based targets to reduce emissions, while
a separate three in ten plan to do so within two
Despite the views of the Trump administration, it's
apparent that numerous American businesses increasingly view climate change as
Climate risk exposure falls as companies boost green
action, by James Phillips, October 24, 2017,
Professional Pensions, UK.
Three-quarters of companies don't
acknowledge climate risks. "That is the
stark conclusion of a new report from consultancy
giant KPMG, which reveals that 72 percent of large
and mid-cap companies worldwide do not acknowledge
the financial risks of climate change in their
annual financial reports."
One reason for this is that companies don't yet see
the investor/analyst/regulatory demands for it.
Also, companies don't want to add to their potential
liabilities by acknowledging possible associated
costs that could hurt long-term profits, stock
prices, and executive compensation from stock
Three-quarters of companies don't acknowledge
climate risks, by James Murray, October 19,
2017, GreenBiz, USA.
Seniors 65 and Older Are More Interested
in ESG Strategies Than Younger Generations, Finds
AllianzGI ESG Clarity Survey.
"AllianzGI found that 68% respondents in the 65+ age
demographic had a favorable view of ESG investing
compared to only 59% of those 25-44. In addition,
65% of seniors called it a sound investment strategy
compared to only 54% of those 25-44.
Seniors are also incredibly engaged in
practicing personal ESG in their daily lives with
81% of those 65+ engaging actively in the issues
they care about by staying up to date, deciding
which products to buy and contributing their time
and money to causes important to them. This compares
with only 66% of investors aged 25-44 who practice
It's heartwarming to see this data. I'm concerned
about a lot of these surveys though. Who doesn't
want to respond positively when asked, "Do you
invest in 'responsible' companies?" Most people
would be afraid of saying 'no' to the interviewer.
It'll be interesting to get feedback from the
pollsters on this. Of course, what people say and do
are very different things.
Seniors 65 and Older Are More Interested in ESG
Strategies Than Younger Generations, Finds AllianzGI
ESG Clarity Survey, press release, October 17,
2017, Allianz Global Investors, USA.
ESG analysis grows in all regions for CFA
Institute members; EMEA takes biggest leap.
"Although environmental, social and governance
consideration was up for all regions from the CFA
Institute's 2015 survey, Europe, the Middle East and
Africa replaced Asia-Pacific as the region where
investors are most likely to take ESG issues into
account at 85%, up from 74% in 2015. Meanwhile, some
81% and 68% of investors in the Asia-Pacific and
Americas, respectively, said they take ESG factors
into account, up from 78% and 59% in 2015."
The CFA is a highly reputable organization. However,
the percentages of investors saying they're taking
ESG into account look overblown to me. ESG analysis
is no doubt gaining in credibility but if these
responses are to be believed it would be dominant in
financial analysis today. Yet, it doesn't seem to be
the situation from any objective analysis of the
ESG analysis grows in all regions for CFA Institute
members; EMEA takes biggest leap, by Meaghan
Kilroy, October 18, 2017, Pensions & Investments,
PRI threatens to strip members of
signatory status in 'greenwashing' purge.
"The PRI argued that many of the 200 or so asset
managers and schemes that have signed up to the
United Nations-backed principles on tackling
environmental, social and governance (ESG) issues
pay little more than lip service to them. Now they
will be faced with a new set of standards to prove
they are making active efforts to effect change, or
they risk being removed from the PRI's official list
The UN Principles for Responsible Investment (PRI)
have been talking about doing this for some time.
I'm delighted to see it happening.
PRI threatens to strip members of signatory status
in 'greenwashing' purge, by James Phillips,
October 16, 2017, Professional Pensions, UK.
'True Bearing' Financial Planners Unveil
Consumer Attitudes Towards Sustainable Investment.
"With 32.9% wanting to invest in ESG/sustainable
investments, why do actual investments total only
3%? Using the survey results, the 3% of total UK
assets managed should increase many times over.
These figures suggest that IFA's are missing out on
a large market share, of those keen to take up ESG
This is something I've been talking and writing
about for decades! Most financial advisors and
planners -- so many different nomenclatures -- are
reluctant (or not required) to spend the time to
really know their clients. They make a mockery
of what should be their 'know thy client' mandate.
Also, the time to gain knowledge concerning
ethical/ESG investments, commission arrangements,
and other impediments, thus lead numerous advisors
to offer inappropriate advice to their clients.
'True Bearing' Financial Planners Unveil Consumer
Attitudes Towards Sustainable Investment, press
release, October 11, 2017, True Bearing Chartered
Financial Planners, UK.
