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Ethical Investing News/Commentaries:
June 2010 |
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Commentaries by Ron
Robins
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86% Of Charity Supporters Less
Likely To Give If Charities Do Not Invest
'Responsibly.' -
[COMMENTARY]
"Eighty-six per cent would be less likely to give
to charities that do not invest responsibly,
according to guide by Charity Finance Directors'
Group and Eiris." Who wants to donate to a
charity when much of what you give ends up in
invested in ways running counter to your values? It
is time for all charities to be totally transparent
with their investments and let their donors know
where they invest.
Charity supporters 'prefer ethical investments,'
by David Ainsworth, June 29, 2010, Third Sector, UK.
Islamic Finance. KPMG Says It's
'Coming of Age;' Australia To Improve Tax/Financial
Policies For Islamic Compliant Products. -
[COMMENTARY]
Islamic financial products now total well over the
$1 trillion mark with only 3% of Muslims
participating in them--and virtually no western
participation--as yet. Studies predict they will
reach $2 to $5 trillion in assets before 2015. Their
venture onto the world stage is going to have a big
impact on western financial products including those
in the ethical investing arena too.
No doubt that with its growth, Islamic finance will
become increasingly controversial. But I believe as
it grows, particularly in the West, provisions will
be put into place so that extremist elements within
the Muslim community do not benefit from that
growth. Ethical investors everywhere might want to
acquaint themselves with Islamic finance and
Shariah-compliant investing.
UK Is Europe's Worst
Corporate Polluter, Says EIRIS. -
[COMMENTARY]
"A review of Europe's top 300 companies by the
ethical investment consultant Eiris found that the
greatest proportion of those with 'very high impact'
in relation to global warming came from the UK, more
than double the number from any other country. Of
those companies in the top 300 dedicated to solving
or mitigating the problems of climate change, only
3% were located in Britain." This result is not
surprising. Big oil and mining companies dominate
the FTSE 100 Index.
Eiris review names Britain as 'dirty man of Europe,'
by Terry Macalister, June 27, 2010, The Guardian,
UK.
SRI Will Play A More Important
Role In How European Pension Funds Make Decisions,
Says Allianz Survey. -
[COMMENTARY]
"While French and Dutch pension analysts were
very optimistic, their British counterparts were
quite pessimistic. The majority of experts surveyed
believe the SRI approach will be extended to include
asset classes other than equities. Again, the French
and Dutch participants were the most optimistic.
Apart from Germany, most experts are expecting
pension funds to become more active owners.
Environmental criteria are considered to be the most
important element of the SRI concept. Respondents
agreed that the growing SRI trend is being driven
much less by the expectation of higher returns or
lower risk as it is by public pressure."
Consider the latter point, "SRI
trend is being driven... by public pressure." 'Public
pressure' means society. If society deems SRI
important it also means favouring SRI oriented
companies and therefore, ultimately, relatively
higher stock prices for such companies! Sooner or
latter most pension fund managers will realize this.
It has been my thesis for some forty years.
'Doing Good by Investing Well' - Pension Funds and
Socially Responsible Investment: Results of an
Expert Survey, revised June 24, 2010, Allianz
Global Investors International Pension Paper No.
1/2010, UK.
FTSE Offers Two New Carbon Based
Indexes For Ethical Investors. -
[COMMENTARY]
"The FTSE CDP Carbon Strategy Index Series aims
to support investors in incorporating climate change
risks into their investment strategy. It features
future-oriented criteria that assess the exposure of
individual companies to higher future costs
associated with greenhouse gas emissions. Some
companies will be better placed to exploit the
transition to a low carbon economy; other companies
will see their value diminished if they fail to
adapt."
The
momentum for ethical investing indices continues
unabated! It illustrates a more ethical, higher
consciousness beginning to emerge among investors
and in the investment industry.
FTSE CDP Carbon Strategy Indexes. June 23, 2010,
FTSE, UK.
