E-newsletter of Investing for the Soul September 29, 2010
Top ethical investing news for September 2010
Links may only be valid a limited time Commentaries by Ron Robins
Twitter allows me to cover more--and breaking news--to help you do better!
NASDAQ Launches Array Of Indexes To Track Green
"The company, which owns the NASDAQ and bills itself as the world's
largest exchange company, unveiled the first four in a family of indexes
tracking companies operating in 13 sectors, including energy efficiency,
renewable energy and healthy living. NASDAQ OMX said it will launch more
green economy indexes in the coming months." The proliferation of
green indices is an obvious indicator of global investor sentiment
towards investing in greener businesses. Ethical investors should be
continually encouraged by these developments.
Canadian Mutual Funds Less Supportive Of Company Management Says Proxy Analysis. - [COMMENTARY] "Funds rejected a significant 20-30% of compensation resolutions put forward by management... SHARE released its third annual survey of proxy voting by Canadian mutual funds. The report examines four years of data on votes cast by 258 funds managed by 21 fund companies in connection with the shareholder meetings of more than 200 senior Canadian issuers."
It seems that Canadian
mutual funds are starting to get more active in engaging company
management! This is important if we are to get companies to be more
ethical, transparent, and proactive on environmental, social and
governance (ESG) issues.
Sustainable Stock Exchanges Dialogue in Xiamen. - [COMMENTARY] "The event’s main focus was to review the recent challenges that exchanges have experienced with the introduction of sustainability indices and ESG (environment, social and governance) disclosure regulation, and discuss whether it was even possible to pursue mandatory reporting with such large differences in the materiality of reporting indicators across each industry."
The main point I got from
reading this overview was that the large for-profit and private stock
exchanges are hesitant on an individual basis to go to fast mandating
environmental, social and governance reports from their listed
companies. They are afraid of losing those listings to other exchanges
not requiring such reporting.
IMF Issues Working Paper On Financial Crisis Comparing Its Effects On Islamic & Conventional Banks. - [COMMENTARY] "Factors related to IBs‘ [Islamic banks] business model helped contain the adverse impact on profitability in 2008, while weaknesses in risk management practices in some IBs led to larger decline in profitability compared to CBs [conventional banks] in 2009. In particular, adherence to Shariah principles precluded IBs from financing or investing in the kind of instruments that have adversely affected their conventional competitors and triggered the global financial crisis."
Ethical investors may want to acquaint themselves with Islamic finance due both to its increasing global importance and some similarities to ethical finance and investing. The Effects of the Global Crisis on Islamic and Conventional Banks: A Comparative Study, September 2010, International Monetary Fund (IMF), USA. (Conclusions are on page 33.) Also, see my September 16 alrroya column, The Rise of Islamic Finance.
Siemens, Deutsche Post, BASF, Bayer and Samsung
Electronics Lead In Carbon Management, Says Carbon Disclosure Project (CDP).
"This year, CDP, backed by 534 institutional investors overseeing
more than $64 trillion in assets, sent inquiries to more than 4,700
companies... Some 82 percent of Global 500 companies responded to the
questionnaires, compared to 70 percent of S&P 500 companies,
illustrating a trend that has been playing out for several years: North
American companies lag their European counterparts in both climate
disclosure and performance." The data is interesting, and indicates
the trend is in the right direction.
China Launches Its First Sustainability Index.
"The CSI ECPI China ESG 40 Equity Index, made up of 40 domestic
companies in mainland China, is a collaboration between Chinese
Securities Index Company, a Chinese index provider backed by the
Shanghai and Shenzhen stock exchanges, and ECPI, a European ESG research
and indices company." Welcome China!
Justmeans Releases Its Global 1000 Best CSR Companies
List. - [COMMENTARY]
"Justmeans released its Global 1000, a list produced in conjunction
with the relatively new ESG ratings firm CRD Analytics. As with the
various CSR rankings we have explored in this blog in the past, the list
contains many of the usual suspects. So what distinguishes this
selection from those made by CRO, Ethisphere, Corporate Knights, legacy
KLD and legacy Innovest products?" The discussion article raises
concerns about various CSR rankings' methodologies. This short article
is worthwhile reading.
Australia Launches First Global Standard For
Responsible Investment Training. -
"It is backed by the United Nations Principles for Responsible
Investment (UNPRI) and includes web-based courses on UNPRI compliance
and the integration of ESG factors in finance decisions across pensions
and investment organisations." This is exciting news. Such training
needs to become commonplace, particularly among investment
professionals. Congratulations to Responsible Investment Association
Australasia (RIAA) for establishing this and to the Australian
government for funding its creation.
