Ethical Investing News/Commentaries:
Commentaries by Ron
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UK Fair Trade Up Thirty Times In
Ten Years. -
"Fairtrade grew more than any other sector of
virtuous goods in the past decade, according to an
audit of ethical shopping in the Noughties." No
doubt a sign of a growing social consciousness, and
comes as a pleasant reminder of the values we
celebrate at this special time of the year.
Sales of Fairtrade goods show 30-fold increase in 10
years, by Martin Hickman, December 30, 2009,
The Independent, UK.
Do Socially Responsible Funds
Carry More Governance Risk? Study Says Yes. -
"According to the firm Audit Integrity, if you
take two socially responsible funds as an example it
appears that their 'socially responsible' holdings
contain companies who practice some pretty risky...
aggressive accounting or corporate governance
[practices]... " Well, many might ask how
can this be? Without knowing all the facts, it is
possible that SRI ratings companies might not fully
consider a company's accounting practices.
Also, SRI funds often have proportionately higher
holdings of financials and tech stocks than most 'conventional' funds. As we know from the recent
financial meltdown and the dotcom bubble some years
back, accounting practices in these groups can
sometimes be questionable. Ethical investors may
want to quiz their fund managers on this topic!
Audit Integrity: 'Socially Responsible' Companies
Have Worse Accounting Practices Than Normal Ones,
by Vincent Fernando, December 28, 2009, The
Business Insider, USA.
Goldman Sachs & Other Financial
Firms Bet Against Client Positions--And Won. -
"... authorities appear to be looking at whether
securities laws or rules of fair dealing were
violated by firms that created and sold these
mortgage-linked debt instruments and then bet
against the clients who purchased them..."
Goldman and many other Wall Street firms created,
bundled, and sold hundreds of billions of dollars of
mortgage backed securities (MBS). Then, unbeknownst
to clients, acting as principals, they bet-against
(shorted) what their clients' were holding and made countless
billions in profits.
To me it is fair game that financial firms can bet
against products they create and sell. After all,
most of these clients are professional, astute, and
sophisticated investors. HOWEVER, in the
interests of fairness and ethics, they should make
transparent to these clients, and perhaps to the
public at large, their contrarian position. It
is the same principle as when interviewers ask
analysts if they own any stock in the company they
are recommending. Full disclosure needs to be
enforced, as it is when you buy any new stock or
Banks That Bundled Bad Debt Also Bet Against It,
by Gretchen Morgenson and Louise Story, December 23,
2009, The New York Times, USA.
ING Internet Poll: 43% Of
Investors Willing To Give Up Some Profits To Invest
In A Socially Responsible Way. -
that ethical investing means lower returns is deeply
entrenched in the mass psyche. This is probably the
biggest impediment to converting what we know is
widespread desire to invest ethically into getting
investors to actually do so. Need I say it, but most
research studies over the past decade studying
ethical portfolio returns most commonly show that
they provide similar returns to conventional
How much return would you give up to invest in
socially responsible (ethical) funds? eZonomics
Polls, December 17, 2009.
More S&P 100 Companies Reporting
On ESG Issues. -
"The number of S&P 100 companies producing
sustainability reports with performance data jumped
by more than a third in the past year, according to
a new report from the Sustainable Investment
Research Analyst Network (SIRAN), a working group of
the Social Investment Forum (SIF)." The upward
trend among the larger western companies to report
on ESG issues continues to grow. It is
clear that many companies believe by publishing such
information they might get greater buying interest
in their stock. It is a win for the company as well
as for ethical investors.
Number of S&P 100 Firms Producing Sustainability
Reports Jumps by More Than a Third; Nearly All Offer
Some Sustainability Informat,
December 17, 2009, press release, Social Investment
Forum (SIF) and the Sustainable Investment Research
Analyst Network (SIRAN), USA.
ESG Corporate Reporting Still
Emerging In Emerging Markets. -
"While a significant number of emerging market
companies have begun to report on some
environmental, social and governance (ESG) issues,
most do not report extensively or according to
global standards such as the guidelines of the
Global Reporting Initiative (GRI), according to a
new report authored by the Emerging Markets
Disclosure Project (EMDP) of the Social Investment
The data from this survey is not unexpected. It
seems to mirror what is going-on in Copenhagen where
the developing countries are, and it is difficult to
fault them on this, primarily interested in getting
food on the table and clean water to drink. Hence,
companies in the developing world reflecting the
consciousness of their local stakeholders do not
have the same focus as in the developed world,
concerning ESG issues.
However, this is not to imply the importance of
dealing now with climate change or the need for
developing world companies to make efforts to
improve on their reporting of ESG activities.
Actually, I suspect that should they report to GRI
standards, some in the west might be quite horrified
in what they read.
Few Companies in Emerging Markets Offer
Comprehensive “ESG” Reporting; Brazil and South
Africa Stand Out as Exceptions,
December 17, 2009, press release, Social Investment
Forum and The Emerging Markets Disclosure Project (EMDP),
Australian Fund Managers Ahead In
Responsible Investment. -
"Funds representing around half of Australia’s
total funds under management are signatories to the
United Nations Principles for Responsible Investment
(UNPRI), compared with a global average of around 20
per cent...Erik Mather, managing director of
Sydney-based corporate governance consultancy Regnan,
[says] 'Forty three per cent of all institutional
pension funds in Australia have signed up to UNPRI
along with 50 per cent of institutional managed
funds, and if that’s not the highest in the world
it’s up there.'" Well done Australia!
