Ethical Investing News/Commentaries:
Commentaries by Ron
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Generation Investment Management’s Investment
The list of stocks in this portfolio seems like that
of most large cap mutual funds. Nonetheless, for
green investors, it is worth a look at. For a list
of their securities holdings as of September 30,
2007, see their
SEC 13F filing. For a critique of their
holdings, go to
Al Gore’s Inconvenient Stock Portfolio Exposed,
press release, by JunkScience.com, October 30, 2007,
Report On The Politics - And Disregard Of Economic
Reality - Concerning Government Biofuel Programmes.
Member governments of the Organisation for Economic
Co-operation and Development, which includes the US,
EU, Japan and most other industrialized countries,
are now spending between $13bn to $15bn annually to
subsidize biofuel programmes. Again, this is a farm
support programme disguising itself as a major
Biofuels: a tale of special interests and subsidies,
by Martin Wolfe, October 30, 2007, FT.com, UK.
More Green Than Americans According To Porter
Novelli (PN) and Natural Marketing Institute (NMI)
"Europeans, across the countries surveyed, are
fifty percent more likely than Americans to buy
’green’ products - from solar panels to hybrid cars
to natural/organic foods, personal care and home
products... While Europeans are eagerly adopting new
behaviors as it relates to green consumerism;
paradoxically, they report being more price
sensitive than their American counterparts." We
are also seeing that as LOHAS markets grow globally,
there is increasing interest by environmentally
conscious major corporations. This is good news for
ethical investors as it means a broader, more
diversified portfolio of green and socially
responsible investments are possible.
Europeans Are Better Environmental Citizens Than
Americans, New Research Study Reveals, press
release, October 29, 2007, PR Newswire/CNN Money,
Coca Cola, Mattel & Other Companies Cited In
Unethical Practices From Reports Delivered To The
Consumers International World Congress, Australia.
This information is important for all ethical
Drug firm tops ethical offender list, by Kelly
Burke, October 30, 2007, theage.com.au, Australia.
For a comprehensive review of their findings go to:
Consumers International – Press briefing,
International Bad Product Awards 2007,
October, Consumers International, UK. See also:
Corporate Social Responsibility News - BP fined
for environmental crimes and
Gap admits to child labour violations in
outsource factories Guardian Unlimited Business.
Mutual Funds Reviewed.
This article cites five US mutual funds
that adhere to strong religious principles. So do
they inculcate spiritual laws of financial
prosperity as well?
Five religious-based mutual funds that keep the
faith, by Murray Coleman, October 28, 2007,
Canadian Cleantech Companies According To Corporate
Well done Corporate Knights for this outstanding
report on Canada’s cleantech (green technology)
companies. Well worth reading by anyone looking for
green stocks that are good to invest in. Please note
though, that this is not a financial report and does
not make stock recommendations. However, it does
provide excellent material for you to have a
valuable discussion with your investment advisor
concerning cleantech companies.
First Annual Corporate Knights Ranking of Canadian
Cleantech, 2007, Corporate Knights, Canada.
Socially Responsible Companies Get Lower Ethical
Ratings When Purchased By Larger Firms?
Yes, seems to be the answer.
Nigel, the author of the Wildberry’s blog cites
research that according to Ethical Consumer
Magazine’s ’ethicscore’ ratings, appears to validate
the concerns of many ethical investors. That is that
highly regarded small socially responsible
companies, when purchased by huge multi-nationals,
score less favourably in terms of socially
responsible indicators, as determined by
ethicscore’s parameters. You may think you have the
best corporation to invest in -- say, when you invest
in a small ’higher consciousness’ green company --
but beware when they are taken-over by larger
Is Ethical Business just Business after all?
October 27, 2007, Wildberry’s blog, UK.
Shows High-Income US Consumers Would Pay More For
Socially Responsible Goods. -
57% of high-income adults (annual income over
$307,000) would give greater consideration to a
brand they deem more socially responsible, according
to a new survey by The Luxury Institute. For
companies engaged in producing or marketing of
luxury goods, the advantages of using corporate
social responsibility policies are clear.
Uber-wealthy Say Socially Responsible Brands Catch
Their Attention, by Jeff Miller, October 26,
2007, Rapaport News, USA.
