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Ethical Investing News/Commentaries:
June 2007 |
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Commentaries by Ron
Robins
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Poor Ethics,
Moral Hazard Endanger Global Financial System.
- [COMMENTARY]
This Financial Times (FT) of London story is
an excellent overview of what is happening in the
sub-prime mortgage and derivative markets. And
frankly, it is scary! In particular, it appears that
many financial institutions are carrying financial
assets that may have to go through substantial
write-downs, leading to losses in the countless
billions of dollars for investors. Furthermore, it
illuminates how numerous hedge fund managers
'cook-the-books' to line their pockets. All
investors may want to review with their advisors -
including their legal and tax professionals - what
their exposure is, and perhaps be prepared for
battle. This is what happens when a new generation
of financial 'whiz kids' and math geniuses get
overwhelmed with greed, and ethics goes out the back
door.
Does it all add up?
By Saskia Scholtes in New York and Gillian Tett in
London, June 28, 2007, FT.com (Financial Times
of London), UK.
Banks Rank
Best Among Ten Industries In Ethical Reputation
Among Multinationals.
- [COMMENTARY]
Covalence SA, a Swiss-based ethics organization has
studied and ranked - according to their criteria
based largely on positive and negative media reports
- ten major industries. Their analysis is
interesting because they are looking at 'perception'
rather than the analysis of corporate rights and
wrongs. A chart is included that shows the scores
and rankings of individual banks. This is worth
looking at.
Banking Industry Report 2007,
June, 2007, Covalence SA, Switzerland.
Consumers
Urged To Boycott Three Companies Who Lobby Against
Action On Climate Change.
- [COMMENTARY]
With the advent of the Live Earth concerts,
Ethical
Consumer is publicly urging consumer boycotts
against Esso Petrol Exxon, Kenco coffee, and
Nouvelle. Ethical investors may want to take note of
who is being targeted and why. For a full list of
companies they urge boycotting against see
Ethical Consumer Boycotts List.
Consumers Urged To Boycott Three Climate Change
Criminals,
June 29, 2007, CommonDreams.org, USA.
Barclays Asks
Suppliers About Their Corporate Social
Responsibility (CSR) Policies.
- [COMMENTARY]
I hope that this trend of companies asking suppliers
about their CSR policies gathers momentum. According
to this article, "When Barclays considers
appointing a new supplier, 10 percent of the
calculation will be based on answers to those
questions, which cover supply chain risk, human
rights, environmental issues and business
integrity." Frankly, I feel the 10% CSR
contribution is too low. However, it is a good
start.
Barclays’ Suppliers Fill Out CSR Questionnaire,
June 28, 2007, Environmental Leader, USA.
Demand Grows
For Money Managers With Socially Responsible
Investing (SRI) Skills.
- [COMMENTARY]
In London, the UK Social Investment Forum recently
launched a special training programme in SRI for
financial advisors. With demand for SRI products
booming, investment and financial advisors
everywhere need to avail themselves of greater
knowledge in this area.
Growing Demand for Money Managers with Expertise in
Socially Responsible Investing,
by A. E. Feldman, June 28, 2007, USA.
US
Psychiatrists Receive Large Payments From Drug
Companies.
- [COMMENTARY]
In Vermont,
psychiatrist received an average of $45,692 from
drug companies in 2006. To me, this is scandalous
that psychiatrists - or any other medical
professional - should receive payments from drug
companies in order to peddle their wares. What kind
of ethics do these 'purported' honest professionals
and pharmaceutical companies have? What a huge
conflict of interest is occurring here. Are doctors
lining their own pockets at the expense of patients?
As I have said before, ethical investors and
socially responsible mutual funds, which often have
major investments in drug companies, need to
evaluate their own ethics, as well as those of the
drug companies they invest in!
Psychiatrists Top List in Drug Maker Gifts,
by Gardiner Harris, June 27, 2007, The New York
Times, USA.
Hedge Funds
Employing Socially Responsible Investing (SRI)!
- [COMMENTARY]
Can this be true? According to sources cited in this
report, there are at least three dozen hedge funds
applying environmental and social screens. Many of
them see such positioning as an added benefit to
gaining more investors. Some of these funds, by
going 'short', may even bet against companies with
the worst environmental and social policies. (Going
short means borrowing shares you do not own [from a
broker], then selling them now, hoping to buy the
same shares back latter at a lower price. For
instance, by selling the shares at $50 and then
buying them back latter at $30, you make a $20
profit per share.)
Hedge funds embracing social mandate,
by Jeff Benjamin, June 25, 2007, InvestmentNews,
USA.
