Ethical Investing News/Commentaries:
Commentaries by Ron
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Consumers Continue To Prioritize
Social Responsibility Across Business Sectors,
Despite Recession. -
"The second annual Corporate Social
Responsibility Perceptions Survey, conducted by
research-based consultancy Penn Schoen Berland in
partnership with brand consulting firm Landor
Associates and strategic communications firm
Burson-Marsteller, analyzed consumer views of
companies operating across 14 industries ranging
from Apparel to Telecommunications. The survey finds
that more than 75 percent of consumers say that it
is important for companies in each of the industries
tested to be socially responsible." As much as I
like the outcomes of such surveys, you cannot help
but wonder who would say that they like to support
socially irresponsible firms.
Consumers Continue to Prioritize Social
Responsibility across Business Sectors, Despite
Recession, press release by Penn Schoen Berland
in partnership with brand consulting firm Landor
Associates and strategic communications firm
Burson-Marsteller, March 29, 2010, USA.
CRO Magazine Awards To Best
Responsible Companies Questioned. -
"How do you compare HP (No. 1 on the list) with
Kimberly-Clark (5), Wal-Mart (21), Nike (23), Green
Mountain Coffee Roasters (39), Duke Energy (43),
Citigroup (57) and Ford (88). They’re in disparate
businesses, with different issues." Read the
article, the introduction about Google is especially
CRO Awards Spotlight What’s Wrong with Awards,
by Marc Gunther, March 24, 2010, GreenBiz.com, USA.
Over One-Third Of UK DC Pension
Schemes Now Offer Ethical Fund Choices, Towers
"... over a third of schemes now offer ethical
funds, up from a quarter last year, and the number
of schemes offering Shariah funds has doubled in the
same period." The march towards ethical
investing continues apace in the UK. It shows that
investors are increasingly concerned with ethics,
illustrating a higher consciousness occurring
not only in the UK, but we see it globally as well.
FTSE 100 DC poll reveals shift towards smaller fund
ranges, by Jonathan Stapleton, March 29, 2010,
Professional Pensions, UK.
S&P, Toronto Stock Exchange (TSX)
Launch S&P/TSX Clean Technology Index. -
"The S&P/TSX Clean Technology Index draws
companies from the investable universe of public
companies whose activities provide value-added
solutions to environmental problems. S&P and TSX
chose Jantzi-Sustainalytics, one of the world’s
leading providers of environmental, social, and
governance research and analysis, to develop and
maintain the Clean Technology Classification
More welcome news on the clean
tech index front. Congratulations to Michael Jantzi,
Kevin Ranney, and all those at Jantzi-Sustainalytics
in developing this new index.
S&P, TSX Launch S&P/TSX Clean Technology Index,
news release, March 25, 2010, Standard & Poors/TMX
IMF Members Reject $100 Billion
Green Fund. -
"International Monetary Fund member countries
have rejected an idea supported by IMF chief
Dominique Strauss-Kahn to create a green fund to
help developing nations pay for the impact of
climate change. The IMF made no public
acknowledgment of the rejection by the board and
instead published the proposal on Thursday as a
staff paper, emphasizing it did not represent the
views of IMF member countries. Board officials
privately told Reuters the paper was the subject of
much disagreement at an informal meeting earlier in
March, where many members argued the IMF had no
expertise or mandate to address climate change."
Yes, this should fall under the domain of the UN
IMF member countries reject green fund plan, by
Lesley Wroughton, March 25, 2010, Reuters, USA.
Ethisphere Announces Its 2010
Rankings Of The World’s Most Ethical Companies.
"The World′s Most Ethical Companies designation
recognizes companies that truly go beyond making
statements about doing business ’ethically’ and
translate those words into action. WME honorees
demonstrate real and sustained ethical leadership
within their industries, putting into real business
practice the Institute′s credo of ’Good. Smart.
Most noteworthy is that stocks
of the 2010 World′s Most Ethical Company honorees
have outperformed the S&P 500 and FTSE since 2005.
Whether you agree with their criteria or not, it is
great to see this superior stock performance.
World’s Most Ethical Companies, March 2010,
Ethisphere Magazine, USA.
Canadian Shareholders Voting on
’Say On Pay’ Resolutions Supporting Management.