Deutsche Bank Publishes Excellent
Overview & Introduction To Responsible-Ethical
Investing In Europe. -
[COMMENTARY]
Responsible Investments: A new investment trend here
to stay, June 24, 2010, Germany.
NASDAQ OMX Introduces Two
Sharia-Compliant Indexes. -
[COMMENTARY]
"The NASDAQ OMX Group, Inc. (Nasdaq:NDAQ)
announced the introduction today of two new
Sharia-compliant indexes based on two of the world's
most widely-followed benchmarks: The NASDAQ-100
Index(R) (Nasdaq:NDX) and the OMX Stockholm
Benchmark Index (OMXSB). The new NASDAQ-100 Sharia
Index(SM) (N100SI) and the OMX Stockholm Benchmark
Sharia Index(SM) (OMXSBSHARIA) are the first of a
new family of indexes launched by NASDAQ OMX Global
Index Group that are designed to serve investors who
wish to develop and maintain an Islamic investment
portfolio."
You do not have to be a Muslim to
know that Shariah-compliant funds and Islamic
finance in general are making big gains in global
finance. Look for my forthcoming column, "Bright
and Long Term Future of Ethical & Sharia Investing,"
at
alrroya.com for a good look at this subject. The
column should appear by June 28.
NASDAQ OMX Introduces Two Sharia-Compliant Indexes,
press release June 22, 2010, NASDAQ, USA.
Bloomberg CEO Believes ESG To Be
'Fundamental To Equity market Analysis.' -
[COMMENTARY]
"Grauer [Bloomberg CEO] said: 'We believe this
[incorporation of ESG] will be a long term growth area for us. We’ve really
only just begun. Look at the eco system of risk that
climate change presents – our role is to help get
the message out and get acceptance... '" That is
why 'best-in-class' ESG performing companies might
just outperform over the long term.
Bloomberg chief outlines ESG data strategy, by
Daniel Brooksbank, June 24, 2010, Responsible
Investor, UK.
Canadian Companies Rarely
Disclose Environmental Practices. -
[COMMENTARY]
"The review found only 10 of 60 corporations in
the index (17 per cent) disclosed detailed data on
four environmental factors assessed in the ranking.
Only 25 per cent of those companies provided data on
their water use and waste production. Fewer than
half (47 per cent) reported their energy use, while
58 per cent disclosed their carbon-dioxide
emissions... Loblaw Cos. Ltd... Canada’s largest
grocery chain operator, tops the ranking of
corporate responsibility in the country, compiled by
research group Corporate Knights Inc. The review
assessed environmental, social and governance (ESG)
practices of companies in Canada’s S&P/TSX 60
index."
This review by Corporate Knights
is worthwhile reading for any ethical investor
interested in the Canadian marketplace. However, it
brings to light the importance of environmental
disclosure while demonstrating the timidity of
Ontario's
Ed Waitzer's report in not being strong enough on
mandatory corporate social responsibility reporting.
Few Canadian companies disclose environmental
practices, by Janet McFarland, June 21, 2010,
Report on Business, The Globe & Mail, Canada.
Johannesburg Stock Exchange
Requiring Listed Companies To Integrate Their ESG
Report With Annual Report. -
[COMMENTARY]
"South Africa’s JSE stock exchange (www.jse.co.za)
is requiring listed companies to integrate their
sustainability reports with their annual reports,
with effect from this month. According to a report
in Business Day newspaper (www.businessday.co.za)
Mervyn King, chairman of the King committee and a
leading expert on governance, said: 'SA is among the
first countries in the world to require integrated
reporting of listed companies. This puts us ahead of
the game.'" South Africa has become a global
champion for mandatory corporate social
responsibility reporting! Well done South Africa and
Mr. King.
SA listed companies have to integrate sustainability
reports, by Tom Minney, June 9, 2010, African
Capital Market News, South Africa. Also, see my June
18 column,
Ethical Investing Shines in Africa as Economy Grows.