Acting Against Organic Milk Dairy ’Factory’ Says The
Dean Foods′ Horizon dairy in Paul, Idaho, is being
taken to task by the Cornucopia Institute for
allegedly failing to meet regulatory, organic milk
standards. Apparently, many other large US organic
dairy factories are not meeting these standards
either, according to consumer groups who have
launched class-action lawsuits around the US. If you
are an investor in affected companies, you may want
to ask them some pointed questions -- and get them
to respond to you in writing!
Halloween Trick — USDA lets “Organic” Factory Farms
off the Hook, press release, October 31, 2007,
Cornucopia Institute, USA.
Corporation Launches New, Free Report: "The
climate change industry takes root."
There are many topics of interest and ideas for
green investing in these reports.
The climate change industry takes root, October
31, 2007, Ethical Corporation and ClimateChange.com,
New Zealand Responsible Investment Grows At Double
The Pace Of Mainstream Investment.
"Specialist managed responsible investment
portfolios grew 43% during the 2007 financial year
from $11.98 billion to $17.10 billion whereas,
according to the latest Morningstar report, the
total managed investments industry grew 20% in the
same period." This is another example of how
ethical investing (in its broadest sense) continues
to gain in momentum throughout the world.
Responsible Investment 2007, October 2007,
Responsible Investment Association Australasia (RIAA),
Public Companies -- A Brief Review.
Geothermal power is an emerging area with possibly
great potential, though we do not hear much about
it. The article linked to below is a brief overview
of what the reviewer believes are six interesting
public companies in this field. Are they stocks that
are good to invest in? Only time will tell. However,
always get help with investing from a qualified
investment advisor before making investments.
6 Geothermal Developers that Could Break Out, by
Tim Plaehn, October 25, 2007, Ecototality Life,
New Report By
UN Environmental Program’s Finance Initiative
Demystifies Responsible Investment Performance.
An incredible review of key academic and broker
studies on the effects of environmental, social and
governance (ESG) issues on corporate performance and
stock prices. It convincingly demonstrates that by
incorporating ESG factors, investors may actually
improve their returns. When clicking the link to it,
please be aware that it is a big 2.35MB PDF file.
Demystifying Responsible Investment Performance,
October 2007, UNEP Finance Initiative & Mercer
Investment Consulting, UN.
Issues ’Green Bonds’. -
The World Bank is issuing euro-denominated bonds
through two European banks, ABN-AMRO and
Sparkassen-Finanzgruppe, to finance ’green
technology, environmentally friendly development,
and anti-poverty programs.’ It is good to see
finally, this mammoth and heavily criticized
institution getting behind sustainable investing.
News & Broadcast - World Bank Forges Links with
Socially Responsible Investors, October 24,
2007, World Bank, USA.
On Canadian Government To Withhold Support To
Canadian Mining Companies Who "... violate
international environmental and human rights
Around 153,000 Canadians signed an action letter
proposed by Development and Peace, was presented to
the Canadian government. Development and Peace is in
its second year of action on this front. Ethical
investors need to take note of such groundswell
protests when looking for resource stocks that are
good to invest in.
DEVELOPMENT AND PEACE delivers strong message to
Ottawa on the need to call Canadian mining companies
to account, press release, October 24, 2007,
Major US Financial Institutions Questioned Again
Among the major financial institutions Goldman Sachs
has been in the forefront in promoting sustainable
investing. And it needs to be congratulated for
that. However, in another department, that
concerning their ethics in first packaging and
selling mortgage-backed securities, then a year
later selling them short, certainly creates some bad
feelings. How would you feel if your broker sold you
some shares in an exciting new public offering, and
then you found-out a few months latter that they
were selling them and making huge amounts of money
by doing so! Also, the net downstream effect of such
actions is to further harm the already bad US
Sub-Prime? So Over! Part II, by Adrian Ash,
The Rude Awakening, October 24, 2007, USA.
Major US Financial Institutions Questioned Again
An investors’ class action lawsuit has just been
resolved involving Morgan Stanley clients who paid
storage and insurance fees for silver supposedly
held for them by the firm. Apparently, Morgan
Stanley admitted that they never stored the silver
purchased by their clients! Now Morgan Stanley is
agreeing to refund millions of dollars in storage
and insurance fees to some 22,000 affected clients.