"Four of the country′s major banks have held
their shareholder meetings, and all four have
received roughly 90 per cent or more support for
their compensation practices. More than 99 per cent
of Laurentian Bank shareholders voted “yes” on the
bank′s pay plan. Adds Gary Hawton, CEO of Meritas, a
mutual fund family owned by several Mennonite groups
that promotes its products as socially responsible
investments: ’I can see measures of success not in
the vote but in changes to compensation that have
already occurred at companies.’ Namely, Mr. Hawton
said, compensation that vests, or becomes payable,
over a longer period of time, rather than
significant short-term pay tied to short-term
Mr. Hawton is right. The intent of
these resolutions is largely to help tie management
compensation practices to longer term results. Were
that they case in the US much of the inordinate
bonuses paid to investment industry employees would
likely have been moderated. Well done to Mr. Hawton
and to all those, not only in Canada, but in the US,
UK, and elsewhere for proposing such measures.
Shareholders overwhelmingly endorse exec pay, by
David Milstead, March 24, 2010, CTV News, Canada.
Meritas Mutual Funds delivering shareholder ’say on
pay’ in Canada, press release, March 24, 2010,
Meritas Mutual Funds, SHARE, Canada.
After The News ’Leaked’ Out Days
Ago, Finally The UK Government Formally Announces
Its £2 billion ($3 billion) Green Bank. -
"The bank will be funded half from the British
government and half from private entities. To pay
for its half, the UK government could sell rail
lines leading to the Chunnel, a toll road near
London, or a betting company, Tote, according to
Reuters. The new bank will concentrate on green
transportation infrastructure and offshore wind,
according to the Guardian, which called the measure
merely ’pale green.’”
Considering all the hype about
this over the past week--and I did not want to
report it until it was formally announced--this is a
very, very, modest effort. Also, I may get into
trouble with some readers in saying this, but I hope
it is not government bureaucrats who make the
investment decisions on this.
UK to Start $3 Billion “Green” Investment Bank,
by BC Upham, March 25, 2010, Triplepundit, UK.
Including ESG Analysis
Delivers Financial Benefits, Says Study. -
"A landmark study strengthens the position of ESG
advocates. The results reveal that a focus on ESG
(environmental, social and corporate governance)
factors can significantly reduce portfolio risk or
enhance returns. The study by risklab [a division of
Allianz Global Investors] is the first
systematic quantitative analysis explicitly
examining ESG risk in a portfolio context."
This is exactly the kind of work
that needs to be done to convince investors and
analysts everywhere that accounting for ESG factors
can potentially improve returns!
Study Finds ESG Delivers Financial Benefit, by
risklab. See study:
E.S.G. Risk Factors in a Portfolio Context. A good discussion on the results
can be seen at:
Quant study shows significant, long-term ESG risk
reduction and return boost, by Hugh Wheelan,
March 24, 2010, Responsible Investor, UK.
S&P Launches First Egyptian
Environmental, Social & Governance (ESG) Index.
"Standard & Poor’s, the world’s leading index
provider, today announced the launch of the S&P/EGX
ESG Index, the first index designed to track the
performance of companies listed on the Egyptian
Stock Exchange that demonstrate leadership on
environmental, social and corporate governance
("ESG") issues." This is really good news as it
shows that ESG
gain favour in the Middle East.
S&P Launches ESG Index for Egypt, press release,
March 23, 2010, S&P, UK.
American Companies Lag In CSR.
"U.S. businesses are lagging behind their
counterparts in Europe, Australia and South Africa
in taking seriously their corporate social
responsibility or CSR, according to a new study
released today by Echo Research, the global
specialists in reputation audit and analysis. While,
major U.S. multinationals still lead in
philanthropy, they have a blind spot that misses
the growing importance of CSR to socially
responsible investing around the world, the study
US Social Investment Forum
Welcomes Dodd Steps On Corporate Governance Reform,
SEC Self-Funding. -
"We [the SIO] welcome the progress reflected in
Senator Dodd′s bill on the major fronts of corporate
governance reform and SEC self funding, but we have
concerns about provisions in the bill that could
compromise the functional independence of the
proposed consumer protection entity."
