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Ethical Investing News/Commentaries:
Feb. 2010 |
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Commentaries by Ron
Robins
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Social Investment Organization (SIO)
Produces Canadian Guide To Socially Responsible
Mutual Fund Companies. -
[COMMENTARY]
"All of the firms listed in this Directory are
Sustaining or Associate Members of the SIO. As
Canada’s national association for socially
responsible investment, the SIO raises public
awareness of SRI, educates the financial community
and the public about SRI and takes a leading role in
furthering the use of SRI." This is a very
useful guide for all Canadian ethical investors.
Your Guide to Socially Responsible Mutual Fund
Companies in Canada, February 26, 2010, Social
Investment Organization, Canada.
Swiss Fund Manager Vontobel Says
Sustainable Investment In Asia Could Climb From
Current US$20 Billion Up To US$4,000 Billion By
2015. -
[COMMENTARY]
"In addition, the study examines on the one side
the tremendous pace of change in social,
environmental and corporate governance standards in
the region and on the other the fact that although
investors recognise the corresponding risks they
underestimate the opportunities, thanks to the major
progress achieved in data availability, to identify
Asian companies with high standards of
sustainability and consequently to optimise their
investment strategy accordingly."
The $4,000 billion number is certainly an eye
catcher! There is no doubt in my mind that
sustainable investing in Asia is still in its early
stages and will grow enormously in the years
ahead--and probably much faster than their rapidly
growing economies as well. We only recently became
aware that China is outspending and outpacing the US
in green tech.
Sustainable Investing in Asia - Uncovering
Opportunities and Risks, February 2010, Vontobel,
Switzerland.
Company Carbon Ratings
Announced By Environmental Investment Organization (EIO).
-
[COMMENTARY]
"For the first time a Ranking has been created
which penalises and rewards companies on a global
scale against absolute emissions with a particular
emphasis on the reliability of the data being
provided. The effect of the Rankings is first and
foremost to encourage disclosure and verification
amongst companies. It will then begin to create
incentives for companies to reduce their emissions
through share price pressure."
This is an idea whose time has come. Ethical
investors can see the rankings of most of the
world's big companies. The methodology of how they
construct the rankings is also available. This
ranking system might be one that many ethical
investors will want to follow.
Launch of ET Carbon Ranking, press release,
February 22, 2010, Environmental Investment
Organization, UK.
UAE Companies Not Adopting CSR
Policies. -
[COMMENTARY]
"More than 90% of businesses in the UAE do not
adopt corporate social responsibility, or CSR,
policies and practices associated with auditing and
monitoring, a study revealed." Is it the
cultural characteristics of the region, or for other
reasons, for the non-adoption of CSR by companies in
the United Arab Emirates?
Study: Over 90% of UAE companies do not adopt CSR
policies, by
T. Ramavaman, February 23, 2010, MENAFN-Khaleej
Times, Jordon.
SHARE Issues 09 Key Proxy Vote
Survey Of Canada's Investment Managers. -
[COMMENTARY]
"The purpose of SHARE’s annual Key Proxy Vote
Survey is to give pension fund trustees information
that will allow them to compare proxy voting by
investment managers and proxy voting services...
more firms are issuing proxy voting reports to their
clients, consulting with their clients in the
development of their proxy voting guidelines, and
disclosing their proxy voting guidelines to the
public." This report will be of particular
interest to Canadian pension fund boards and others
who hire asset managers to manage their funds.
09 Key Proxy Vote Survey, February 2010, SHARE,
Canada.
US Study Says Vice Fund (VICEX)
Outperformed Domini Social Equity Mutual Fund (DSEFX)
Over Long Term, But Not In 2009. -
[COMMENTARY]
"We examine the performance of socially
responsible investing (SRI) vs. vice investing
through sin funds. Our research shows while the
annualized return of SRI through Domini Social Index
(DS 400 Index) from 1990 to 2009 has been higher
than that of S&P 500, the relative 5 and 10- year
returns are more favorable in S&P 500. We also find
that while SRI through Domini Social Equity Mutual
Fund (DSEFX) outperformed vice investing through
vice fund (VICEX) over the most recent one year,
VICEX has outperformed DSEFX over the long term.