In their defense, Morgan Stanley said that the
charging of storage and insurance fees for silver
and other bullion, though not held in company
vaults, was widely practiced among financial
institutions. Of course, what this means is that
there is likely a massive ’short’ position in the
silver market. That is, should these silver
certificate holders demand delivery of their silver,
the silver price could skyrocket. Furthermore, these
financial institutions have the free use of the
silver purchaser’s funds until they actually put the
silver in their vaults!
Money for Nothing, by Ted Butler, October 23,
2007, SilverSeek.com, USA.
Shows High-End New York Shoppers Will Pay More For
’Fair-Labour’ Goods. -
This study seems to have just come to light and
shows that well-heeled New Yorkers will pay 10-20%
more for goods ’being made under good labor
standards.’ At least we can now see one study where
consumers’ beliefs marry with the goods they buy.
Is There Consumer Demand for Improved Labor
Standards? Evidence from Field Experiments in Social
Product Labeling, by Michael J. Hiscox and
Nicholas F. B. Smyth, Department of Government,
Harvard University, USA.
Stanley Predicts Renewable Global Energy Sales Of $1
Trillion By 2030. -
The investment bank also says that solar power could
gain 11.2% of the world-wide energy market by 2030,
while wind power would take another 9.6% of that
market. When looking for environmental stocks that
are good to invest in, do get help with investing
from your financial advisor. As in any new industry,
many start out, but few survive. However, the
survivors often win big!
Morgan Stanley Predicts Trillion-Dollar Renewable
Sales By 2030, October 19, 2007, Alternative
Energy Retailer (based on a Reuters article),
Car Companies. -
If, you are a green or ethical investor looking for the
best automobile stocks that are good to invest in,
see this review of what car companies are offering
and plan to offer in terms of green technologies.
Car makers – who′s the greenest? October 3,
2007, ClimateChangeCorp.com, UK.
Shareholders Overwhelmingly Say No To Reductions In
Shareholder Rights. -
The US Securities & Exchange Commission’s (SEC)
proposal to reduce shareholder voting privileges has
been met by a massive outpouring of resistance by
socially responsible and religious shareholders.
Accountability Central: RECORD 22,500 INVESTORS
SPEAK OUT AGAINST POTENTIAL SEC CURBS ON SHAREHOLDER
RESOLUTIONS, ROLE IN BOARD NOMINATIONS, October
16, 2007, Social Investment Forum, USA.
Ethical Lapses. -
The fact that the big three US banks - Citigroup,
Bank of America and JPMorgan Chase will create a
special $75-100 billion fund to purchase bonds and
other instruments that are having difficulty finding
buyers, is in effect collusion to support certain
asset prices. In any other industry, such collusion
could be the subject of massive fines! Yet here it
is sanctioned by the US government. What they are
doing is trying to avert massive write-downs in
securities they own by artificially creating a
market with higher than market prices! Enron created
webs of artificial companies that traded energy
products to each other at ever higher prices. As
each entity booked higher profits, Enron’s profits
shone. The same thing seems to be going on among the
banks. Ethically, it is reprehensible. It covers-up
banks’ bad bets in a massive way, letting bank
executives’ off-the-hook, and promotes what
economists call, ’moral hazard’--the latter meaning
it will encourage market players to take on even
bigger out-sized bets with the knowledge that if
anything goes wrong, that they will be bailed out.
Truly, ethics is at an all-time low in our financial
markets and in the US Treasury Department!
Banks to Start Fund to Protect Credit Market, by
Vikas Bajaj, October 15, 2007, The New York
Breaks New Ground With Study Relating Company’s
Carbon Beta And Equity Performance. -
study evaluates the relationship among climate
change, companies′ ability to manage the associated
risks and opportunities, and their financial
performance....The ’Carbon Beta(c) premium’ for
leading companies appears to be growing larger over
time, as regulatory regimes tighten around the
world." This is a fascinating background study
to the whole issue of a company’s carbon emissions,
how they deal with them, and relationship to
financial performance. Congratulations to Matthew
Kiernan and his team at Innovest!
Carbon Beta & Equity Performance: An Empirical
Analysis, October 2007, Innovest Strategic
Produces Report On Global Indigenous Rights &
Resource Sector Risks. -
This is as comprehensive a report as any that I have
seen concerning the risks resource companies face
when creating ventures in aboriginal areas. "This
briefing seeks to identify the risks and
opportunities faced by companies with respect to
managing indigenous rights issues and the ways in
which these can materialise in the short to medium
term for companies involved in resource sectors."