80% Of Americans Say "Socially
Responsible Corporations Can Also Create A lot Of
Wealth For Their Shareholders." -
[COMMENTARY]
"'Over the years, there has been a core shift in
the American public's expectations,' Mittal says in
a statement. 'The old idea was that businesses were
only responsible to their shareholders. But now
people are realizing that this isn't a zero-sum
game," Mittal said. "No matter their political
leanings, Americans expect corporations to be
profitable, sustainable and socially responsible.'"
Again, more encouragement for corporate social
responsibility and ethical investing.
Survey: Corporate responsibility valued, June
18, 2010, upi.com, USA.
C.A Cheuvreux Wins Thomson
Reuters Extel Survey Award For Best European SRI
Research. -
[COMMENTARY]
"Cheuvreux beat French rival, Société Générale (SG),
into second place in 2010 after SG had won the award
for the second year running in 2009. Swiss bank UBS
was third in the 2010 line-up." In Europe these
awards are big news. Though some awards are given by
various North American organizations to SRI
participants, they seem to lack the prestige and
coverage that the European awards have.
C.A. Cheuvreux wins best sustainability research
gong at 2010 Thomson Reuters Extel awards, by
Hugh Wheelan, June 17, 2010, Responsible Investor,
UK.
Survey Ranks Citi Best In SRI
Research. -
[COMMENTARY]
"The winners have been unveiled in Environmental
Finance’s inaugural survey of environmentally-themed
investment research. CA Cheuvreux was voted best
research house for renewable energy, HSBC came top
in climate change and Citi took the honours in
water. Meanwhile, Société Générale was voted top in
resource/energy efficiency, while Barclays Capital
came first in carbon markets research. Citi was
voted best research house overall, based on the
total number of votes cast across all five
categories."
I think it is great that Citi is paving the way in
SRI research. Now I do wonder though how much it
reflects the fact that Citi is under the thumb of
the Democrats in the U.S. Congress? Either way, it
is still very positive.
Winners announced in Environmental Finance
Investment Research Survey, June 10, 2010,
Environmental Finance, UK. (Log-in required.
Registration is free.)
Top ESG Reporters Are Sweden,
Austria, and Switzerland. Worst Is China, Says EIRIS
Report. -
[COMMENTARY]
"Ethical investors looking to put money into
emerging market economies should avoid China, Egypt
and Vietnam, the Ethical Investment Research Service
(Eiris) has claimed... Both Brazil and Mexico scored
higher on environmental indicators than the United
States and Canada, demonstrating that emerging
markets can achieve rapid growth while mitigation
ESG risks." This report demonstrates the
timidity of jurisdictions like Ontario, Canada (see
below), in backing-off some sought of mandatory ESG
reporting.
China ranked bottom for ethical investment, by
David Masters, June 16, 2010, Finance Markets, UK.
Two Reports Cite Islamic Oriented
Financial Assets At $1 Trillion & $1.5 Trillion.
-
[COMMENTARY]
(1) "Tan Jeh Wuan, a managing director at the
Islamic Bank of Asia, said the assets of the world's
top 500 Islamic banks are expected to top one
trillion US dollars this year, up from 822 billion
dollars in 2009 and 639 billion dollars in 2008."
Islamic finance set to cross $1 trillion: Moody's,,
June 14, 2010, The Economic Times, India. (2)
"It is estimated that investors globally hold
more than $1.5 trillion in Sharia-compliant
investments. These include equities that are in line
with Islamic principles, sukuk and Islamic funds."
Key Islamic securities market set for growth,
May 25, 2010, Gulf Daily News, Bahrain.
Islamic, Shariah compliant assets
are growing twice as fast as conventional financial
assets globally. I will be writing more about the
reasons for this in my forthcoming column for
alrroya.com.