Investors fear ESG investment will hurt
returns. "Almost half of big European
investors fear they will lose out on returns if they
invest sustainably, despite the majority believing
environmental, social and governance issues will
become increasingly important over the next five
Schroders definitely sees the future in ESG investing
and is taking it seriously. The research they're
compiling -- and its results -- is spurring
increasing attention throughout the investment
industry. Investment industry professionals should
note the results of the study below that just won
this year's Moskowitz Prize!
Investors fear ESG investment will hurt returns,
by Attracta Mooney, October 11, 2017, Financial
Announcing the 2017 Moskowitz Prize
Winner for Sustainable and Responsible Investing.
"This year, the Moskowitz Prize acknowledged the
superior quality of the paper Corporate Governance
and the Rise of Integrating Corporate Social
Responsibility (CSR) Criteria in Executive
Compensation: Effectiveness and Implications for
Firm Outcomes released in September 2017. The study
examined the integration of CSR contracting – that
is the linking of executive compensation to social
and environmental performance – and how it affects
'This study provides practitioners of
sustainable, responsible and impact (SRI) investing
with data that shows how companies that do good also
perform well,' said Steve Schueth, producer of The
SRI Conference and president of First Affirmative
Financial Network. 'The authors' findings add to the
mounting evidence that investing in companies that
integrate sustainability best practices into their
operations does not hinder financial performance,
but can improve it – especially for their long-term
I've given a lot of space to this study because it's
important for many reasons. Firstly, the Moskowitz
Prize offered by the Center for Responsible Business
at the Haas School of Business, University of
California, Berkeley, has become THE prize for
SRI/CSR researchers globally. Secondly, the winner
of this year's prize uniquely demonstrates the
advantages of CSR for company executives and
Announcing the 2017 Moskowitz Prize Winner for
Sustainable and Responsible Investing, press
release, October 10, 2017, SRI Conference and The
Center for Responsible Business at the Haas School
of Business, UC Berkeley, USA.
UK Good Money Week October 8-13, 2017.
"Letting people know they have sustainable and
ethical options when it comes to their banks,
pensions, savings and investments so we can protect
the environment and support society when we deposit
and grow our money."
The UK also has its yearly ethical-responsible
money/investing week too. Again, I encourage all UK
investors and investment professionals to take this
opportunity to help grow UK ethical-responsible
finance and investment. These 'weeks' garner greatly
increased media attention to these endeavors as
Good Money Week October 8-13, 2017, Good Money
Responsible Investment Week Canada Events
October 23-27, 2017. "The Responsible
Investment Association (RIA) is coordinating a week
of events across Canada to promote learning about
environmental, social, and corporate governance
(ESG) issues that affect investments."
I encourage Canadian investors and investment
professionals to take part in these events! It's a
terrific opportunity to encourage the adoption of
ethical, sustainable, responsible investing. For a
listing of events see
Responsible Investment Week, Make Money, Responsibly,
Major asset managers moving slowly but
surely toward impact investing. "Nine
out of the top 10 largest U.S. asset managers are
now active in impact investing, according to new
Tideline analysis. All but Vanguard, the second
largest US asset manager, have stood up or are
actively testing impact investing strategies."
impact investing continues to grow, largely due to
the demands of high net worth investors says this
survey. Also, this survey found that institutional
investors are laggards in this area.
Major asset managers moving slowly but surely toward
impact investing, by ImpactAlpha/Kim
Wright-Violich, October 3, 2017, Tideline &
100 Women: Do women on boards increase
company profits? "More sophisticated
pieces of analysis carried out by academics have
shown very small positive correlations between
female board members and financial success. But this
is an average - in some companies the relationship
was neutral and in some it was negative. And proving
causation is far harder."
Ethical investors are convinced that having women on
boards improve corporate financial performance.
Studies support that thesis. However, this article
cites some research contradicting that finding. So,
who's right? As in most social science research,
results can differ greatly between studies.
Women: Do women on boards increase company profits?
October 2, 2017, BBC News, UK.
Research preoccupied with short-term
financial metrics. "Excluding
environmental, social and governance issues leads to
misallocation of capital... A global survey of 342
financial analysts by Aviva Investors found that 42
per cent of respondents thought research published
by banks and brokers was preoccupied with short-term
Interesting, aren't these the analysts that publish
the research? Yet, they're the ones criticising
themselves of a short-term preoccupation and
avoidance of ESG measures they know are important
for understanding the long-term financial prospects
of companies! At least they know their issues.
Perhaps it's their managers that need to get with it!
Research preoccupied with short-term financial
metrics, by Chris Flood, October 1, 2017,
Financial Times, UK.
Candriam: ESG analysis deems 49 countries
'non-investable.' "China, Russia and
Turkey are among 49 countries that are
'non-investable', according to an analysis of their
potential for long-term sustainable development by
Candriam. Of the 35 advanced economies analysed –
based on the definition used by the International
Monetary Fund – only Greece came out as
non-investable. Out of the 88 emerging economies, 48
were classified as non-investable."