A US ETF That
Is 'Sudan Free'.
- [COMMENTARY]
Though I agree with the idea of not investing in
countries with outrageous social or environmental
policies, it does seem a little strange to base an
entire ETF on such a specific one-country policy.
Could this be the start of a trend?
Claymore Launches First Socially Responsible ETF
Based on Sudan Divestment Issue,
June 25, 2007, Business Wire, USA.
South African
Platinum Mines Criticized For Health, Environmental
And Other Problems.
- [COMMENTARY]
This new report by
The Bench
Marks Foundation of Southern Africa for
Corporate Social Responsibility, found many failings
by the mining companies involved.
South Africa: Platinum mines lack transparence,
communities suffer,
June 25, 2007, AfricaNews, South Africa.
Most United
Arab Emirates (UAE) Consumers Reward Companies With
Good Corporate Social Responsibility (CSR)
Practices.
- [COMMENTARY]
It is wonderful to see the universality of the
importance of CSR. This report is by YouGovSiraj and
Globescan.
UAE consumers reward companies for social
responsibility,
June 25, 2007, ArabianBusiness.com, UAE.
New UN Report
Shows Investors Flocking To Renewable Energy.
- [COMMENTARY]
Research and investment in renewable energy and
energy efficient industries has taken-off! Higher
consciousness is at last infiltrating the world's
investors. Read the UNEP press release below.
Investors Flock to Renewable Energy and Efficiency
Technologies,
June 20, 2007, United Nations Environment Program (UNEP),
USA.
Website
Tracks Sustainable Development In US Cities &
States.
- [COMMENTARY]
This interesting website tracks and compares how
some 400 jurisdictions in the USA are progressing in
their sustainable development policies and
activities.
Advancing
Cross-Sector Sustainable Development for State and
Local Government,
Sustainlane.us, USA.
Another
Insightful Review On The US Ethanol Stance.
- [COMMENTARY]
The writer makes a good case why we need to be very
concerned about the push for corn ethanol. I believe
the push for corn ethanol is almost exclusively to
buy farm votes. Even with cellulosic fibre being
used for ethanol production, I foresee higher food
prices and much soil erosion as a result. Our focus
must be on finding ways to make energy use far more
efficient - and to find sources of energy that do
not harm the environment or our food supplies.
Ethanolics Unanimous,
June 21, 2007, by Denny Haldeman and Soddy Daisy,
TheChattanoogan.com, USA.
New Report
Criticizes Global Pharmaceutical Industry.
- [COMMENTARY]
I am highly critical of how big pharma has been
peddling its wares around the world, frequently in
an unethical and irresponsible and manner. This
study appears to explain in detail all the problems.
The link is to a press release on the study.
However, investors may want to encourage the
financial institutions they deal with to get copies
of it.
New Report ‘Analyzing the Global Pharmaceutical
Industry’ Takes a Critical View on the Irresponsible
Drug Promotion and Advertising Practiced by Some
Pharma Companies,
June 22, 2007, Research and Markets, Ireland.
US
HarrisInteractive Poll Shows People Have Good
Intentions, But Few Follow Through On Them.
- [COMMENTARY]
This poll provides fascinating information on the
ethics of American adults. It is interesting to note
how most studies show that over 80% of investors
want the companies they invest in to be socially and
environmentally responsible, but this and other
studies demonstrate that few of these individuals
are willing to make significant changes in their own
lives to be themselves more socially or
environmentally responsible.
Social Responsibility: Most People Have Good
Intentions but Only a Small Minority Really Practice
What They Preach, June 18, HarrisInteractive,
USA.
GreenMoney
Journal's Summer 2007 Edition Is Worth Reading For
All Investors.
- [COMMENTARY]
Cliff Feigenbaum, founder and managing editor of the
GreenMoney Journal has put together a series of
articles that are worthwhile reading for all
ethically, spiritually or environmentally oriented
investors.
Essays
on the Future: Looking Ahead,
by Cliff Feigenbaum, June 2007, GreenMoney
Journal, USA.
Are A
Company's Corporate Social Responsibility Activities
Simply 'PR' Or Real?
- [COMMENTARY]
A US group calling themselves the 'B Corporation' is
offering a new socially and environmentally
responsible seal of approval to all corporations who
ask for, and meet, their social and environmental
standards. This sounds like a good idea. So far it
seems that most of the companies who have gained
their approval are small in size. Perhaps it fills a
niche for small and medium sized private companies
who otherwise would not be rated by such firms as
KLD Analytics, Calvert Group and Dow Jones
Sustainability Indices.
B
Corporation, USA.