The SIO’s media release highlights the issues it
agrees and disagrees with. Among those proposed
changes it agrees with are ’say on pay’ and improved proxy access by
shareholders who desire to put forward directorship
nominations. I welcome and largely agree with the SIO’s recommendations.
Social Investment Forum Welcomes Dodd Steps on
Corporate Governance Reform, SEC Self-Funding,
media release, March 18, 2010, Social Investment
Pembina Institute Issues First
Ever Canadian Oil Sands Environment Report. -
"Today, the Pembina Institute released Drilling
Deeper: The In Situ Oil Sands Report Card. It is the
first comparative environmental assessment of
in-situ oilsands projects. Scores among the nine
Canadian operating projects surveyed ranged from 25
to 60 per cent, with five of nine projects scoring
less than 50 per cent. The average score of 44 per
cent demonstrates substantial room for improvement
across the sector."
Suncor shows the overall best performance.
Hopefully, this study will spur oil sands extractors
to do better on their environmental performance.
Ethical investors might want to study these results.
First ever report card on deep oilsands reveals
significant room for improvement, media release,
March 17, 2010, The Pembina Institute, Canada.
(As an aside, SHARE recently issued a report on
Reclamation Risks in the Oil Sands.)
Questions Raised About Corporate Social Responsibility
"’As a result, making the List [100 Best
Corporate Citizens] is worth millions or even
billions in increased shareholder and brand value.’
This should be good news for Citigroup, Goldman
Sachs, ExxonMobil, Chevron and Monsanto which,
despite their notoriety, have been counted as ’Best
Citizens’ by Corporate Responsibility numerous
times. ’When someone asks you to define corporate
transparency, show them this list,’ touts the
magazine. But to an increasing number of observers,
the transparency seems elusive – as does a clear
indication of what the CSR industry stands for."
I could not agree more. That is why I always suggest
when viewing such lists to try and understand how
they do the rankings--and who pays for them to be
Are corporate social responsibility rankings
irresponsible? By Christine Arena, March 17,
2010, The Christian Science Monitor, USA.
UK ISA (Tax Free Savings
Accounts) To See 1,000% Rise In Ethical Investments
This Year Says The Co-operative. -
"Ethical investments currently have a 1% share of
the ISA market, but The Co-operative predicts that
this could increase thirteen-fold later this year as
savers use their increased ISA allowance for more
eco-friendly investments. The Co-operative′s study
found that 13% of investors would like to put money
into an ethical fund." The UK continues to be a
leader in ethical investing.
Ethical investments could increase 1000% this year,
by David Masters, March 17, 2010, Finance Markets,
Swiss Investors Going Green.
"The financial crisis may have persuaded more
Swiss investors to return their money to sustainable
funds with an ethical focus, according to market
specialists. Research shows that sustainable funds
grew at a faster pace than traditional vehicles last
year, leading to the conclusion that investors may
be searching for safer prospects after having their
No-doubt the continuing--yes I say
continuing--financial crises will spur increasing
numbers of investors everywhere to critique the
ethical behaviour of companies and their management.
Companies demonstrating higher ethics and
sustainability will likely outperform those that
Ethical investing emerges from ruins, by Matthew
Allen, March 16, 2010, Swisssinfo., Switzerland.
UK Investors Buying Green Funds.
"One in every eight investors intending to beat
the 5 April deadline to use their 2009/10 ISA [a tax
free savings/investment account] allowance claimed
ethical funds would be a big part of their thinking,
a survey from The Co-operative Investments has
revealed. The share of the ISA market enjoyed by
sustainable and ethical investments has grown almost
two and a half times in size over the last decade."
Linking sustainability to ethical investing has
added to the appeal of ethical funds. However, one
cannot but wonder
how much interest would there be for purely ethical
there were not this linkage? Anyone have any
thoughts on this?
ISA investors set to go green, March 12, 2010,
Important In Outsourcing Contracts Says
International Association of Outsourcing
"On a five point scale, both outsourcing
providers and buyers rated the importance of CSR at
3.9. In addition, 70 percent of outsourcing
customers and providers said they plan to increase
their CSR activity in the next three years, with
small- and medium-size providers having the
strongest intentions to increase CSR." The
advantages of using corporate social responsibility
are becoming self-evident to all companies. However,
what ethical investors need, as well as all
Mandatory Corporate Social Responsibility Reporting.