Candriam have completed a fascinating analysis of
investible countries based on ESG criteria. What is
especially interesting is that this analysis applies
to both equity and bond investing.
Candriam: ESG analysis deems 49 countries
'non-investable, by Susanna Rust, September 29,
2017, IPE, UK.
The global rise of sustainable investing
-- Schroders. "To accurately gauge the
latest attitudes, we surveyed more than 22,000
people from 30 countries who invest. We asked them
about their knowledge, views and actions when it
comes to sustainable investing."
Schroders survey of global sustainable investing
provides some useful insights for all investors,
particularly supportive for ethical investors.
However, the self-reporting of those surveyed saying
that most of them are already investing in
sustainable ways is questionable. As we know, what
people say and actually do aren't always the same!
Nonetheless, it does show that sustainable investing
is increasingly important to investors.
The global rise of sustainable investing --
Schroders, September 27, 2017, Schroders, UK.
China’s sustainable firms are starting to
outperform. "Chinese companies that
disclose their environmental, social and governance
measures are outperforming on the stock market, data
There's been little evidence to date of Chinese
corporate ESG stock performance. This new data is probably
the first to indicate that possibility. Companies ESG
outperformance and correlated stock outperformance
appear to be a worldwide phenomenon. Most ethical
investors have probably avoided China so far, but
data like this could change that.
China’s sustainable firms are starting to
outperform, by Karen Yeung, September 27, 2017,
South China Morning Post, China.
[UK] Consultants pressure pension funds
over ethical investment. "Twelve large
investment consultants have joined forces to
increase pressure on pension funds that are not
taking environmental, social and governance (ESG)
factors into account when making investment
The group of consultants, which includes the
big three of Willis Towers Watson, Mercer and Aon
Hewitt, advise on close to £1.6tn of pension and
insurance assets in the UK alone and have huge
influence over the investment decisions of asset
This is great news. However, they're taking this
action because the UK government's pension regulator
says, according to the FT, that, "savers face
long-term financial risks because trustees are
failing to take climate change, responsible business
practices and corporate governance into account when
[UK] Consultants pressure pension funds over ethical
investment. by Aliya Ram, September 23, 2017,
Financial Times, UK.
Canadian Money Saver publishes an
article, "Do-It-Yourself Ethical Investing
Pays," by Ron Robins. "Though DIY
sustainable-ethical investing requires some work it
can pay handsomely. The process is engaging and fun
too. But the skills to do it effectively can be more
quickly acquired with coaching from those
experienced in this work."
I wrote this article -- and offer
tutorials on this subject too -- for individual
investors who want to have ownership and save on
fees in creating and managing a stock portfolio that
reflects their personal values.
Canadian Money Saver publishes an article,
"Do-It-Yourself Ethical Investing Pays," by Ron
Robins, September 2017, Canada.
Catching The Wave: The Spread of ESG in
Institutional Investment Portfolios.
"More than a quarter of North American institutions
use environmental, social and governance (ESG)
standards in their investment portfolios, and
approximately 60% of institutions that have not yet
incorporated ESG into their portfolios say they are
open to doing so in the future."
Their study provides some further insights into the
spread and utilization of ESG among institutional
Catching The Wave: The Spread of ESG in
Institutional Investment Portfolios, press
release, September 19, 2017, Greenwich Associates,
LEGO Group Leads Global Ranking of Best
CSR Reputation. "Reputation Institute
has released the main findings of its 201 7 Global
CSR RepTrak® 100 report, including the list of the
companies considered as the most responsible
worldwide. The report is based on over 170,000
ratings from interviews with the public in the 15
largest economies (United Kingdom, Spain, Italy,
Germany, France, Russia, Brazil, Mexico, USA,
Canada, Japan, China, India, Australia and South
Their top five are LEGO, Microsoft, Google, Walt
Disney, and BMW. Full results
Reputation Institute, September 12, 2017,
Ceres launches water use scorecards on
affected companies. "For food
companies, water management is a business imperative
like never before. And as risks of water scarcity
and pollution steadily increase, corporate leaders
must evaluate the most effective ways to water-proof
Ceres has created an impressive scorecard on how
food companies, in particular, use and manage their
Feeding ourselves thirsty, September 2017,
Big investors take aim at banks over
climate change risk. "A coalition of
institutional investors managing more than $1tn in
assets is demanding that 60 of the world’s largest
banks take action to protect the world from the
threat of catastrophic damage due to climate
This was bound to happen -- and good that it has.
Financial institutions and companies not reporting
or allowing for climate change effects on their
businesses will likely see reduced investor interest
and possibly lower relative stock prices over time.
Big investors take aim at banks over climate change
risk, by Chris Flood, September 14, 2017,
Financial Times, UK.
