Ethical Investing News/Commentaries:
Commentaries by Ron
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Ethical Funds Performed
Better than Non-Ethical Funds In Downturn Says
"the results indicated that the ethical funds are
different from the non ethical funds with regards to
the performance and put in evidence that the ethical
funds governed the financial crisis triggered by
subprime in a better way than the non ethical funds.
Consequently we argue that it is important that the
interests of the financial community are addressed
to the development and promotion of ethically
oriented finance and of its instruments."
This is one more study indicating that ethical funds
performed better than non-ethical funds during the
The Ethical and Non Ethical Mutual Funds Comparison,
by Rosa Adamo, Angela Coscarelli, Domenica Federico
and Antonella Notte, American Journal of Economics
and Business Administration, Volume 2, Issue 4, USA.
Trucost Finds 40% Lower Carbon
Intensity & Outperformance In US SRI Funds.
"The Responsible funds analyzed are on average 40%
less carbon intensive than the Traditional funds...
all eight Responsible funds in this study
outperformed their Median Peer Group [Traditional
funds] over a one-year period. Seven of eight
outperformed their Median Peer Group over a
three-year period, while five of eight outperformed
over a five-year period.”
me, these results are not unexpected, since
SRI-ethical funds do not usually contain carbon
intensive heavy manufacturing or mining companies.
SRI-ethical funds are frequently heavily weighted
with technology, financials, health, drugs, etc.
Nonetheless, it is great to see such performance.
Carbon footprints, performance and risk of US equity
mutual funds, November 29, 2010, Trucost, UK.
(Registration required, which is free, to view
Fossil Fuels Gets 12 Times More
Subsidies Than Clean Energy Worldwide.
"Energy from fossil fuel gets 12 times more in
subsidies worldwide than sustainable energy, says a
new report from the USC Marshall School of
This is something that I have often criticised: the
diabolical public financial subsidies that fossil
fuels and nuclear for that matter, receive. My
belief is that all these subsidies should be
eliminated and then clean energy will be on a more
level playing field.
Clean energy gets fewer subsidies, less investment
than fossil fuels, report says, by Tiffany Hsu,
November 30, 2010, LA Times, USA.
81.5% Of Investors Surveyed Plan
To Increase Investments In Climate Change,
"90% of respondents considered environmental
protection an investment theme, and the same
percentage planned to do more green investing in the
future with climate change being the most popular
green theme for 81.5% of respondents. Environmental
themes such as water management, anti-pollution
measures and improvement of processes were also
concerns for many respondents, the survey found."
These are the highest interest levels of any survey
I have seen to-date.
Green investing still misunderstood, by Jaishree
Kalia, November 30, 2010, Global Pensions, UK.
J.P. Morgan & Rockefeller
Foundation Report Says Impact Investing Is A
Distinct Asset Class.
"Report estimates an investment opportunity
between $400 billion and $1 trillion with profit
potential between $183 billion and $667 billion over
the next decade in five sectors – affordable urban
housing, rural access to clean water, maternal
health, primary education, and microfinance –
serving global populations earning less than $3,000
According to the reports definition, impact
investing are investments, "made in private
markets by providing debt or equity to
mission-driven businesses." Socially
responsible-ethical investing generally refers to
investing in public companies with diverse products
and services and favours companies that have high or
higher environmental, social and governance (ESG)
Impact Investing Emerges as a Distinct Asset Class,
press release, November 29, 2010, J.P. Morgan,
Rockefeller Foundation, and Global Impact Investing
US Investor Group File
Shareholder Resolutions At Accenture, IBM, Pepsi and
Pfizer, To Review Policies & Oversight Of Political
Expenditures Through Trade Associations.
"The investors said that despite good corporate
governance records, the four companies were
compliant to political lobbying by the Chamber of
Commerce against issues such as healthcare reform
and climate change. US SRI investors and the
country’s Chamber of Commerce have locked horns over
numerous issues in recent years including climate
change, engagement, proxy access and say-on-pay."
It seems the stated aims of these companies
could be at odds with those of the Chamber of
Commerce. These companies, and many others for that
matter, need to come clean with their politics.
US investors target Accenture, IBM, Pepsi and Pfizer
over politics of US Chamber of Commerce,
November 29, 2010, Responsible Investor, UK.
