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Ethical Investing News/Commentaries:
July 2008 |
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Commentaries by Ron
Robins
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Investors
With $1.5 Trillion In Investments Ask US Senate To
Extend Renewable Energy and Energy Efficiency Tax
Credits. -
[COMMENTARY]
The current tax credit regime is set to expire at
the end of this year and has been helpful in
promoting renewable energy projects throughout the
US. "In the letter [to the US Senate], investors
cite a February 2008 study by the Navigant
consulting firm that a failure to enact these tax
credit extensions will result in the loss of more
than 116,000 jobs and $19 billion in investment in
2009 in the solar and wind energy industries
alone... Congress will support the continued
development of 42,000 megawatts of renewable energy
projects in 45 states equivalent to the capacity of
75 electric power plants by extending these tax
credits."
It is unfortunate that governments everywhere prop
up carbon-based industries. These run the gamut from
tax deductions, tax incentives, and numerous other
support programmes, both direct and indirect. Try
adding to oil costs the US war/defence expenditures
of its Middle East activities to safeguard oil
supplies, and then see what a barrel of oil would
cost! If it were a true even playing field,
renewables, even without incentives, would be quite
competitive.
Investors with $1.5 Trillion in Assets Call on
Congress to Extend Renewable Energy and Energy
Efficiency Tax Credits, press release by Ceres,
July 29, 2008, USA.
Watson Wyatt
Report Sees ESG As One Of Six Major Investment
Trends In Next Five Years. -
[COMMENTARY]
ESG - environmental, social and governance - issues
are coming to the fore, as they must, for properly
assessing investment opportunities and obstacles.
Analysing companies this way necessitates a
long-term focus, something the investment industry
does not, by and large, do. This report highly
criticizes the industry for its short-termism.
ESG to be one of six major investment trends in next
five years: Watson Wyatt, by Hugh Wheelan, July
31, 2008, Responsible Investor, UK.
Investment
Professionals Vote ESG As Preferred Term.
-
[COMMENTARY]
"‘AXA Investment Managers and AQ Research have
announced the results of a survey in which over 350
global investment professionals took part... ESG’
and ‘sustainability’ emerged as preferred terms
associated with integration from a selection of 16
choices... The preference... was consistent in
Europe and North America..."
Investment Professionals vote ‘ESG’ and
‘Sustainability’ as top descriptions, July 31,
2008, Accountability-Central.com, USA.
Pax Funds
Fined $500,000 By US Securities & Exchange
Commission For Failing To Abide By Their Own
Investment Screens. -
[COMMENTARY]
"Pax World had violated the funds’ SRI
restrictions which prohibited them from buying
securities of companies that derived revenue from
the manufacture of alcohol or gambling products; or
derived more than 5% of their revenue from contracts
with the U.S. Department of Defense or failed to
satisfy the funds’ environmental or labor standards,
the filing said." Though not stated, it is
likely that the pressure to perform for short term
goals could be a factor. Most fund managers are
measured for their short term performance, even
though their investors have a supposed long-term
horizon. The average US mutual fund has over a 100%
turnover of its holdings each year! Hopefully, as
consciousness rises, both investors and investment
managers will move to a longer-term focus and such
misdeeds will be less.
Pax World, SEC settle non-SRI charge, by Barry
B. Burr, July 31, 2008, Pensions & Investments,
USA.
Ethical
Investing Groups Seek End To Tar Sands & Other
Unconventional Oil Production. -
[COMMENTARY]
"Shell, BP and other oil companies at the centre
of the tar sands revolution in Canada are facing a
backlash from the Co-operative [UK] and other
members of the ethical investment community
determined to bring a halt to these operations for
environmental reasons." This has the potential
to be big. Investors in these companies will have to
watch these developments closely. Personally,
investing in carbon related industries is something
I have always avoided because of their environmental
consequences.