Responsible Investment Week Canada, "make
money responsibly." October 23-27, 2017.
"Responsible Investment Week is dedicated to
education and awareness about responsible investment
(RI). The Responsible Investment Association (RIA)
is coordinating a week of events across Canada to
promote learning about environmental, social, and
corporate governance (ESG) issues that affect
All Canadian investors are encouraged to attend and
participate in RIA's Responsible Investment Week!
The event gets larger every year and the more people
that attend the greater the media coverage.
Responsible Investment Week Canada, "make money
responsibly." October 23-27, 2017, September 14,
2017, Responsible Investment Association, Canada.
US SIF Foundation Releases Resource Guide
For Retail Investors: "Getting Started in
Sustainable and Impact Investing."
"This resource is a concise guide for retail,
non-accredited investors exploring investment
options such as mutual funds, ETFs, and direct
ownership of stocks, as well as information on
seeking professional investment help."
A basic guide for novice sustainability focused
investors. It's a useful adjunct to my
Tutorial: Creating A Profitable Personal
US SIF Foundation Releases Resource Guide For Retail
Investors: "Getting Started in Sustainable and
Impact Investing," press release, September 14,
2017, US SIF, USA.
Big investors to put more money into
tackling climate change. "More than
two-thirds of institutional investors are planning
to increase investments related to tackling climate
change, according to a new survey that suggests
'green finance' is moving from the margins to the
mainstream of global markets.... in a study
commissioned by HSBC, will add weight to calls from
Mark Carney, governor of the Bank of England, and
others for greater disclosure of 'climate risks' in
the corporate and financial sectors."
How many companies in the insurance, utilities and
other hurricane affected industries in Texas and
Florida have put as potential liabilities on their
balance sheets potential hurricane damages? Though
such costs are difficult to assess, but, with
climate warming/change becoming increasingly costly
for businesses, perhaps investors need to ask such
questions more vigorously. Companies refusing to
acknowledge such costs might be shunned by investors
in years to come!
Big investors to put more money into tackling
climate change, by Andrew Ward, September 11,
2017, Financial Times, UK.
Investors Can Be Ethical and Still Beat
the Market, Study Says. "Ethical fund
managers don’t have to be envious of the
market-beating returns of so-called sin stocks. They
should be able to match them without dabbling in
vice, according to a study in the Fall edition of
the Journal of Portfolio Management. The study
debunks the popular theory that shares in the
alcohol, tobacco, gaming, and weapons industries
outperform because investors shun them, enabling
those with fewer moral scruples to earn a
'reputation risk premium.'”
So 'sin' stocks only outperform if their profits and
investment also outperform. This is an important
message, but one I feel will take time to be
accepted. Nonetheless, for ethical investors, it's
heartwarming to see the results of this study.
Also, as government health care costs continue to
explode, many sin sectors such as tobacco and
alcohol will continue to be taxed higher and higher,
thereby continually eroding the profitability of
companies in these sectors. Thus, their future
outperformance becomes questionable. See actual
Investors Can Be Ethical and Still Beat the Market,
Study Says, by Cormac Mullin, September 11,
2017, Bloomberg, USA.
Rising carbon prices could slash company
profits. "The impact of climate change
could hit global profits just as hard as the
financial crisis and Schroders have launched a new
tool to help investors work out which companies will
This is an important article to read for all ethical
investors. Such research will likely become ever
more important to investors as the world grows
increasingly concerned about climate change.
Rising carbon prices could slash company profit,
by Michelle McGagh, September 6, 2017, Citywire
Sustainable Signals: New Data from the
Individual Investor--Morgan Stanley.
"80% [of investors] are interested in sustainable
investments that can be customized to meet their
interests and goals."
Morgan Stanley's Institute for Sustainable Investing
has published the results of its second investors'
survey. Unsurprisingly, the results show a growing
interest in sustainable investing-- especially by
(Again, for individual investors interested in a
do-it-yourself approach, you'll find participating
in my free
DIY Ethical-Sustainable Investing Webinars very
Sustainable Signals: New Data from the Individual
Investor, Morgan Stanley Institute for
Sustainable Investing, September 2017.
Opinion: The pros and cons of ethical
debt instruments. "Innovative debt
instruments help to harness the powerful role of
capital markets and can connect more savings with
international development priorities such as the
SDGs. As investor interest continues to soar, they
could help move the world from billions to trillions
of dollars in financing for the SDGs [Sustainable
A fine article about ethical-sustainable debt by an
advisor to the UNDP.
Opinion: The pros and cons of ethical debt
instruments, by Gail Hurley, September 4, 2017,
If you are a
spiritual investor, or believe in ethical investing
and socially responsible investing, get the latest
relevant news in your inbox. Sign-up now for our
The Soul Investor.
Special note on news intermediaries.