Presumably, U.S. investors sacrifice returns by
investing in social responsibility."
I believe we are entering a very
different investment world now. The emphasis on
environmental, social, and governance (ESG)
criteria, plus the rising concerns about ethics,
point to potentially superior long term results for
ethical investors. Perhaps the past year where
ethical funds performed really well against their
conventional peer is indicative of the trend I
foresee.
Socially Responsible Investing vs. Vice Investing,
by Hoje Jo, Roopali Sharma and Sylvie Wright, all at
Santa Clara University, and Tamanna Saha of New York
University, February 2010, USA.
Natural Marketing Institute (NMI)
Publishes Its Top 10 Trends For The Next Decade.
-
[COMMENTARY]
"These trends are the result of various NMI
research sources including the Health & Wellness
Trends Database® (HWTD), the LOHAS Consumer Trends
Database® (LCTD), Healthy Aging/Boomer Database® (HAB)
and Supplements/OTC/Rx Database™ (SORD) as well as
analysis of current activities in the marketplace.
NMI databases, now including 11 years of data across
500,000+ U.S. consumers, provide comprehensive
information across more than 150 product
categories."
The trends include "Getting Off the Grid” and
"Meaningful Green." To understand them
click here.
Studying these trends might help you on where to
place some of your funds.
Top Trends for the
New Decade,
February 17, 2010, Lohas.com, USA.
Ethical Investor Groups Calling
For Boycott Of 'Conflict Minerals' From The Democratic
Republic Of The Congo. -
[COMMENTARY]
"Since the conflict began, more than 5.4 million
have lost their lives. The DRC is one of the most
mineral rich countries in the world, with sizeable
deposits of gold, tantalum, tin and tungsten.
According to the United Nations, over 50% of the
mines in eastern Congo are controlled by warring
armed groups, who demand 'taxes,' bribes or other
payments for the minerals being extracted out of the
mines. The majority of the minerals are smuggled to
neighboring countries where they are sold to
smelters, and ultimately find their way into
finished consumer products. This practice directly
hinders repatriation and disarmament efforts, as it
provides armed groups with a robust funding source."
Deutsche Bank & NASDAQ OMX
Introduce The DB NASDAQ OMX Clean Tech Index. -
[COMMENTARY]
"DB Climate Change Advisors (DBCCA), the climate
change investment and research business of Deutsche
Bank's Asset Management business, and The NASDAQ OMX Group,
Inc. (Nasdaq:NDAQ) today announced the introduction
of the DB NASDAQ OMX(R) Clean Tech Index (DBCC). The
index is an accurate, real-time representation of
the global clean technology sector with exposure to
clean energy, energy efficiency, transport, waste
management and water companies. This is the first
clean technology index co-branded by a global
exchange company and a global bank."
We have another good clean tech index to watch now.
For ethical investors, it is always useful to see
what companies such indices include. They might give
you ideas as to what to put into your own
portfolio.
Deutsche Bank and NASDAQ OMX Introduce the DB NASDAQ
OMX Clean Tech Index, press release, February
10, 2010, Deutsche Bank & NASDAQ, USA.
International Brands Disclosing
Global Forest Footprint. -
[COMMENTARY]
"A Report published today by the investor-backed
initiative the Forest Footprint Disclosure (FFD)
project reveals the names of those businesses that
have responded to its first call to disclose details
of their ‘Forest Footprint’. This term indicates the
extent to which procurement policies for Forest Risk
Commodities (FRCs) such as palm oil, soy, timber,
beef, leather and biofuels are linked to
deforestation. The Report identifies two high
profile British High Street names as ‘Best
Performers’ in their sectors – Marks & Spencer
(General Retail) and Sainsbury’s (Food and Drug
Retail)."