Oil: Campaigners seek an end to production of
CO2-intensive 'unconventional fuels,' by Terry
Macalister, July 29, 2008, The Guardian, UK.
Eating Less
Meat & Junk Food Could Cut Fossil Energy Use By
Half. -
[COMMENTARY]
David Pimentel and colleagues at Cornell University,
New York, suggest that: 1) Americans eat less as
they already consume over 30% more calories than
they need; 2) reduce meat and junk food consumption;
3) move to traditional organic farm production; and
4) improvements to food processing, packaging and
distribution that are known to reduce energy
requirements. I expect these things to happen in the
years ahead. Though it might be tricky to do,
finding companies that benefit from these trends
could be among the best stocks that are good to
invest in over the medium to longer term. It is an
area that many ethical investors might want to
discuss with their advisors.
Eating Less Meat And Junk Food Could Cut Fossil
Energy Fuel Use Almost In Half, July 24, 2008,
ScienceDaily, USA.
US
Environmental Protection Agency (EPA) Now Has 200
Companies In Its Climate Leaders Program.
-
[COMMENTARY]
"EPA's Climate Leaders represent more than ten
percent of the U.S. Gross Domestic Product and have
pledged to prevent estimated GHG emissions
equivalent to nine million cars annually... Climate
Leaders, launched in 2002, is a voluntary program
that works with companies to measure greenhouse gas
emissions and to set aggressive long-term emissions
reduction goals" Many of the companies in their
program are among the most environmentally conscious
major corporations in the USA.
EPA Climate Leaders Now 200 Partners Strong, Eight
Companies Establish New Greenhouse Gas Reduction
Goals, press release, July 24, 2008,
Environmental Protection Agency, USA.
SustainableBusiness Lists Their Top 20 Global
Sustainable Businesses. -
[COMMENTARY]
If you are looking for sustainable stocks that are
good to invest in, this is a list you might want to
look at. Always get help with investing from a
qualified professional.
SB20: The World's Top Sustainable Business Stocks,
July 25, 2008, SustainableBusiness.com, USA.
Australia's
RepuTex Rates Carbon Emissions of Companies In The
S&P ASX300 index. -
[COMMENTARY]
The most highly rated companies in their analysis
include Babcock & Brown Wind, Arrow Energy,
Queensland Gas Company and Sims Group. The rating of
an individual company's carbon emissions is becoming
mainstream. However, the rating techniques
themselves still need to be standardized.
The potential of Australia's top 300 companies to
thrive in a low carbon economy has been assessed by
market analysts, by David Gibbs, July 22, 2008,
edie.net, UK.
Are US
Organic Food Sales Slowing? -
[COMMENTARY]
According to an article in the Progressive
Grocer, "... aggregate consumer use of organics
dropped four percentage points from 73 percent of
the population buying organics in 2006, to 69
percent in 2008." The article provides a number
of reasons why a 'bump' in the road of organic sales
is occurring now.
Signs Show Possible Bump in Road for Organics Sales:
Hartman Study, July 24, 2008, Progressive
Grocer, USA.
Socially
Responsible Investing (SRI) Becoming Mainstream In
Europe. -
[COMMENTARY]
"With 2007 net sales of €9.3bn accounting for
10pc of total European [fund] sales, SRI funds are
rapidly moving from niche to mainstream, Lipper Feri
reports." Continental Europe had been lagging
the UK in buying ethical stocks and bonds. It seems
they are catching the ethical investing wave now as
well.
European SRI moving from niche to mainstream, by
Rob Kingsbury, July 24, 2008, Professional
Advisor, UK.
Guide
Launched For Faith Groups On Influencing Corporate
Behaviour. -
[COMMENTARY]
The Guide is co-sponsored by The Ecumenical Council
for Corporate Responsibility (ECCR), responsible
investment specialists EIRIS and Ethical Screening.
"[It] aims to support church members, faith
communities and other responsible investors in
influencing companies on the basis of Christian and
ethical values."