New Islamic SR/Ethical Stock
"The Organization of the Islamic Conference based
in Jeddah hired Standard & Poor’s to start an index
of about 50 of the most-traded stocks in the first
quarter of 2011, Huseyin Erkan, the Istanbul Stock
Exchange’s chief executive officer and coordinator
of the initiative, said on Nov. 8. The index, which
will track listed equities that comply with Islam’s
ban on alcohol, gaming and tobacco, aims to target
exchange-traded funds, he said."
When available, this index could be of great
interest to many ethical investors. Assets of
Islamic equity funds were $52.3 billion last May,
says Ernst & Young.
Muslim-Majority Nations Plan Stock Index to Spur
Trade: Islamic Finance, by Haris Anwar, November
25, 2010, Bloomberg, UAE.
Harvard Releases Overview &
Manual On Integrated Reporting (Combining Financial
& CSR Reports).
Worthwhile reading for anyone in management and, or
The Landscape of Integrated Reporting: Reflections
and Next Steps, (PDF) November 2010, Harvard
Business School, USA.
Islamic Financial Assets To Reach
$1.5 Trillion By 2012.
"The Islamic finance assets base is likely to
reach $1.5 trillion by 2012 with bright future
growth prospects, according to a senior expert at
the Islamic Development Bank." For those not
familiar with Islamic finance, it has aspects to it
that some ethical investors find appealing. See my
The Rise of Islamic Finance.
Islamic finance sector to touch $1.5tn by 2012, says
Al-Aboodi, by Mahmood Rafique, November 25,
2010, Arab News, Saudi Arabia.
Chinese Company CSR Reports Found
"China's Social Resources Institute (SRI) has
criticized the country's Corporate Social
Responsibility (CSR) reports, saying they lack
credibility, in a new study released by SRI and
Global Sustainable Leaders Forum on Wednesday."
I believe that very few people would have expected
that Chinese corporate CSR reports would be in the
top tier of reporters. However, it does seem that
there is a strong initiative there to improve their
Study: China's CSR reports need improvement, by
Pang Qi, November 25, 2010, Global Times, China.
Malaysia's Stock Exchange To
Launch SRI Index.
"Bursa Malaysia [Malaysia's stock exchange] is
working towards establishing an environmental,
social and governance (ESG) index to influence
public-listed companies to adopt sustainability
practices in their business operations. The proposed
ESG index is also expected to attract socially
responsible investment (SRI) funds into the
Incidentally, Malaysia is also a
world leader in Islamic finance. SR/ethical
investing has huge support there, right up to, and
including, their prime minister.
New index proposed, Azatun Shari, November 24,
2010, thestar online, Malaysia.
2010 Moskowitz Prize Winner Shows
Companies With Environmental Concerns Pay More For
"An academic paper that shows that environmental
concerns such as litigation and regulation mean that
exposed companies are paying up to 64 basis points
(0.64%) more for their debt, has won the 2010
Moskowitz Prize, the only global award recognizing
outstanding quantitative research in the field of
socially responsible investing (SRI). The paper by
Rob Bauer, the former head of research at ABP, the
Dutch pension fund, and Daniel Hann, a PhD student,
both of Maastricht University’s European Centre for
Corporate Engagement (ECCE), studied the
environmental profile and debt costs of 582 US
public corporations between 1995 and 2006."
This is a significant paper. It
informs companies to be proactive in regard to
environmental concerns--or pay much higher rates for
their debt! Congratulations to Rob Bauer.
Former ABP research head wins Moskowitz Prize with
paper showing bond costs of enviro concerns, by
Hugh Wheelan, November 23, 2010, Responsible
Investor, UK. Also, see study information at:
Corporate Environmental Management and Credit Risk,
by Rob Bauer and Daniel Hann, Maastricht University,
June 30, 2010, Netherlands.
Investors Favouring Bonds.
"A surge of interest in fixed income within the
SRI space has divided industry experts. While latest
figures show investors increasingly looking to bonds
for SRI portfolios, some specialists play down the
significance of this move." It seems that
ethical investors are little different to
conventional investors in this regard. As most
people know, they have also been favouring bonds.
Could fixed income be the future of SRI investing?
By Atholl Simpson, November 23, 2010, CityWire, UK.
New: Dow Jones Sustainability
World Enlarged Index Launches Next Week.