Bank Reports
Cite Possible Winning Companies In Climate Change
Thrust.
- [COMMENTARY]
Environmentally oriented investors may find some
useful investment related information in these
reports. Read the summary of these leading bank
reports below.
Financial services – Banking on climate change’s
consequences,
by Mike Scott, June 18, 2007, Climatechangecorp.com,
UK.
2nd Major
Canadian Bank To Offer Environmentally & Socially
Responsible Mutual Fund.
- [COMMENTARY]
I believe it will not be long before all major
Canadian banks offer socially and environmentally
oriented mutual funds and ETFs. This is a good step
forward!
TD gets a little greener,
June 14, 2007, Advisor.ca, Canada.
Are US Mutual
Funds Shirking Their Fiduciary Responsibilities?
- [COMMENTARY]
Huge pay
increases are going to CEOs of top American
companies whose profits are often flagging, yet few
mutual funds voice a concern. This study indicates
that the compensation of the top five highest paid
executives in the average public company now
approaches 10% of the company's total corporate
earnings. This has to be a concern of mutual funds,
and in the interest of their unitholders, they
should question company boards who lavish executives
with big undeserved payouts. (I want to thank
SHARE for this
reference.)
Failed Fiduciaries: Mutual Fund Proxy Voting on CEO
Compensation,
American Federation of State, County and Municipal
Employees, Corporate Library and the Shareowner
Education Group, USA.
US Investors
File Record Number Of Shareholder Resolutions
Concerning The Environment, Political Contributions,
Etc.
- [COMMENTARY]
It is wonderful to see that shareholders are finally
holding to account companies whose practices they
deem unsatisfactory.
(Again, I want to thank
SHARE for this reference.)
Investors Filing Record Number of Social and
Environmental Shareholder Resolutions in 2007,
May, 2007, Social Investment Forum, USA.
Study: The
Financial Advisor - Client Relationship.
- [COMMENTARY]
State Street Global Advisors and Knowledge@Wharton
(University of Pennsylvania) have completed an
interesting survey of the financial advisor - client
relationship. It is a useful read for all investors,
especially the charts on pages 12-14. The charts
frequently show marked differences between what
advisors believe their clients perceive or
understand in relation to fees, trust, satisfaction
with their advisor, etc. - and what those clients
actually think!
Bridging the Trust Divide: The Financial Advisor-Client
Relationship,
State Street Global Advisors and
Knowledge@Wharton,
USA.
Islamic
Finance.
- [COMMENTARY]
The following is a useful introduction and
description of Islamic finance describing its
principles and ideals, some of which parallel those
of socially responsible investing. Though not
covered in this article, I am particularly intrigued
about the role that gold and silver played in
Islamic finance in promoting economic growth and
social stability.
Unitarian Universalist heads Islamic investing
group, by
Michelle Bates Deakin, June 15, 2007, uuaworld.org,
USA.
Survey: 87%
of Execs Would Not Work For Companies With Negative
Record On Social Issues.
- [COMMENTARY]
TheLadders.com website conducted a survey among
executives to determine their attitudes towards
corporate social responsibility.
Execs Say Social Responsibility is ''Duty'' for
Companies,
June 14, 2007, Businesswire.com, USA.
Ethical Funds
Gaining.
- [COMMENTARY]
Ethical funds have been frequently enjoying above
average gains in part because they have not invested
in some industries that have lagged the market
generally. This is what I have been predicting would
happen - see
About Us.
Ethical funds gain as screened-out sectors
underperform, says Britton,
by Matthew Goodburn, June 14, 2007, Citywire.com,
UK.
Religious
Organizations Pitch Action On Global Warming To US
Senate.
- [COMMENTARY]
For an interesting review of who presented and what
was said, read this.
Global Warming Alarmism and Religion - Together at
Last? By
Peyton Knight, June 14, 2007, Amy Ridenour's blog,
National Center for Public Policy, USA.
An Investor
Relations (IR) Professional Offers A Perspective On
Corporate Social Responsibility (CSR) Actions.
- [COMMENTARY]
The following essay is useful for ethically,
spiritually or environmentally oriented investors to
read. It will provide some insight as to how IR
professionals deal with CSR in their companies.
Where should PR stop and IR start when it comes to
corporate social responsibility (CSR) programs?
By Peter Noel Schiefelbein, June 14, 2007,
IRmanager.org.
Disconnect:
85% Of Americans Want To Invest In Alternative
Energy Yet For Those With Advisors, Only 20% Have
Discussed This With Them!