Investment and Engaging with Companies: A Guide for
Faith Communities, July 23, 2008, The Ecumenical
Council for Corporate Responsibility (ECCR), UK.
Summer Issue
of GreenMoney Journal Offers Great Insights Into
Organic Food Marketplace. -
[COMMENTARY]
Cliff Feigenbaum, founder and publisher of the
GreenMoney Journal has done an excellent job in
analysing the American organic food industry. As
this industry grows there will be more and more
opportunities for individual ethical investors to
participate in companies associated with this
industry.
The
Organic Marketplace: From Food, Fashion and Flowers
to the Future of Farming, by Cliff Feigenbaum,
July 23, 2008, GreenMoney Journal, USA.
SHARE Reports
On Its Company Engagement Activities In Canada.
-
[COMMENTARY]
The report covers SHARE's initiatives with 87
Canadian companies, many from the resource
extractive industries. The advantage of using
corporate social responsibility is increasingly
being seen by companies as necessary to expand their
operations and as a means to show that their stocks
are good to invest in.
Shareholder engagement report, Q2/08,
Shareholder Association for Research & Education
(SHARE), July 23, 2008, Canada.
Sustainability Reporting By S&P 100 Companies Makes
Great Gains Between 2005-2007. -
[COMMENTARY]
"More than half of the United States’ 100 largest
publicly traded companies now report on their
sustainability efforts, and more than a third now
incorporate elements of the Global Reporting
Initiative (GRI) sustainability reporting
guidelines... " This is great news. I still say
however, that for public companies there should be
standardized environmental, social and governance (ESG)
reporting. Furthermore, these reports should be
independently audited too! Only then can investors
and other stakeholders be really convinced that what
is being presently is honest and comparable across
companies and industries.
Sustainability reporting by S&P 100 Companies made
major advances from 2005-2007, July 17, 2008,
Sustainable Investment Research Analyst Network (SIRAN),
USA.
Study Of US
Car Market Says Consumers Want More Green Cars.
-
[COMMENTARY]
"In the 2008 Alternative Powertrain Study, J.D.
Power has found that 30 percent of consumers think
U.S. automakers should structure their vehicle
lineups 'with a focus on hybrid-electric, clean
diesel, and flexible fuel vehicles' and 39 percent
think the automakers should invest more on emerging
powertrain technologies... 62 percent of consumers
are considering a hybrid vehicle, up from 50 percent
last year." Clearly, U.S. consumers are now
realizing the implications of Peak (dirty) Oil.
J.D. Power study says consumers want more green
investment from automakers, by Zach Gale, July
16, 2008, Motor Trend, USA.
London's
EIRIS Releases Study On Climate Change Reporting By
The 300 Largest Companies In The FTSE All World
Index. -
[COMMENTARY]
This study is worthwhile reading for all investors.
How companies deal with their climate change issues
will likely have a significant bearing on their
long-term stock prices. Environmentally conscious
major corporations may well lead in investment
returns in the years ahead.
The state we’re in: global corporate response to
climate change and the implications for investors,
July 15, 2008, Ethical Investment Research Services
(EIRIS), UK.
Will Wind
Power Investments Succeed? -
[COMMENTARY]
A highly provocative study on Danish wind power says
wind power may not live-up to our expectations. Any
green or ethical investor invested in energy should
review and assess these findings for themselves. I
have always supported wind and solar power. However,
I now have more questions to ask about it. Perhaps the 'holy-grail' for these
energies will be to find an efficient and effective
way to store their energy.
Wind turbine marketers are full of hot air, by
Neil Reynolds, July 11, 2008, The Globe & Mail,
Canada.
The UK's
Business In The Community's Corporate Responsibility
Index Provides Useful Insight On CSR In UK &
International Companies. -
[COMMENTARY]
"Since 2002, when it was launched, 280 of the
largest companies in Britain have measured
themselves via the index. It is in essence no more
than a benchmarking tool that allows companies to
assess their performance on Corporate Social
Responsibility, discover their strengths and
weaknesses, and compare themselves to peers... Over
the past year alone, 126 companies participated."