European Survey Found 90% Of Buy Side Firms Plan To Increase SRI & Sustainability Asset Allocation In Next Year. - [COMMENTARY] "The 2010 Survey represents the views of over 450 investment professionals from 16 countries, making it the most extensive assessment of socially responsible investing (SRI) in the European investment community. Voting was conducted from 20 March to 03 June 2010. It reflects a contribution from 254 buyside firms and 42 brokerage firms/research houses."
When will North America get a survey like this? It ranks
SRI analysts and firms on several variables.
French Study Showed Ethical Funds Provided No Protection From Market Downturn, But Over Long-Term Green Funds Outperformed With Higher Risk. - [COMMENTARY] "... the focus on the financial crisis reveals that SRI funds provided no protection from market downturns during this period, as illustrated by the considerable increase of extreme risks borne by these funds. Finally, the comparison of best-in-class funds and green funds, reveals, over the long term, higher alpha for green funds, with higher risks, including higher extreme risks."
The study focused on
French funds, though probably somewhat applicable to most other regions
as well. Nothing remarkable here and not already known by most of us who
closely follow ethical investing. For a brief discussion on this study
and others, see
No proof SRI outperforms traditionals, by Ruth Sullivan, September
12, 2010, Financial Times, UK.
Security Analysts Favouring Firms With Good CSR, Says Study. - [COMMENTARY] "Security analysts are increasingly awarding more favorable ratings to firms with corporate socially responsible (CSR) strategies, according to this paper by Ioannis Ioannou and HBS professor George Serafeim."
This is an important
study! It is one of the few links indicating that mainstream analysts
are taking CSR seriously AND that CSR benefits stock prices.
CSRHUB, A New CSR Research Site Could Be Valuable
Resource For Ethical Investors.
New MSCI ESG Indices Launched. -
"MSCI Inc. (NYSE: MSCI)... announced today the launch of a family of
MSCI ESG Indices. With over 40 years of expertise in index construction
and maintenance, MSCI aims to set new standards for ESG indices —
allowing clients to more effectively benchmark their ESG investment
performance, issue index-
Generally, it is great
that there are so many new ESG indices out there for ethical investors
today. However, I am not sure that it is necessary to report on new ones
anymore. One difference here though is that they are offering some 23
different indexes under their MSCI ESG index umbrella.
Eurosif Says Portfolios Of Europe's Wealthy
Increasingly Focus On Sustainability. -
"According to Eurosif estimates, the proportion of rich Europeans’
portfolios managed sustainably was 11 per cent at the end of 2009, up
from 8 per cent two years earlier. That represents €729bn (£606bn,
$936bn), more than a third higher than in 2007." This is good news
for ethical investors. As concerns for the environment grow, the numbers
shown in the Eurosif survey are likely to continue to increase.
Study Says Over 19 Years Returns Of SRI & Conventional
Funds Show Statistically Indistinguishable Results.
"This article explores that topic through an analysis of those
actively managed mutual funds categorized as “Socially Conscious” from
1990 to 2008 (19 calendar years) and finds that while SRI funds tend to
slightly underperform their non-SRI peers (−17 bps per year), they tend
to slightly outperform on
Recent Commentaries by Ron Robins on Alrroya.com
Huge Migration of Service Jobs to Developing World Looming, September 1, 2010.
US Government and Financial Elites Deceive Us, September 7, 2010.
The Rise of Islamic Finance, September 16, 2010.
Higher US Savings Is Economic Game Changer, September 23, 2010.
Note: Articles are linked to the original source. Some sites may require registration, and may, or may not, archive stories. All links were active at the time of publication.
Disclaimer: Neither The Soul Investor nor Ron Robins make investment recommendations. Nothing in this newsletter should be interpreted as a recommendation or solicitation to buy/sell any securities or investments. The Soul Investor is a source of general information and resources for spiritual investing, ethical investing, and socially responsible investing (SRI). Investors should consider their actions thoroughly and consult their professional advisers prior to taking any investment action. The Soul Investor does not necessarily agree with the opinions expressed in articles in its newsletter or offered on the web pages to which it might be linked. Such opinions are the responsibility of the writers themselves. Furthermore, The Soul Investor does not offer or provide any warranties, representations, guarantees, implied or otherwise, as to the accuracy, legality, copyright compliance, timeliness or usefulness of the information, materials or services in this e-newsletter, or other sites, to which it might be linked. Also, Mr. Ron Robins is not an investment advisor, nor is he licensed with any professional investment related body, and thus is not able to, nor does he make, any investment recommendations.
The Soul Investor is a publication of Investing for the Soul, a registered business name in Ontario, Canada. Copyright © 2010 Ron Robins. All rights reserved.