IAOP Survey Finds Corporate Social
Responsibility Increasingly Important in Outsourcing
Contracts, media release,
March 10, 2010, EIN Presswire, USA.
Big American Pension Fund
Reportedly Suing Goldman Sachs Over ’Excessive’ Payouts.
"A US labour union pension fund has reportedly
filed a lawsuit against Goldman Sachs, the US
investment bank, over claims of excessive executive
pay. The Philadelphia-based International
Brotherhood of Electrical Workers Local 98 Pension
Fund has lodged the writ at Delaware Chancery Court,
according to Thomson Reuters." It is about time
that institutional funds challenged the
extraordinary payouts of Goldman and others in the
investment industry. What other industry allocates
around 40% of its profits as bonuses?
US pension fund adds to exec comp lawsuits against
Goldman Sachs, by Daniel Brooksbank, March 10,
2010, Responsible Investor, UK.
US Companies Based In More
Religious Environments Take Fewer Financial Risks.
"Gilles Hilary and Kai Wai Hui of Hong Kong
University of Science & Technology say researchers
have long demonstrated the link between religion and
an aversion to risky behavior among individuals.
Rates of gambling, alcohol abuse and crime, for
instance, are lower on average in communities where
church attendance and religious affiliation are
high. Their study in a recent Journal of Financial
Economics — ’The Influence of Corporate Culture on
Economic Behavior: Does Religion Matter in Corporate
Decision Making in America?’ — now shows that
religion has a similar effect within for-profit
companies by deterring business activities that
place corporate assets at risk."
The results of this study should
not surprise anyone. It simply highlights that
communities with strong spiritual and religious
values are less likely to engage in potentially
reckless activities. It has been my contention for
decades that individuals imbibing higher spiritual
and community values, such as the ’Cultural
Creatives’ as described by sociologist Paul Ray,
is the only way the world will be able to free
itself from its problems.
A new study reveals that U.S. companies are less
likely to accept financial risks when they are based
in communities where religion is important, by
David Villano, March 7, 2010, Miller-McCune, USA.
Australian Study Examines Use Of
Terms Related To Responsible Investing On The Web.
"The study explored the level of support for
responsible investment and consumer motivation to
invest responsibly. The three terms attracting the
most positive association were: responsible
investment (74%), cleantech (69%) and sustainable
investment (62%). The term ’ethical investment’
attracted cynicism, because, the report said, the
concept of ’ethical’ can vary significantly between
individuals and lacks clarity."
I concur with the findings of this
study. The word ’ethical’ in relation to investing
has always been a difficult one to explain. It will
be fascinating to watch the evolution of the above
Blogosphere survey says RI has yet to tap financial
crisis potential, March 8, 2010, by Daniel
Brooksbank, Responsible Investor, UK.
HP, Intel, General Mills Top List
Of Best Corporate Citizens. -
"Corporate Responsibility Magazine today released
its 11th annual Best Corporate Citizens list... the
full list this year includes a number of shakeups,
including that Bristol-Myers Squibb, last year’s top
firm, fell to the seventh position in the rankings.
Coca-Cola, which appears in eighth place this year,
was ranked 56 last year." As ethical
investors, such lists
may provide us with ideas on what to
hold, or sell, depending on our values and how it
fits with our investment strategy.
HP, Intel, General Mills Top List of Best Corporate
Citizens, March 2, 2010, GreenBiz, USA.
News From Responsible Investment
Association Australasia (RIAA), March 8,
"ESG Research Australia hosted their inaugural
broking awards last night in Sydney. Citi Investment
Research and Analysis was recognised as the Best ESG
Broking Firm as voted by investment managers. Andrew
Gray from Goldman Sachs JBWere took out the award
for Best Piece oF ESG Research by an individual
analyst or team for a report on how good ethics can
translate into good returns.
Last week in Melbourne, at the annual Melbourne
Financial Services Symposium awards dinner, the
Investment Stewardship Award was given to Cbus for
the superannuation category and Aviva for the
investment manager category. UCA Funds Management
was highly commended by the judging panel for
outperforming the benchmark in a tough year.
Cbus, Aviva and UCA are all members of RIAA and we
congratulate them for these achievements.