- [COMMENTARY]
I have long learned that there is usually a big
difference between what people say, and what they
do. I think that it is great that most investors now
want to invest in alternative energy - and share
prices of companies in that sector have generally
seen enormous gains recently. My real concern for
investors is that they make their decision to get
into a sector only when the media buzz has reached a
crescendo and prices are ready to top-out.
Calvert Climate Change/Alternative Energy Survey,
June, 2007, USA.
Today's
Farming Methods Threaten Agriculture's Future.
- [COMMENTARY]
Modern farming techniques rely less and less on
agricultural diversity. Eventually though, due to
climate change, more diversity among crop species
may be needed to fight various climate threats.
Modern farming techniques have brought food prices
down. However, my reading in this area leads me to
believe that these modern farming techniques are
causing massive soil erosion, nutritionally
deficient food, and possibly badly damaging our
future food supply. I suggest this is an area that
all consumers - and investors - will become
increasingly concerned about.
Climate and changes in the food supply,
by Jess Halliday, June 13, 2007, FoodNavigator.com/Europe.
G8 Promote
Corporate Social Responsibility (CSR) At Recent
Meeting.
- [COMMENTARY]
Probably inspired by European countries, their joint
statement supporting CSR is the first time these
leaders and countries have formally endorsed the
idea.
The G8 and responsible business: wading into CSR
waters, by
Paul Hohnen, June 12, 2007, Ethical Corporation, UK.
Will Push For
Fairtrade Lead To Increased Protectionism?
- [COMMENTARY]
This could become a very real problem, especially
when local producers within a country push for
protectionist laws favouring them. The idea of a
consumer paying a little extra to help farmers or
producers in developing countries is fine with me.
However, to use the Fairtrade argument for
protectionist trade policies could lead to trade
wars with major international economic and political
repercussions.
Retailers Say Proposed Trade Remedy Laws Would Lead
to More Protectionism,
June 12, 2007, National Retail Federation. USA.
Are
Genetically Modified (GM) Foods Increasing Allergic
Reactions?
- [COMMENTARY]
"Beginning in 1996 [in the USA], bacteria, virus
and other genes have been artificially inserted to
the DNA of soy, corn, cottonseed and canola plants.
These unlabeled genetically modified (GM) foods
carry a risk of triggering life-threatening allergic
reactions, and evidence collected over the past
decade now suggests that they are contributing to
higher allergy rates." - Jeffrey Smith, from the
following article in Foodconsumer.org. I for one
have never believed that sufficient long-term
studies have been done on the safety of GM foods.
Actually, I would never purchase GM foods anyway
because I do not believe that we can ever know their
true long-term effects on our health, agriculture or
the environment. Do you have funds invested in
companies producing, distributing or marketing GM
foods? Where do you stand on this issue?
Genetically Engineered Foods May Cause Rising Food
Allergies - Part 1,
by Jeffrey M. Smith, June 8, 2007, Foodconsumer.org,
USA.
UK Spending
On Organic Foods Doubles In 3 Years.
- [COMMENTARY]
"Spending on organic food has soared from £849
million in 2004 to £1.23 billion last year, and is
forecast to hit £1.7billion this year." This is
according to the article below, as reported in a new
study by Minto. The study also found significant
growth in the number of UK residents interested and
buying Fairtrade products and recycling their waste.
Britain is definitely a leader in going green. For
ethically, spiritually and environmentally oriented
investors, this is particularly good news. Of course
it is good news for the planet too!
Rise of the ethical shopper as demand for organic
goods soars,
June 8, 2007, Daily Mail, UK.
Florida To
Ban State Investments In Iran & Sudan.
- [COMMENTARY]
The directive is largely aimed at the state's
pension funds. The momentum for divesting funds in
political hotspots is gaining speed. Ethical
investors also may need to review their investments
in light of their own ethics concerning investing in
troubled countries. Should such divestment continue
and accelerate, companies with investments in these
countries might see their share values negatively
affected.
Florida governor to sign ban on state investments in
Iran and Sudan, by Anthony Man, June 7, 2007,
Sun-Sentinel.com, USA.
Four In 10 UK
Bank Customers Would Accept Lower Interest If Their
Bank Invested Green.
- [COMMENTARY]
This study, by consumer campaigner Which? in the UK,
makes the same point as another UK survey that I saw
some months ago. The real point is that most savers
and investors want to see their money used for good
purposes. However, there is no need to believe that
this means lower returns. On the contrary, we are
beginning to see, and what I strongly believe will
be even more the case in the future, is that above
average returns will be the norm from ethically and
green oriented investments.
Bank customers’ ethical credit boost,
by Eryl Jones, (Western Mail), June 6, 2007,
IcWales.co.uk, UK.