Measuring how companies shape the world, by Ross
Tieman, July 8, 2008, FT.com, UK. If you are looking
for ethical stocks that are good to invest in, you
might want to review the findings shown here:
Latest CR Index Results, Business in the
Community, UK.
G8 Communiqué
"We recognize and commend efforts by private
businesses for undertaking socially responsible
investments. We will encourage good corporate
governance practices." -
[COMMENTARY]
It is promising to see that even our top political
leaders recognize the increasing importance of
socially responsible investing.
World Economy, document, press release, July 8,
2008, Hokkaido Toyako Summit, Japan.
Mercer Survey
Says 99% Of Responding Investment Analysts Use ESG In Their
Analysis, Though Only 23% Label
Themselves As SRI Investors. -
[COMMENTARY]
ESG (environmental, social and governance) factors
are now clearly in the minds of investment analysts,
whether they be SRI (socially responsible investors)
or not. Mercer continues excellent work in promoting
and assessing what is happening in the investment
world concerning these matters.
ESG ratings of fund managers - a step closer towards
the mainstreaming of ESG integration, by
Danyelle Guyatt, July 4, 2008, Mercer.
Ceres
Addresses UN & SEC On Environmental Investments;
Member Companies Investing $10 billion In Renewables.
-
[COMMENTARY]
This article provides insight into the role Ceres is
now playing in promoting environmental investment.
Ceres: the US investor coalition advising the UN,
lobbying the SEC and investing $10bn in renewables,
by Hugh Wheelan, July 8, 2008, Responsible
Investor, UK.
Sharia
Banking: New Entrants Include Canada's Royal Bank.
-
[COMMENTARY]
This interesting review article also discusses the
significant role and impact of Muslim scholars on
Islamic banking.
RBC plans to enter Islamic finance market, by
Sonia Verma, July 7, 2008, The Globe & Mail,
Canada.
Green Stock
Exchange To Be Launched This Summer. -
[COMMENTARY]
"The Green Stock Exchange (GREENSX) is the first
social stock exchange in North America. We are
'empowering earth friendly and humanity friendly
businesses ', such as social businesses (also called
social benefit organizations)." Such an exchange
will certainly be of interest to all socially
responsible and ethical investors. It will be well
worth watching!
The Green Stock
Exchange, USA.
ASSET4 Study
Confirms Difficulty Of Funds Integrating
Environmental, Social & Governance (ESG) Factors Due
To Short Term Bias. -
[COMMENTARY]
"European pension funds are having trouble
integrating long-term environmental, social and
governance factors into their investment portfolios
because of their asset managers’ and consultants’
focus on the short term, according to a survey
published by Swiss ESG researcher ASSET4 and
Germany’s Federal Environment Ministry." Such a
bias may well harm long-term results. Pension
and fund holders need to question their fund
managers on this topic and re-negotiate their terms
of engagement.
Short-term focus thwarts Europe plans’ SRI, July
4, 2008, Pensions & Investments, USA.
Citigroup,
Goldman Sachs and Société Générale Named Best
Providers Of Extra-Financial Issues (EFIs) By The
Enhanced Analytics Initiative (EAI). -
[COMMENTARY]
Extra-financial issues include environmental, social
and governance factors. "The 30-member EAI
initiative collectively owns or manages around €2
trillion (US$3trn) of assets."
Citi, Goldman and SocGen top for ESG research
commissions, says EAI, by Hugh Wheelan, July
3, 2008, Responsible Investor, UK.
Trading
Screens To Incorporate Real Time Environmental,
Social & Governance Ratings/Information. -
[COMMENTARY]
"ASSET4 and France’s OpenSRI launch on-line ESG
research products... ASSET4, the Swiss
sustainability research house, has combined
corporate ESG (environmental, social and governance)
and financial data into one trading screen it says
can be used alongside existing financial screens
such as Bloomberg and Reuters..." Apparently,
Bloomberg is also testing such a combined screen.