Important reading for anyone interested in resource
Indigenous rights, indigenous wrongs: risks for the
resource sectors, October 2007, Centre for
Australian Ethical Research (CAER) and Ethical
Investment Research Services (EIRIS), Australia/UK.
’Emit More Greenhouse Gases than Fossil Fuels’.
A Nobel prize-winning chemist and his team have
found that biofuels may emit up to 70% more
greenhouse gases than fossil fuels! Evidence
continues to mount that promoting biofuels at public
expense was a bad, bad idea. Not only are billions
of tax payers dollars going to support its
production, but it is driving up food prices and
ending-up causing more damage to the environment
than fossil fuels. One wonders why this report never
made it into mainstream American media.
Rethinking Renewables: Biofuels ’Emit More
Greenhouse Gases than Fossil Fuels’,
September 26, 2007, Spiegel Online
Launches Low Carbon Index For European Blue Chip
This is a welcome development and shows that
mainstream investment firms are moving into green
investing in a big way. So if you are looking for
green stocks that are good to invest in, one good
way is to look at what Merrill Lynch, HSBC, and
others are including in their green indexes.
Merrill launches carbon footprint index, by Tom
Fairness, October 11, 2007, Financial News Online,
Study Supports Sustainable Investing For Funds.
The report by the Russell Investment Group said that
after reviewing over 40 empirical studies that,
"’There is no necessary performance penalty from
pursuing a sustainable approach; and there is
unlikely to be a performance premium from pursuing a
sustainable investing approach when account is taken
of appropriate risk and style effects." Of
course most of these studies have been done in a
period when the concern for global climate change,
green and ethical investing, was not as acute
as it is now. With much more investor attention now
being paid to sustainable, ethical stocks and bonds,
I believe the returns on such assets have the
potential to do even better than what these prior
studies indicated. Always get help with investing
from a professional advisor though.
No more sustainable investment roadblocks: Russell,
by Chris Nicholls, October 11, 2007, Financial
Investment Forum Reports On UK Ethical Investing
Oriented Pension Funds. -
Probably a first by any ethical or socially
responsible investment entity to report on the
responsible investing practices of pension funds.
Congratulations to them on this initiative! Ethical
investors might glean some ideas for ethical stocks
and bonds by reviewing this report too.
Top UK Corporate Pension Funds named in UKSIF
report, October 4, 2007, UK Social Investment
Responsible Investing (SRI) Gaining In South Korea.
It is good to see how investing in ethical stocks
and bonds continues to gain in countries around the
SRI Funds Attract Investors (The Korea Times),
by Park Hyong-ki, October 7, 2007, The Korea
Times, South Korea.
Investors & Funds Making The Same Mistake As In
This commentary makes the argument that just as
ethical investors and ethical funds over-invested in
tech stocks in the late 1990s, and then saw them
implode, the same over-investment has probably taken
place by them investing in financials! Now with many
financial organizations taking multi-billion dollar
hits on bad financial plays, and with their stocks
under-performing many other sectors, ethical
investors and funds could see much poorer
performance when compared to non-screened funds.
Personally, I suspect that as the mortgage crises
deepens and derivative losses mount in the USA and
elsewhere, financial institutions are likely to
suffer extraordinary losses in the years ahead.
Ethical Corporation: Governance - Credit crunch: US
social investors repeat past mistakes, by Jon
Entine, October 5, 2007, Ethical Corporation,
Mounting Extreme Climate Events & Losses Charted
By IPCC. -
Everyone is aware of this report by the UN’s
International Panel on Climate Change (IPCC).
However, to visually see the growth of extreme
climatic events and their costs multiplying over the
decades, and adjusted for price inflation, is
stunning! Go down about half-way on this page -
following the link provide here - to see the graph.
UN Chronicle | Financing the Response to Climate
Change, UN Chronicle, UN.
Shows Companies The Advantage Of Using Corporate
Social Responsibility (CSR). -
"The latest research suggests that an
organization′s active participation in corporate
social responsibility efforts has a significant
influence on employees′ engagement levels and views
of senior management." Kenexa press release.
This can only be good news for all those companies
that aspire to be the best corporation to invest in!
BEING SOCIALLY RESPONSIBLE HAS A POSITIVE IMPACT ON
EMPLOYEES AS WELL AS THEIR LOCAL COMMUNITIES AND THE
ENVIRONMENT, press release by Kenexa, October 5,
2007, USA. Also see:
Time for Wall Street to recognize what a ’good’
company is, by Thomas Kostigen, October 5, 2007,
Canadians "... say that investing in alternative
energy is a good investment choice with potential
for good returns..." - Investors Group.