".. a new Dow Jones Sustainability World Enlarged
Index, in partnership with sustainability investment
boutique SAM, in response to increasing investor
demand for a broader sustainability benchmark. The
new index, which will be officially launched next
week, will track the performance of the top most
sustainable 20 per cent of the largest 2,500
companies in the Dow Jones Global Total Stock Market
Index." Sustainability indices keep growing.
Dow Jones creates new broader sustainability index,
November 22, 2010, Newnet, UK.
Gold Company, IAMGOLD Corp., Wins
"IAMGOLD was recognized for having established
over 28 community and NGO partnerships companywide,
in Suriname, Botswana, Burkina Faso, Ecuador, Canada
and French Guiana... The Conference is convened to
celebrate and showcase excellence in the area of
Social, Economic and Environmental sustainability.
The driving force behind the Conference is Algonquin
College with strong support from four Ontario
academic institutions: Carleton University, La Cite
Collegiale, the University of Ottawa and the
University of Waterloo as well as Red River College
Considering the universities and colleges backing
this award, it is significant that a gold mining
company won it. Barrick Gold Corp., the world's
largest gold producer, also, in recent days, appears
to be getting very proactive in its CSR activities
too. Perhaps the extractive industries are starting
to get the CSR message?
IAMGOLD Recognized for Its Corporate Social
Responsibility, press release, November 17,
2010, EarthTimes, UK.
Global Cleantech Investment At
$1.6 Billion In 3Q10, Down 25% From 2Q10.
the $1.6 billion in cleantech venture investment in
3Q10 was down 25% from last quarter, it brings the
investment through the first three quarters of 2010
to $5.8 billion - a number that already exceeds the
total cleantech venture investment in all of 2009."
Apparently, solar investments account for about
half of the total.
Q3 Investment Monitor Report Released, November
19, 2010, Cleantech, USA/UK.
Tatas, Reliance, Infosys & ITC
Top BT Sustainable Development Index (India).
"Developed in partnership with global public
opinion company GlobeScan, the BT SD Index findings
are based on a survey of 253 senior, academic,
corporate, government, media and NGO leaders from
all over India and measure perception about business
performance on sustainable development indicators
and not actual performance."
Ethical investors in emerging markets might like to
review the BT Sustainable Development (SD) Index. It
assesses the business performance in India companies
Tatas, Reliance, Infosys and ITC top BT Sustainable
Development Index, November 20, 2010, The
Financial Express, India.
Investors Representing $15
Trillion In Assets Call For US Action On Climate
"Citing potential climate-related GDP losses of
up to 20 percent by 2050 and the economic benefits
of shifting to low-carbon and resource-efficient
economies, investors released a major statement
today calling for national and international
policies that will spur private investment into
low-carbon technologies. The statement was signed by
259 investors from North America, Europe, Asia,
Australia, Latin America and Africa with collective
assets totaling more than $15 trillion." This is
clearly a message aimed at convincing the newly
elected Republicans that big US and global firms
support more action on climate change.
Investors Representing More Than $15 Trillion Call
for U.S., International Action on Climate Change,
press release, Ceres, November 16, 2010, USA.
Australian/New Zealand Demand For
Responsible Investment Products Doubles In One Year.
"In a time when many are still reeling from the
effects of the global financial crisis, the consumer
demand for responsible investment products has
almost doubled with ethical advisor portfolios
growing an extraordinary 50% from AU $972 million to
AU $1.46 billion after a decrease of 21% in the
2009." Despite its critics, responsible-ethical
investing is growing around the planet.
Australia & New Zealand 2010 Responsible Investment
Benchmark Report, Responsible Investment
Association Australasia (RIAA), November 15, 2010,
New Study Says That SRI Performs
Best In Less Volatile Markets.
"We find a positive relationship between the
idiosyncratic risk (i.e. unsystematic risk) and
return during low and medium volatility states.
However, this positive relationship tends to
disappear during high volatility states. In
addition, our analysis suggests that idiosyncratic
risk has no forecasting power over SRI future
returns. Overall, our findings imply that SRI
investors are rewarded for bearing the additional
SRI specific risk (idiosyncratic risk) when the
market is less volatile. This reward, however,
becomes uncertain during periods of high market
This is an interesting piece of research from a new
perspective--that of how SRI performs in markets of
Yes, Indeed, Idiosyncratic Risk Matters to Socially
Responsible Investments! By Huimin Li, Adrian
(Wai-kong) Cheung, and Eduardo Roca, November 6,
2010, Griffith University, Australia.