These developments are revolutionary for investment
professionals and will likely mean tremendous growth
in the use of ESG factors for stock and bond
analysis. This is a very welcome development.
Info providers launch real-time corporate ESG
rankings, by Hugh Wheelan, July 3, 2008,
Responsible Investor, UK.
UN
Environmental Programme Says New Investment In
Sustainable Energy Up 60% In 2007 From 2006.
-
[COMMENTARY]
The total came to $148 billion for 2007. "Wind
energy again attracted the most investment ($50.2
billion in 2007), but solar power grew most rapidly
attracting some $28.6 billion of new capital and
growing at an average annual rate of 254% since
2004, driven by the advent of larger project
financings... Most of the new money flowed into
Europe, followed by the USA. However, China, India
and Brazil draw growing investor interest, their
share of new investment growing from 12% in 2004 to
22% in 2007, an increase in absolute terms of 14
times, from $1.8 billion to $26 billion." Wind
power is seen as competitive in many countries and
solar power rates are coming down fast too. However,
discerning the green stocks that are good to invest
in is a great challenge.
Clean Energy Investments Charge Forward Despite
Financial Market Turmoil, July 1, 2008, press
release, United Nations Environment Programme,
Kenya.
Greenpeace
Produces Its New Greener Electronics Guide.
-
[COMMENTARY]
Sony Ericsson and Sony rank highest; Microsoft and
Nintendo rank lowest. If you are looking for the
best socially responsible stocks to invest in among
the electronics companies, this will be a good place
to get some ideas.
Story:
Green Electronics Scores Fall as Greenpeace Adds
Criteria, July 2, 2008, GreenBiz, USA.
See actual guide at:
Guide to Greener Electronics.
US Graduating
MBAs Say They Want To Work For Companies With Good
Corporate Social Responsibility Programs.
-
[COMMENTARY]
"A survey of 759 graduating MBAs at 11 top
business schools reveals that the future business
leaders rank corporate social responsibility high on
their list of values, and they are willing to
sacrifice a significant part of their salaries to
find an employer whose thinking is in synch with
their own... The study by David Montgomery and
Catherine Ramus of UC Santa Barbara examines the
tradeoffs students are willing to make when
selecting a potential employer." Clearly, for
companies, one of the advantages of using corporate
social responsibility is in attracting and retaining
the best workers. Companies with the best CSR
programs usually prove to be the most profitable as
well.
Challenging Work and Corporate Responsibility Will
Lure MBA Grads, by Bill Snyder, June, 2008,
Stanford Graduate School of Business News, USA.
Mainstream
Fund Managers Vary Widely In Socially Responsible
Investing Competencies. -
[COMMENTARY]
A new report by RImetrics "Responsible
Investment 2008," shows that more and more
mainstream fund managers are accepting
environmental, social and governance (ESG) factors
as important in evaluating companies. However, their
competencies in conducting such analysis vary
widely. There will be a learning curve for
mainstream fund managers in integrating ESG factors
in their company evaluations, but the fact that they
see ESG becoming increasingly important bodes well
for investing generally.
Mainstream Fund Managers Vary Widely on Social
Responsibility, by Anne Moore Odell, July 1,
2008, SocialFunds.com, USA.
Swiss Bank,
Pictet, Says Socially Responsible Companies Have
Less Of A Carbon Footprint. -
[COMMENTARY]
"Pictet claims a socially responsible global
equities portfolio would have carbon emissions 40%
below those of a portfolio indexed to the MSCI
global equities index." I have tried to get hold
of the actual study, but have only this reference.
Still, it is interesting reading.
Pictet measures “extra-financial” returns from
socially responsible investing, July 1, 2008,
Wealth-Bulletin, UK.
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