The poll was conducted by Harris Decima and it also
found that 82% of Canadians plan to change their
behaviour and increase their green activities. It
seems that Canadians are certainly getting the green
message. Also, it is clear that among the stocks
that are good to invest in, environmental stocks
have stood out in terms of performance recently.
Canadians see financial benefits of going green,
Investors Group finds, press release, October 4,
2007, Investors Group, Canada.
Shariah Compliant Green Fund Launched. -
"Malaysia’s AmanahRaya Investment Bank said
Wednesday it will team up with Asian Finance Bank to
launch an Islamic green fund to tap the
multi-trillion dollar sharia-compliant market. The
one-billion ringgit (294 million dollar) green fund
will invest in environmentally friendly projects
compliant with sharia law such as biofuel ventures
in Malaysia and the Middle East." (From article
linked to below.) It is good news indeed to see that
shariah compliant funds are being oriented to green
investments. However, the mention of investing in
biofuels makes me concerned as to who is advising
them on their investments.
Malaysian and Middle Eastern banks plan green fund,
October 3, 2007, AFP, Malaysia.
FTSE & Impax
ET350 Join Forces. -
The Impax ET350 index of leading environmental
companies will now become the FTSE ET350. Both
companies believe the ET350 will be more successful
and useful to the investor with these new
FTSE And Impax Sign Agreement For Environmental
Technology (Impax ET50) Index, press release,
October 2, 2007, FTSE, UK.
Survey Shows Most Institutional Investors Do Not
Consider Carbon Footprints In Evaluating Companies.
When looking for the best stocks that are good to
invest in, institutional investors are unlikely to
take into account a company’s carbon footprint. The
KPMG survey shows fully 63% of them believe that a
company’s carbon footprint does not really figure in
their investment decisions. Perhaps one of the
difficulties they and all investors face is that
there is still a lack of information from companies
regarding their carbon footprints and that there is
yet no recognized independent auditing procedure for
FT Alphaville » Blog Archive » Not so green after
all, FT.com, October 2, UK.
Financial Ad Pulled From Morningstar.com.
It seems that US Faith Financial Planners was asked
to remove "Christian" references in their proposed
advertisements on Morningstar.com. I believe that
any religious or spiritual group should be able to
state their values in their ads and mention the
tradition from which those values spring from. We
hear a lot about Shariah (Muslim) based investment
vehicles today. I wonder how Morningstar would react
to a Shariah oriented fund explaining its values and
background in an advertisement on their site?
Incidentally, for anyone interested, I have on this
spiritual quotes and sayings (and relevant
spirituality information) from many traditions
on the subject of wealth.
Devotionals - Christian Advertising Rejected!
October 1, 2007, Devotionals, USA.
Embracing Green Practices. -
According to this BDO Seidman Retail Compass Survey
of chief financial officers, two-thirds of
leading US retailers say that they are "actively
involved with ’green’ or environmentally friendly
practices..." However, their motivation is
mostly to enhance their image rather than a sincere
belief in green values. Nonetheless, it is good
to see leading retailers becoming environmentally
conscious major corporations.
U.S. Retailers Embrace ’’Green’’ Practices According
to BDO Seidman, press release, October 1, 2007,
BDO Seidman, USA.
Billiton Shareholders Want Company To Divest Itself
Of Uranium Activities. -
BHP Billiton Shareholders for Social
Responsibilities are trying to enlist other
shareholders, especially churches, conservationists
and unions to support their motion to get BHP to
drop uranium activities. BHP owns the largest
uranium deposit in the world at its Australian
Olympic Dam property, and the company has contracts
to supply uranium oxides to many countries.
"Claims that uranium is ’carbon-free’ completely
ignore the substantial carbon costs of its mining,
processing, power station construction, protection
and disposal," says Mr. Poppins, a retired
engineer leading the shareholder proposal, quoted in
The Guardian newspaper. Mr. Poppins has 60 of
the required 100 shareholders to actually put the
motion onto next month’s agenda of BHP’s annual
general meting in Adelaide, Australia.
BHP Billiton shareholders call for moral stand on
by Jan Mayman, October 1, The Guardian, UK.
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