Carbon Disclosure Project
Releases Results Of Questionnaire On Water Use At
"The CDP, which is backed by 137 institutional
investors representing $16trn (€11.7bn) of assets,
sent out its inaugural water questionnaire to 302 of
the world’s 500 largest companies in the FTSE Global
Equity Index Series."
'Water is the new oil' is a common
phrase these days. Its scarcity in coming years is
going to lead to enormous changes for societies--and
for innumerable companies. This is a first rate
report on the subject.
“Water the new carbon” as CDP’s Water Disclosure
Project releases first results, by Daniel
Brooksbank, November 11, 2010, Responsible Investor,
UK. See the
TBLI Conference Names
Sustainalytics As Best ESG Research House.
"Sustainalytics, also known as
Jantzi-Sustainalytics in North America because of
its connection to Canadian SRI pioneer Michael
Jantzi, was named Best ESG Research House at the
TBLI Conference Europe 2010 in London this week."
Congratulations to Sustainalytics and especially to
Michal Jantzi and friends at Jantzi-Sustainalytics.
Sustainalytics named Best ESG Research House, by
Doug Watt, November 12, 2010, SRI Monitor, Canada.
8% Of UK Savers Have Green &
Ethical Investments; 37% More Want To Do So Soon.
"Penny Shepherd MBE, UKSIF Chief Executive, said:
'Recent environmental and economic crises have made
people think more carefully about the long term
impacts of their financial decisions. After a decade
that almost ended in global financial meltdown,
attitudes are changing from greed is good to green
is good – less Gekko more Eco. The 2010s are well
set to become the decade of financial
responsibility, as more people consider how they can
make a difference with their money.'"
The UKSIF just ended a very successful promotional
week in the UK for ethical investing. Well done to
all involved. The US, Canada and other countries
should promote such a week too!
From greed is good to green is good: 2010s set to
become decades of financial responsibility,
press release, November 10, 2010, UKSIF, UK.
US SRI Assets Top $3 Trillion,
Almost 1 In Every 8 Dollars Under Management.
"SRI Assets Up 13 Percent in Current Economic
Downturn, While Overall Assets Increased Less Than 1
Percent... sustainable and socially responsible
investing (SRI) in the United States is continuing
to grow at a faster pace than the total universe of
investment assets under professional management,
according to the new 2010 edition of the Social
Investment Forum Foundation’s Report on Socially
Responsible Investing Trends in the United States."
This is exciting news. The data
that I particularly like to compare from period to
period are that of retail SRI mutual funds, as to me
they best indicate how the average investor invests
in relation to ethical/socially responsible
In 2007, there were $171.7 billion
in total net retail SRI fund assets in 173 different
funds, which rose in 2010 to $316.1 billion in total
assets in 250 different funds. In 2007 SRI retail
funds represented just under 2% of total US retail
fund assets. It appears that they are now probably
over 3%. This is really good news.
Report: Socially Responsible Investing Assets in US
Top $3 Trillion; Nearly 1 Out of Every 8 Dollars
Under Professional Management, press release,
November 9, 2010, Social Investment Form, USA.
73% Of UK Public Want British
Banks To Have Ethical Lending Policies.
"73% of the British public think that banks
should have ethical lending policies in place to
prevent them from investing in, or lending to,
companies involved in controversial areas such as
arms manufacturing, or companies with poor records
on the environment and human rights, according to
new research released today." The interest in
ethical finance and investing appears to be an
unstoppable trend, not only in the UK, but around
the world. However, this contrasts, I believe quite
sharply, with the lack of teeth in new financial
regulations that have appeared in the US, EU, or in
Basel 3, etc.
Public want banks to lend ethically, survey finds,
press release, November 8, 2010, EIRIS, UK.
UK Ethical Investing Shows
Biggest Annual Increase In Past Decade.
"The amount of money saved or invested ethically
by consumers has shown its biggest annual increase
in a decade according to a new report released today
(6 November) by Co-operative Financial Services
(CFS). Total money invested ethically rose 34 per
cent to £19.2bn, from £14.3bn in the previous 12
months. In comparison, total deposits and
investments grew 15 per cent over the same period."
Again the UK shows itself as a leader in ethical
Ethical savings and investments up a third,
press release, November 8, 2010, Co-operative
Financial Services, UK.
CSR Budgets To Continue & Expand
At Large Companies.