Carlyle Group, Kohlberg Kravis
Roberts (KKR) & Others Incorporating ESG Into Investment
Decisions. -
[COMMENTARY]
"Some of the world’s largest private equity
companies, battling an image problem and a shift in
market dynamics, had very warm words about
incorporating environmental, social and governance (ESG)
factors into their operations at a conference in
London last week...
[the] PEI Responsible Investment Forum, co-hosted by
the United Nations Principles for Responsible
Investment... "
Environmental, social, and governance (ESG) analysis
has entered mainstream investment decision making.
Private equity ‘barbarians at the gate’ of ESG:
conference report, by Daniel Brooksbank, June
15, 2010, Responsible Investor, UK.
CSR: Canada's Top 50 Companies.
-
[COMMENTARY]
"For many successful companies, corporate social
responsibility (CSR) is no longer just a boardroom
buzzword, but a key to business. So, for the second
year in a row, Maclean’s has partnered with
Jantzi-Sustainalytics, a global leader in
sustainability analysis, to present the country’s
Top 50 Socially Responsible Corporations." The
majority of the top fifty are multi-nationals. The
write-ups on each of them are brief and convey
useful information for ethical investors.
Top 50 Socially Responsible Corporations, June
2010, macleans.ca, Canada.
Lack Of CSR Reporting Standards
Inhibit Mandatory CSR Reporting, Says New Canadian
Report. -
[COMMENTARY]
"Toronto lawyer Ed Waitzer, a former OSC
[Canada's Ontario Securities Commission] chairman
who helped spearhead the review, said that investors
want more disclosure but that there is no clear
consensus about which social reporting factors are
most relevant. He said companies and other
stakeholders are still experimenting with various
disclosure options. 'In this area, we just don’t
have the standards yet,' he said in an interview.
'So part of the exercise is how the OSC can take a
leadership position in developing the standards.'”
Frankly, it is true that standards
are evolving, but what I think is really at play
here is that Ontario wants to be a follower with
regard to CSR reporting. I believe it fears that
going-it-alone could jeopardise Ontario businesses.
Therefore, they are likely waiting to see how CSR
reporting progresses in other jurisdictions, most
especially with the US and the SEC's recent
directive requiring companies to report on
climate-change impacts. See my editorial,
Why We Need Mandatory Corporate Social
Responsibility Reporting, and June 9 column at
alrroya.com,
A
Call for Mandatory Corporate Social Responsibility
Reporting.
UKSIF Report: The Future
of Investment: Sustainable Investment Boutiques.
-
[COMMENTARY]
"UKSIF’s 'Future of Investment' Reports seek to
highlight the activities and views of those driving
this new flowering of successful long-term
investment. As the UK’s hub for sustainable and
responsible investment, we are privileged to have
many of these leading-edge investment practitioners
among our members." This report is useful
reading for all ethical investors.
The Future of Investment: Sustainable Investment
Boutiques June 2010, UKSIF, UK.
Africa's First Sustainable
Investment Forum AfricaSIF Launched. -
[COMMENTARY]
"AfricaSIF is an independent pan-African
not-for-profit network, knowledgebase and advocate
promoting sustainable investment across the
continent. The network aims to achieve its
objectives by attracting investment in the public,
private and philanthropy sectors across asset
classes, countries and stakeholders." This is
great step forward for ethical and sustainable
investing in Africa.
Africa’s First Sustainable Investment Network
Launched, press release, June 9, 2010,
AfricaSIF, South Africa.
Canada's Desjardins Group Says
Investors Under 40 Show Most Interest In SRI. -
[COMMENTARY]
"In fact, 44% of SRI fund holders at Desjardins
Group are in that age group, while only 29% of them
have shown regular interest in our conventional
funds... given the choice between a conventional
fund and an SRI fund with a 1% lower return, 85% of
investors would choose the SRI fund. Even if the
return was 3% lower, 58% of investors would still
choose SRI funds!"