US Federal
Trade Commission (FTC) Wants To Stop Whole Foods
Market Inc.'s Proposed Takeover Of Wild Oats Markets
Inc.
- [COMMENTARY]
I suppose the FTC is concerned that the two largest
organics food retailers would create some sort of
monopoly. I suggest that they visit almost any other
large US supermarket to see just how absurd that
proposition is!
Whole Foods, Wild Oats To Challenge FTC Lawsuit,
by Jessica Wohl, June 6, 2007, Environmental News
Network, Source: Reuters, USA.
New Study:
Globalization Vs Sustainability.
- [COMMENTARY]
A new study by SustainAbility discusses the issues
involved, and should be read by all investors. Only
a glimpse of the study is presently available, its
full release is on June 28.
New Study Forecasts to the Year 2027, Asks - Are
Globalization and Sustainable Development on a
Collision Course?
June 5, 2007, CSRwire.com, USA.
19% Of US
Defined Contribution (DC) Pension Plans Offer
Socially Responsible Investing (SRI) Options;
Another 41% Will Within Three Years.
- [COMMENTARY]
As reported on June 1, the growth of SRI options in
DC pension plans for US employees is growing fast.
Now we have the full details of the Mercer
Investment Consulting Report. See the article below.
DC Plans & SRI in the USA,
June 5, 2007, Mercer Investment Consulting, USA.
The Ethics &
Morality Of Debt Financed Private Equity Deals.
- [COMMENTARY]
It is clear that lenders to these private equity
deals are exhibiting signs of what
economists call 'moral hazard'. This
is where market participants get overly confident
and throw-out all caution. When the inevitable
credit market tightening happens, I believe we could
see some truly big financial fireworks.
What Henry Kravis isn't saying about private equity,
by Brian Milner, June 2, 2007, The Globe & Mail,
Canada.
Use Of
Ethical Investment Symbol Grows Quickly In
Australia.
- [COMMENTARY]
Australia's Ethical Investment Association has a
symbol that fund managers can use if they consider
"... a company's environmental sustainability,
corporate governance, social responsibility and
labour standards before buying shares for a super
portfolio...The value of managed portfolios with the
symbol grew by 56 per cent over the year to the end
of June 2006 to $11.98 billion from $7.67billion."
The idea of
creating a symbol like this, providing it was
properly monitored, is something that all national
socially responsible investing organizations should
create and implement. I believe it can go a long way
in assisting the investing public in deciding in
what funds they may want to invest in.
Investors focus on climate policies,
by Stephen Johnson, June 2, 2007, The Canberra
Times, Australia.
Americans
View Poorly US Companies Corporate Social
Responsibility (CSR) Efforts.
- [COMMENTARY]
This Fleishman-Hillard/National Consumers League
study is useful for all socially responsible
investors to read. It confirms my opinion that US
companies are still seen as infants in implementing
CSR.
Rethinking Corporate Social Responsibility,
May, 2007, USA.
Major
Problems With Kyoto.
- [COMMENTARY]
This article describes huge problems with some of
Kyoto's implementation schemes. Two pillars of
Kyoto, carbon trading and the Clean Development
Mechanism, are found in practice to have huge
faults. After you read this, let me know your
thoughts on how these problems can be fixed.
Truth about Kyoto: huge profits, little carbon
saved, June
2, 2007, The Guardian, UK.
World's
Greenest Companies According to UK Newspaper & EIRIS.
- [COMMENTARY]
The UK's The Independent newspaper and
Ethical Investment Research Services (EIRIS) report
on what they consider to be the greenest companies
in Britain and the world.
Green Leaders: A guide to the world's greenest
companies, by Karen Attwood, June 1, 2007,
The Independent, UK.
Big Growth
Of Socially Responsible Investment (SRI) Choices In
U.S. Workplace Retirement Plans Reported.
- [COMMENTARY]
This is great news for American workers. Mercer
Investment Consulting will release the report on
June 5. I will give highlights from the report as
soon as they are available.
The Greening of Retirement: Report to Show Major
Gains in Socially Responsible Investment Choices in
U.S. Workplace Retirement Plans,
June 1, 2007, PRNewswire-USNewswire, USA.
Shares Of
Green Companies Make Big Gains In London.
- [COMMENTARY]
Large mainstream funds are now going green and
contributing to significant price rises in green
companies on the London Stock Exchange. We are still
in the early stages of the green revolution.
However, as in all past technological phase
transitions, there will only be a few winners. If
you are considering investing in this area, be sure
to seek both expert technical and investment advice.
How green turned into gold,
by Patrick Collinson, June 2, 2007, The Guardian,
UK.
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