Again, looking at what the companies report--or do
not report--is a worthwhile exercise for
ethical investors. It just might affect one's
holdings.
International Brands lead the way in disclosing
their global forest footprint,
February 10, 2010, Forest Footprint Disclosure
Project. See
full report (over 6MB PDF). UK.
Shareholders Successfully
Pressure Shell To Freeze Executive Salaries &
Incorporate Sustainability Measures In Employee
Bonuses. -
[COMMENTARY]
"Institutional shareholders have welcomed an
announcement by Shell, the Anglo-Dutch oil giant,
that it plans to limit top executives’ pay and
include sustainable development as a significant
part of performance bonuses." The winds of
change are hitting corporations everywhere. By
taking a lead like this Shell is demonstrating the
advantages of using corporate social responsibility
to advance its own interests as well.
Shell freezes exec salaries and includes
sustainability performance after shareholder
pressure, by
Daniel Brooksbank, February 17, 2010, Responsible
Investor, UK.
Corporate Water Usage Risk
Unmeasured. -
[COMMENTARY]
"Unfortunately, the vast majority of large
publicly traded companies are failing to adequately
manage and disclose the risks they face from water
scarcity, an issue that will likely become more
acute as the world's population increases and the
future impacts of climate change come to pass,
according to new Ceres research." This is a
subject ethical investors need to be aware of as it
breaks upon the consciousness of investors
generally. Water management and costs will be a huge
consideration for companies in the not so distant
future and could significantly affect financial
results and stock prices.
Lack of Awareness About Water Risks Threatens to
Sink Global Firms, February 11, 2010, GreenBiz,
USA.
What Companies Are Green? Wide
Gap Between Public Perception & Reality. -
[COMMENTARY]
"New research suggests some of the world's
largest companies are still struggling with
communicating their environmental efforts to
customers. The latest installment of MapChange 2010
-- a joint effort from Change, a Canadian consulting
firm, Angus Reid Public Opinion, and the nonprofit
Climate Counts -- measured actual and perceived
sustainability efforts of major consumer shipping,
food service and banking companies, using a scale of
0-100." Amazing what good PR can do. Companies
with terrible sustainability scores such as Wendy's
International and Burger King score well on
sustainability according to public perceptions.
Study Shows Wide Gap Between Actual and Perceived
Green Efforts, February 9, 2010, GreenBiz, USA.
From Oil To Gold, 'Clean'
Resource Inputs Demanded By Retailers. -
[COMMENTARY]
"Whole Foods and Bed, Bath and Beyond have begun
working to phase out from its operations
transportation fuel from the Canadian tar sands.
Meanwhile, Cartier, Sears and more than 60 other
retailers have committed to buying gold from
environmentally responsible sources." A
good discussion here on how even jewellery retailers are
demanding 'untarnished' gold.
From Oil to Gold, Top Companies Shunning 'Dirty'
Resources, February 10, 2010, GreenBiz, USA.
More Large US Companies
Boycotting Canadian Tar Sands Oil. -
[COMMENTARY]
"... two Fortune 500 companies announced plans to
eliminate the high-carbon Alberta fuel from its
supply chain. The U.S.-based firms Whole Foods
Market Inc. and Bed, Bath and Beyond Inc. both
unveiled new fuel policies designed to wean
themselves off 'higher-than-normal greenhouse gas
footprints' inherent in feedstock from the Alberta
tar sands." Despite the action of these large
retail firms--and even if US companies increasingly
boycott tar sands oil--companies from China, South
Korea, and possibly even Japan, may well fill the gap
by buying more of that oil. The need for a global
climate change solution is evident by what is
going-on with tar sands oil.
2 U.S. firms wash hands of tar sands, by Mitch
Potter, February 10, 2010, The Toronto Star,
Canada.