These are very interesting stats. Their investors
hail mainly from Quebec, Canada. The full data from
their survey will be provided June 15 at the 2010 Canadian
Responsible Investment Conference.
Canadian
Responsible Investment Conference Preview: Attitudes
towards socially responsible investment, by
Benjamin Commerie, June 11, 2010, SRI Monitor,
Canada.
BP Disaster Results In UK Members
of Parliament Calling For Pension Funds To Include
ESG Assessments In Investments. -
[COMMENTARY]
"A cross-party group of UK Members of Parliament
(MPs) has called on their parliamentary peers to
push UK pension funds to do more to look at
environmental risk in their investment as a result
of the ongoing BP Deepwater oil spill disaster."
Such an action would require asset managers to take
a long term view of their investments... wow what a
change that would be!
UK parliamentary motion says BP disaster shows need
for better pension fund ESG reporting, by Hugh
Wheelan, June 10, 2010, Responsible Investor, UK.
MSCI Incorporating ESG Factors
Into Its Indices. -
[COMMENTARY]
"Index firm MSCI, fresh from its $1.55bn
(€1.28bn) acquisition of risk and corporate
governance advisory firm RiskMetrics, is to include
environmental, social and governance (ESG) factors
into its investment offerings such as the benchmark
MSCI World." Including ESG into everything
investing will happen in the next few years.
MSCI to incorporate ESG risks into indices, by
Telis Demos, Financial Times, USA.
Screens Can Moderate SRI Returns,
Study. -
[COMMENTARY]
"Screening intensity has no effect on unadjusted
(raw) returns or idiosyncratic risk. However, we
find a significant reduction in α of 70 basis points
per screen using the Carhart performance model.
Increased screening results in lower systematic risk
– in line with managers choosing lower β stocks to
minimize overall risk."
The findings are inline
with what I would have expected. However, this study
does not negate the fact that what type of screen(s)
one uses can provide hugely different outcomes. Nonetheless, this is an
interesting and useful study.
Socially Responsible Investment Fund Performance:
The Impact of Screening Intensity, by Darren
David Lee, Jacquelyn Humphrey, and Karen L.
Benson--all at University of Queensland, Australia,
and Jason Ahn. June 2010, Accounting and Finance,
Australia.
F&C Says 73% Of UK Investors
Would Invest In An Ethical Investment Trust (Mutual
Fund) If Available To Them. -
[COMMENTARY]
"Penny Shepherd, chief executive of UKSIF - the
sustainable investment and finance association,
explained '... Following the financial crisis there
is an increasing recognition that it makes sense to
look at how your wealth is being created... There is
also an increasing recognition that issues like
climate change aren't going to go away and there are
opportunities to both make money and make a
difference by addressing it.'" She is right.
Green investment rise predicted, June 9, 2010,
investments.co.uk, UK.
European Institutional Investors
Consider Litigation Issues Concerning Tar Sands.
-
[COMMENTARY]
"The Institutional Investors Group on Climate
Change (IIGCC), which comprises more than 50
European pension funds and asset managers with a
combined worth of around €5trn, said in a new report
that its members were focusing increasingly on the
risk of environmental litigation." Should such
legal challenges succeed, tar sands development
could become very expensive. Oil investors gloating
over the difficulties in the Gulf need to take heed.
Alternative energy will increasingly be seen as the
only solution to our energy needs.
Institutional investors consider tar sands
litigation, by Daniel Brooksbank, June 8, 2010,
Responsible Investor, UK.
GoodGuide. Useful Site For
Ethical Investors To Find Companies Making The
Greenest Consumer Products.
"GoodGuide
provides the world's largest and most reliable
source of information on the health, environmental,
and social impacts of the products in your home."
GoodGuide,
USA.
Virgin & Continental Top Green
Airlines, Says Greenopia. -
[COMMENTARY]
"Virgin earned the highest score overall, the
only airline to earn four leaves from in the
website's ranking system, while Alaska and
Continental each earned three leaves. The laggards
in the rankings were Northwest, United and US
Airways, each with one leaf." For both
travellers and ethical investors, this report offers
useful information.