And late last year, the Ethical Investor’s
’Sustainable Business Awards’ were announced. The
Ethical Investor Fund of the Year was ING
Sustainable Australian Share Trust, with HESTA
taking out the sustainable super fund award and
Elaine Prior of Citi Investment Research winning the
category for sustainability research.
Responsible Investment Association Australasia.
PRNews Names Its 2010 Winning
Companies, Organizations and Individuals. -
"With trust in business at a low ebb, many
organizations have realized that goodwill toward
stakeholders and their communities is a concept
whose time has come—it′s crucial in rebuilding trust
and lifting reputations. Indeed, corporate social
responsibility is coming to the forefront, as
witnessed by the millions of dollars in corporate
donations for earthquake relief in Haiti." One
more list of great companies, etc., only this time
it is from a PR/marketing perspective.
PR News CSR Award winners, March 1, 2010, PRNews,
Dubai Islamic Bank (DIB) Wins
First-Ever Pan-Arab emeafinance Award For Corporate
Social Responsibility (CSR). -
"... in acknowledgement of its sustained efforts
to support individuals and communities in the UAE
and across the Middle East, DIB has been named
winner of the first-ever Pan-Arab emeafinance award
for corporate social responsibility... For the
second consecutive year, the bank′s wholly-owned
investment banking subsidiary, DIB Capital, was
named ’Best Investment Bank’ in the UAE by
emeafinance, a leading international publication
focused on financial markets in the Europe, Middle
East and Africa regions."
Despite the troubles in Dubai, it
is great to see the emergence of CSR in the Middle
DIB Wins Best Investment Bank & Best CSR Program At
Middle East Banking Awards,
press release, March 6, 2010, Middle East Events,
UK’s F&C Wins Best Ethical
Investing Manager Awards. -
"At the Global Pensions Awards ceremony held in
London on Wednesday March 2nd, leading asset manager
F&C was awarded the prestigious accolade of ’SRI
Provider of the Year’. This follows on from F&C
winning the ’Socially Responsible Investment
Programme’ Award from Funds Europe in December
2009." Congratulations to everyone at F&C!
F&C wins SRI Provider of the Year Award, press
release, March 2010, F&C, UK.
European Carbon Regulation Having
Little Impact So Far On Firms Costs & Ability To
Raise Funds. -
"... respondents believe that carbon exposure
could have a real impact on industry from 2012, when
the more stringent Phase III of the EU Emissions
Trading Scheme (ETS) comes into force."
It will be important for investors to know the
carbon data--and how it compares to their peer
group--in companies they invest in. It is best not to wait
for surprises that could be costly. In these columns
I have reported on many sites and studies on this
subject. Simply type ’carbon’ in the Google ’This
Site’ search box on the left to see the many
references. Good luck.
Carbon risk not incorporated into Europe′s funding
decisions and financial statements, says S&P,
March 3, 2010, NewNet, UK.
MSCI Buys RiskMetrics For
"MSCI, the index and risk group is buying
RiskMetrics, the New York-listed risk management and
corporate governance firm, in the latest twist to
consolidation in the ESG research and governance
space. It is paying approximately $1.55 billion in a
cash and stock transaction that values RiskMetrics
at $21.75 per share. RiskMetrics last traded at
$18.69 and its highest ever share price was $25.50
during 2008... In November 2009, RiskMetrics
finalised the $10m buy-out of Boston-based KLD
Research & Analytics, which also gave it a foothold
in the SRI index business via deals with FTSE and
Canada′s Jantzi Sustainalytics. That came after a
February, 2009, $16m buy-out of Toronto-based
Cost savings are the purported
rationale for this transaction. What it means for
ethical investors will be unclear for sometime. So
do I welcome this merger? I do not have an answer at
MSCI buys RiskMetrics for $1.55bn, March 1,
2010, by Hugh Wheelan, Responsible Investor,
Vodafone, Nokia & HP Ranked
Highest In New Sustainability Rankings. -
"The companies subjected to this Tomorrow′s Value
Rating were the 20 largest ICT companies according
to the Fortune Global 500 list, which ranks the
world′s largest companies by revenue." I find
when looking at rankings like this, it is good to
check out how companies do on several different
Tomorrow’s Value Rating of world’s largest
information and communications technology companies,
March 1, 2010, Tomorrows Value Rating, UK.
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