Australia acts on responsible investment, by
Lachlan Colquhoun, December 13, 2009, Financial
Survey Reveals Failure Of UK
Finance Firms To Reform. -
"Research by Co-operative Asset Management, one
of the UK's leading socially responsible investment
managers, found remuneration policy had gone in the
wrong direction at half of the 30 finance companies
in the FTSE 350. Behaviour was slightly worse in the
financial sector than in a comparison of 30
non-financial organisations, where 14 companies were
found wanting." My guess is that these
findings are true at the majority of financial firms
around the world.
Executive pay: Co-op report reveals failure of firms
by Ruth Sunderland, December 13, 2009, The
S&P, IFC Launch Carbon Index For
Emerging Markets. -
"The S&P/IFC Carbon Efficient Index should
mobilise more than $1 billion of investment in firms
with low carbon footprints over the next three
years, IFC said in a statement. The index measures
the performance of companies in emerging markets
with relatively low carbon emissions. It includes 21
markets and more than 800 stocks." Increasingly,
sustainability is seen as a principle theme in all
markets, and so this new index is most welcome.
REFILE-S&P, IFC launch carbon index for emerging
markets, by Nina Chestney, editing by Keiron
Henderson, December 9, 2009, Reuters, UK.
New US Catholic, Methodist, &
Christian Faith Based ETFs Launched. -
"Industry newcomer FaithShares Trust released its
first three ETFS targeting Christians: FaithShares
Catholic Values; FaithShares Methodist Values; and
FaithShares Christian Values. FTSE Group and KLD
Research & Analytics, which specializes in socially
responsible investing, developed the underlying
indexes." These new funds are a sign of growing
interest in faith based ETFs.
FaithShares Christens Religious ETFs by Trang
Ho, December 9, 2009, Investor's Business Daily,
China Second Most Attractive
Place For Green Investment. -
"China has overtaken Germany to become the second
most attractive country in the world in which to
invest in renewable energy projects, Ernst & Young
said Monday in its latest global renewable energy
country attractiveness index. China, which is ranked
just behind the U.S., has moved up the index driven
by relaxation of restrictions on the amount of
non-domestic components used in renewable generation
technologies, increased subsidies for solar and a
recently announced plan to lower its carbon
intensity." The question is how do you invest in
China? If interested, talk to your advisor for
possible stocks that are good to invest in for that
China Now 2nd Most Attractive Place For Green
Investment-Report, by Selina Williams, December
6, 2009, Dow Jones News Wires, UK.
Social Investment Forum Survey
Says US Investment Consultants Say Responsible/ESG
Investing Here To Stay. -
"U.S. investment consultants believe that the
growing interest of their clients in environmental,
social and governance (ESG)/responsible investing
issues is not going to be a short-lived phenomenon:
Nearly nine out of 10 (88 percent) believe that
client interest in ESG will continue to grow over
the next three years, and none believe it will
decrease, according to a new survey conducted by the
Social Investment Forum and Pensions & Investments."
This poll specifically deals with the US and
complements the Eurosif survey below.
Social Investment Forum: Nearly All U.S. Investment
Consultants Surveyed Agree Responsible/ESG Investing
is Here to Stay, press release, December 2,
2009, Social Investment Forum, USA.
Eurosif Survey Finds 89% Of
Investment Consultants Expect Increasing Interest In
ESG In Next Three Years. -
"ESG still seems to be in its infancy as Eurosif
approached over 300 consultancy firms to take part
but received just under 50 responses in total, and
84% of investment consultants chose not to respond."
Some of the survey's findings might be of use to
ethical investment professionals.
Lack of client demand hinders ESG growth -
consultants, by Nina Röhrbein, December 2, 2009,
IPE International, UK.
Canada's Meritas Financial and
Qtrade Fund Management Announce Merger. -
"The combined entity will be part of the Qtrade
Financial Group ('Qtrade') which will have over $4
billion in assets under administration and $350
million in assets under management. Meritas Mutual
Funds will continue to operate as a separate
division within Qtrade and will continue to focus
exclusively on Socially Responsible Investing
Meritas has shown outstanding leadership in
developing ethical investing in Canada.
My hope is that they are able to continue in that
capacity. I wish them continued great success.
Meritas Financial and Qtrade Fund Management
Announce Intention to Merge, press release,
December 2, 2009, Meritas Financial/QTrade Fund
Only Two Canadian Oil Sands
Operations In Alberta Meet Government Rules For
Liquid Tailings. -
"The review conducted by the Pembina Institute
and Water Matters found that only two oil sands
operations reported they would meet the rules to
reduce toxic tailings between 2011 and 2013 (the
start date for binding rules to capture and start
solidifying liquid tailings). The seven remaining
operations submitted plans that will not comply with
rules for reducing their production of liquid
tailings by the first target date in 2011. Some
companies submitted plans suggesting they may not
meet the rules for tailings management for over 40
years." Ethical investors should read this
information and note that some ethical funds may
also be investing in these operations as well.
Only two oil sands operations set to meet rules to
deal with liquid tailings,
press release, December 1, 2009, Pembina Institute,
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