Investors Step Up Pressure On
Corporate Responsibility Reporting. -
[COMMENTARY]
"A coalition of global investors from 13
countries, managing over US$2.1 trillion of assets,
today added its voice to the increasing calls for
better corporate reporting on environmental, social
and corporate governance (ESG) activities. The
international investor coalition is writing to 86
major companies urging them to honour the reporting
requirements of the United Nations Global Compact,
the world’s biggest voluntary corporate
responsibility initiative. Each of the 86 'laggard'
companies has previously joined the UN initiative
but failed to produce the mandatory annual report on
how it puts the initiative’s ten principles into
action."
Most likely the majority of these
companies are listed on stock exchanges in the US.
Therefore, they now fall under the recently
announced SEC guidelines requiring disclosure of any
material impacts of climate change on corporate
activities. Nonetheless, it is great that such a
powerful investor group voices its concern on
disclosure. See my related editorial,
We Need Mandatory Corporate Social Responsibility
(CSR) Reporting.
Investors Step Up Pressure on Corporate
Responsibility Reporting, media release,
February 10, 2010, UN Global Compact, UK.
Mercer Study Finds Equity Fund
Managers Trading More Frequently Than They Think
Appropriate. -
[COMMENTARY]
"Some active equity fund managers have higher
portfolio turnover rates than they themselves claim,
a new study finds. Nearly two-thirds of
institutional investor-focused investment strategies
exceeded their expected turnover from June 2006
through June 2009. Of these strategies, the turnover
was on average 26 percent higher than anticipated,
with some strategies reporting turnover between 150
and 200 percent more than expected."
As I mentioned in a previous
report, stock turn-over rates are appalling among
many funds. This Mercer study further
supports that comment. Funds say to investors,
invest for the longer term, yet they turn-over their
entire portfolios once or more each year! And we
wonder why the markets are a casino. I suggest that
ethical investors quiz their fund managers on this
issue.
STUDY: 65% of investment strategies have shorter
investment horizons than intended,
media release, February 9, 2010, Mercer, USA.
Geography Affects Corporate
Social Responsibility. -
[COMMENTARY]
"The geographic location of a corporation's
headquarters affects its approach to social
responsibility, according to research supported by
the Arthur W. Page Center for Integrity in Public
Communication at Penn State.
Seventy-five percent of Japanese firms, for example,
give to arts, sports or music programs, while only
one-third of U.S. companies support those
initiatives. European firms tend to focus on air
pollution prevention and reduction, but giving to
education is largely off their radar screens --
fewer than 7 percent do that. By contrast, 62
percent of Japanese companies and 61 percent of U.S.
firms support education programs."
I do not think anyone is too
surprised by the data here. However, this article
mentions a new searchable website on CSR,
CSR-Pedia. It
says that it follows CSR activities of over 600
companies.
Study: Geographic diversity impacts corporate social
responsibility, by Cinda Kostyak and Mary Ann
Ferguson, February 5, 2010, Penn State Live, USA.
Vedanta Resources Slammed By
Amnesty International For Air & Water Pollution At
Alumina Mine. -
[COMMENTARY]
"A report by Amnesty International out today
found that an alumina refinery in eastern India
operated by a subsidiary of mining company Vedanta
is causing air and water pollution that threatens
the health of local people and their access to
water." Extractive industries are necessary, but
they have to be held accountable for any human
suffering and environmental degradation that they
cause. Companies like Vedanta have to learn the
advantages of corporate social responsibility.
Amnesty report slams alumina mine run by Vedanta
subsidiary in India, February 9, 2010, BBC News,
UK.
Banks Sign On To Be Green--But
Fail When Providing Loans. -
[COMMENTARY]
"The study assessed the performance of a group of
leading financial institutions -- Crédit Agricole,
HSBC and Standard Chartered and insurance groups
Munich Re and Swiss Re -- against the Climate
Principles, a set of green investment guidelines
launched by the Climate Group in 2008 and endorsed
by the five companies. It found that while the
companies had made strides to reduce their carbon
footprint, they scored badly in a review of the
environmental impact of their project finance
activities."