"The survey, conducted by GlobeScan on behalf of
BSR, shows that 84 percent of the respondents, which
include nearly 400 respondents from the majority of
250 global BSR member companies are optimistic about
the ongoing expansion of CSR efforts among the
business world... Addressing climate change remains
a top priority among survey respondents, with 63
percent saying it was a high priority. Workers'
rights and human rights were the next two
priorities, and 62 and 59 percent, respectively."
Such reports and surveys continue to point to
businesses enhancing their CSR activities. That is
good for the companies, for ethical investors and
for the world, generally.
Corporate Commitment to Sustainability Strong
Despite Economy, November 3, 2010, GreenBiz,
Most Chinese Companies Uninvolved
"More than 70 percent of China's top corporations
do not engage in corporate social responsibility,
according to a recent report by the Chinese Academy
of Social Sciences (CAS)... There were 300 companies
that participated in the evaluation, and only China
Ocean Shipping Group Company (COSCO) scored 80
points, putting it into the 'excellent' category."
I suppose this is not unexpected. However, I suspect
that the Chinese do want to do better in regard to
CSR given the recent bad publicity of worker
suicides at some of their factories.
70% of China's top companies shirk corporate
responsibility, By Zhang Qian, November 5, 2010,
People's Daily Online, China.
Correlation Of Global/Australian
SRI Funds Studied.
"Clearly, it still pays for Australian investors
to diversify internationally since the correlations
are still less than 1. However, it pays less to
diversify to such markets as Japan, Norway and
Denmark while diversification benefits can be
obtained from the other markets. Importantly, our
results suggested that diversification to other SRI
markets is less effective during periods of market
Though this study is written from an Australian
perspective, there are useful insights for ethical
investors in how different SRI funds
perform/correlated in different global markets.
Investigation of Socially Responsible Investment
Markets (SRI) Using Dynamic Conditional Correlation
(DCC) Method: Implications for Diversification,
by Gurudeo AnandTularam, Eduardo Roca and Victor S.
H. Wong, November 4, 2010, Journal of Mathematics
and Statistics, USA.
New US SEC Proxy Vote Rule Not
For 2011. CalSTERS Threatens Legal Action.
"The US Securities & Exchange Commission has said
it does not expect proxy access (the ability to
nominate company directors for a shareholder vote)
to be available to investors for the 2011 AGM
season, following a legal challenge from the US
Chamber of Commerce and Business Roundtable. The
legal action taken at the end of September by the
Chamber of Commerce has prompted California State
Teachers’ Retirement System (CalSTRS), the $131.8bn
scheme – the second largest in the US – to threaten
its own legal riposte against what it called a 'roll
back' on shareholder rights... "
Continuing, "In August, the SEC
approved rules to give shareholders who own 3% of a
company’s stock for at least three years the right
to have their board nominee included in companies’
It seems to me that the Chamber of
Commerce fears too many corporate boards and board
members will be threatened with the new SEC ruling.
After all, shareholders may actually want to replace
some board members and boards! The new SEC ruling
allows the opportunity to get more corporate boards
truly focused on environmental, social and
governance (ESG) matters. I hope that the pressure
from CalSTERS and others moves the SEC to implement
the rule soon!
SEC says proxy vote rule won’t make 2011 AGM season,
CalSTRS threatens legal action, by Hugh Wheelan,
November 5, 2010, Responsible Investor, UK.
Quant Funds Adopting ESG/SRI
"New funds are springing up that blend
quantitative investing, using financial data and
computer models, with socially responsible
investing, a method of picking stocks based on a
company's environmental, social and governance
practices, known as ESG." The results of these
new funds will be fascinating to watch. If
successful, they could become a new branch of the
SRI/ESG/ethical fund universe.
Quants and Do-Gooders Unite, by Carolyn Cui,
November 2, 2010, Wall Street Journal, USA.
Dow Jones Islamic Market Indexes
Named Best Islamic Indexes In Islamic Finance News (IFN)
Poll, 4th Year Running.
"The Best Service Providers award poll is
conducted annually by the Malaysia-based weekly
e-newsletter Islamic Finance News. For this 2010
edition, more than 1,900 votes from Islamic finance
institutions, issuers, investors and government
bodies from around the world determined the leaders
in 13 categories." Congratulations to Dow Jones
Indexes in this emerging ethically investing related
Dow Jones Indexes Named Best Islamic Index Provider
In IFN Award Poll, press release, November 1,
2010, TheStreet.com, USA.
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