Virgin, Continental Fly High in Green Airlines
Rankings, June 2, 2010, GreenBiz, USA.
China & US Tied As Most
Attractive Places For Green Investment, Says Ernst &
Young. -
[COMMENTARY]
"China has climbed two points in the
consultancy's Renewable Energy Country
Attractiveness Indices, having invested a total of
$34.6 billion into clean energy projects in 2009.
The figure is almost double the U.S. and China is
already the global leader in installed wind power
capacity last year...
" It looks
to me that Asia will take the lead in green
investment.
China, US Tie As Most Attractive For Green
Investment - Report, by Selina Williams, June 2,
2010, Dow Jones, USA.
Ethical Fund Managers Questioned
BP Over Safety Record For Many Years. -
[COMMENTARY]
"Though once hailed for its investments in
renewable energy and a green advertising campaign,
the British oil giant worried fund managers over a
string of accidents and safety fines dating to 2005.
The company also had dialed back its outreach, and
even as BP became a mainstay of
sustainable-investing stock indexes, many
specialists had sold their shares or were moving to
do so." The problems of BP bring to the fore the
importance of green and ethical investing.
Environmental funds battled BP for years, by
Ross Kerber, Tom Bergin, and Matthew Daily, June 3,
2010, Reuters, USA.
65% Of US Companies Want Tax
Breaks To Significantly Increase Green Spending.
-
[COMMENTARY]
"In the US specifically, the survey found that
only 13% of companies monitor their carbon footprint
and less than one-third (27%) monitor their energy
consumption. In addition to this, 76% had no company
policy to invest in energy efficient equipment.
Running costs were found to be very important to
more than one-third of companies (37%) who declared
that they would only invest in low-carbon equipment
if it were cheaper or the same to run as
conventional equipment." There are some useful
global numbers in this survey too.
US Business Demands More Tax Breaks for Green
Investment, press release, June 2, 2010, The
Regus Group, UK.
EIRIS Reports At End Of 2009
Investment In UK Green & Ethical Funds Increased To
£9.5 Billion From £2.4 Billion In 1999. -
[COMMENTARY]
"Mark Robertson, EIRIS spokesperson, said
investors were becoming more aware of the power they
had. He said: 'It's clear that increasing numbers of
consumers are turning to those financial
institutions which offer financial products that
make money whilst making a positive difference to
the world.'" No further comment required!
Ethical funds hit £9.5bn high, by Samantha
Downes, June 1, 2010, FT Advisor, UK.
75% Of Middle East Companies Say
CSR Can Be A Means To Attract New Investment,
Capture New markets & Market Share. -
[COMMENTARY]
"The survey was conducted with 100 key decision
makers across eight countries namely United Arab
Emirates (UAE), Bahrain, Egypt, Jordan, Oman, Qatar,
Kingdom of Saudi Arabia (KSA) and Yemen. Further,
86% of respondents strongly agree that CSR fosters
innovation while 82% believe it can help to attract
new customers." With these numbers it seems the
Middle East could become a leader in corporate
social responsibility (CSR)!
75%of
business leaders believe that CSR grows business,
press release, May 31, 2010, Sustainability Advisory
Group, UAE.
Huge Japanese Trades Union Group
Preparing ESG Recommendations For Its Retirement
Funds. -
[COMMENTARY]
"RENGO, the powerful Japanese trades union
confederation, says it is preparing plans for its
member pension schemes – a significant part of the
country’s institutional retirement savings – to
incorporate ESG factors into their investment
decisions." Here is another step of progress on
the march to incorporate environmental, social and
governance (ESG) factors in big institutional pension
schemes.
Powerful Japanese trades union body prepares major
ESG recommendation for its pension funds, by
Hugh Wheelan, June 1, 2010, responsible Investor,
UK.
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