Incentives have to be found to reward bankers making
greener loans. They could be based on the amount of
carbon saved over the years of the project when
compared to some type of benchmark. Unless some such
device can be found, or by global financial
industry/government rules in this area, I doubt if
any of the major banks will do much about this
problem in the near term.
'Green Banks' Still Bankrolling Dirty Investments,
by Tom Young, February 1, 2010, GreenBiz, USA.
Church Of England Sells Stake In
Indian Mining Project. -
[COMMENTARY]
"... the church said that it was not satisfied
that the company, Vedanta, has shown enough respect
for human rights. Campaigners said that the lives of
indigenous people were threatened by the mining
project." This is making big headlines in the
UK. The trend of endowment and foundation funds and
trusts to steer clear of companies with questionable
ethics and environmental, social and governance
issues, continues.
Church of England withdraws from India mining
project, February 5, 2010, BBC News, UK.
Americans See Environment as
Alternative Fuel Source for Economic Growth. -
[COMMENTARY]
"Of the investors surveyed, 73% think that
enacting policies to promote 'green' practices and
technologies will have a positive impact on economic
growth. Further, 57% believe that the recent push to
create 'green' jobs will really help turn around the
economy." We have here further fuel to the US
government's green initiatives.
Nationwide Survey Finds: Americans See Environment
as Alternative Fuel Source for Economic Growth,
media release, February 4, 2010, Allianz Global
Investors, USA.
Canada's SRI Funds Improving On
Social Factors. -
[COMMENTARY]
"Canada's socially responsible mutual funds
appear to be doing better on issues like ESG
screening and integration according to Corporate
Knights magazine's annual responsible investing
guide. The survey scores more than 50 SRI mutual
funds on performance and social factors, including
proxy voting, engagement and ESG integration."
An interesting survey. I have not seen this type of
fund analysis elsewhere.
Also, the article discusses the turnover of stocks in a
fund. I saw some data on this a few days ago. It
said that most US mutual equity funds hold an
average of 160 stocks and turnover the stocks at least
once a year! Talk about a short term focus!
SRI funds improving on social factors: survey,
by Doug Watt, February 4, 2010, Advisor.ca, Canada.
Thirty US Institutional Investors
Demand “Say On Pay.” -
[COMMENTARY]
"CalPERS
and the other signees conclude in the letter that
'the opportunity for investors to have an annual
advisory vote, coupled with investor engagement with
management or boards, is an important communication
vehicle for investors and companies alike.'"
This is a good measure that continues
to gain momentum.
Thirty Institutional Investors Demand “Say on Pay,”
media release, February 3, 2010, hedgetracker.com,
USA.
73% Of Dutch Pension Plans Using
Socially Responsible Investing (SRI) Screens. -
[COMMENTARY]
"The number has more than doubled since 2006
according to the survey by the country’s umbrella
pensions organizations, reports ipe.com." This
probably makes Dutch pension plans the most SRI
friendly in the world. Again, more good news for
ethical stocks and bonds.
Number of Dutch schemes with SRI policies doubles
within three years, say pension associations, by
Hugh Wheelan, February 3, 2010, Responsible
Investor, UK.
ECPI Global Carbon Equity Index
Launched. -
[COMMENTARY]
"Developed in partnership with global management
consultancy Arthur D. Little, the new Index will be
part of ECPI’s thematic index family and will allow
investors to gain equity exposure to those mid-large
cap companies best equipped to tackle a world of
rising carbon emissions and tougher climate
legislation." I almost wondered whether to
include this news item, as the number of these
types of indexes is proliferating greatly. Which is
good news for ethical investors.
ECPI and Arthur D. Little launch Global Carbon
Equity Index, February 1, 2010, media release,
Arthur D. Little, Italy.
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