E-newsletter of Investing for the Soul                                 January 30, 2010

 

Ron Robins, Editor. E-mail /705-635-3034            Latest news at: http://investingforthesoul.com/

Top ethical investing news for January 2010

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News & Commentaries

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65% Of US SRI Funds Outperformed Market Benchmarks In 2009. - [COMMENTARY] "A review of 160 socially responsible mutual funds from 22 members of the Social Investment Forum (SIF) finds that the vast majority of the funds -- 65 percent -- outperformed their benchmarks in calendar year 2009, most by significant margins. These SRI funds topped benchmarks across nearly all asset classes, including balanced, large cap, small cap and global funds, as well as bonds." The evidence speaks for itself.
Performance of Social Investment Forum Member Mutual Funds as of December 31, 2009, media release, January 21, 2009, USA.

Corporate Knights Announces Its Global 100 List Of Most Sustainable Corporations. - [COMMENTARY] "The 2010 Global 100 tapped intelligence from the world's largest sustainability research alliance put together by Legg Mason's Global Currents Investment Management to isolate the top ten per cent of companies from a universe of 3000 global stocks, which were then transparently ranked based on 10 indicators, with data sourced from ASSET4, a Thomson Reuters business, and The BLOOMBERG PROFESSIONAL® service."

The top three companies are GE, PG & E, and TNT. I see Matthew Kiernan, formerly head of the leading global ESG firm, Innovest Strategic Value Advisors, had a hand in this. He has a new company called Inflection Point Capital Management. This is a list to take seriously.
2010 Global 100: The Definitive Corporate Sustainability Benchmark, January 27, 2010, Global 100, Canada.

SEC Says Public Companies Should Warn Investors Of Global Warming Risks To Their Businesses. - [COMMENTARY] "The commission said that companies could be helped or hurt by climate-related lawsuits, business opportunities or legislation and should promptly disclose such potential impacts. Banks or insurance companies that invest in coastal property that could be affected by storms or rising seas, for example, should disclose such risks, the agency said." Better late than never, as ethical investor groups have been demanding such transparency in reporting for many years. Large numbers of companies who could be severely impacted by climate change have so far chosen to ignore the issue. This means that investors in these companies are taking on significant financial risk which they might not be aware of.
S.E.C. Adds Climate Risk to Disclosure List, by John M. Broder, January 27, 2010, The New York Times, USA.

Boston College Center For Corporate Citizenship Releases A 'How To' Guide To Understand Corporate Social Reporting. - [COMMENTARY] "This guide is intended to help those approaching CSR reporting for the first time, as well as those looking to deepen their understanding of what makes for a thorough CSR report. It will help readers, whatever their interests or experience, to identify quickly and easily the most valuable parts of these reports. Its focus is on CSR reporting as practiced by North American companies, but it is applicable to CSR reporting more generally as well." To obtain the guide you need to register with the College. Registration is free.
How to Read a Corporate Social Responsibility Report: A user’s guide, January 26, 2010, Boston College Center for Corporate Social Responsibility, USA.

Mercer Finds Discrepancy Between Companies With CSR Policies And Incorporation Of A CSR Strategy In Their Defined Contribution (DC) Plans. - [COMMENTARY] "... (71%) of those respondents that currently have a global CSR strategy (whether they are aware
of the strategy or not) have not considered actively reflecting this strategy in the management of their DC plans. This speaks to potential gaps in how companies are implementing their CSR strategies, highlighting a possible 'pension inconsistency risk.'... [which] refers to the negative potential impact that could result from employees’ dissatisfaction with their pension plans, or from external scrutiny of the plan in the context of overall corporate strategy (including CSR)." As companies realize this discrepancy, ethical investing could receive a further boost from DC plans."

As companies realize this discrepancy, ethical investing could receive a further boost from DC plans.
DC plan management and pension inconsistency: Are you at risk? By Jane Ambachtsheer and Katherine Burstein, January 26, 2010, Mercer, Canada.

RiskMetrics, Who Recently Purchased KLD & Innovest, Up For Sale Says Wall Street Journal. - [COMMENTARY] "A number of media companies and private-equity firms have
been contacted about a potential acquisition of the New York provider of risk analysis, financial research and corporate-governance services for investors such as pensions and hedge funds. The company could fetch a premium of about 30% to its current value, said one person involved in a potential transaction. That would value the company, which has about 1,100 employees, all in New York, at around $1.3 billion, based on where its shares traded Friday."
If this is correct, on wonders, why now?
RiskMetrics Puts Itself Up for Sale, by Jeffrey McCracken and Peter Lattman, January 23, 2010, Wall Street Journal, USA.

FairPensions Coordinating 140 Pension Funds To Grill Royal Dutch Shell On Its Oil Sands Investments At Its AGM May 18. - [COMMENTARY] "The resolution was filed on December 31, and the company has confirmed that it will be on the AGM agenda. The resolution raises concerns over the long-term success of the company arising from the risks associated with oil sands. It points to expected carbon price rises, oil price volatility, expected fluctuations in demand, regulation of greenhouse gas emissions, and the legal and reputation risks arising from environmental damage and impairment of traditional livelihoods. Thirty percent of Shell’s total reserves is estimated to be represented by oil sands developments." Investors in energy companies with oil sands developments have to be worried about future outcomes.
Institutional shareholders to quiz Shell board over Canadian oil sands at AGM, by Daniel Brooksbank, January 18, 2010, Responsible Investor, UK.

Investors With $13 Trillion In Assets Call For Strong Government Climate Change Policies. - [COMMENTARY] "On the heels of international climate treaty talks in Copenhagen, the world’s largest investors today released a statement calling on the U.S. and other governments to move quickly to adopt strong national climate policies that will spur low-carbon investments to reduce emissions causing climate change. Private-sector investors will likely be responsible for financing more than 85 percent of the global transition to a
low-carbon economy... [The meeting included] 450 global investors at the United Nations... UN Secretary General Ban Ki-Moon, United States Special Envoy for Climate Change Todd Stern, billionaire investor George Soros and former Vice President Al Gore."

Clearly, global investors who take climate change seriously feel adrift after Copenhagen. Without broad agreement by leading governments on this issue, companies and investors are somewhat adrift as to what steps they can take. Nonetheless, many investors and companies will pioneer initiatives that ethical investors will be keen to participate in.
Investors Representing $13 Trillion Call on U.S. and Other Countries to Move Quickly to Adopt Strong Climate Change Policies, media release, January 14, 2010, Investor Network on Climate Risk, USA.

Asset Managers Ignoring Climate Change Risk Analysis--Update. - [COMMENTARY] We now have access to the Ceres report: "Nearly half of the respondents - 44 percent - said they do not consider climate risks at all because they do not believe that climate change is financially 'material' to investment decision-making... half of the respondents - nearly 49 percent - said they did not analyze climate risks because their investor clients did not ask them to. Another shortcoming... incentive structures and benchmarks that asset owners use for evaluating asset managers are heavily weighted towards short-term performance focusing primarily on quarterly returns where climate risks are far less likely to show up."

Most of the problems cited above--as well as mentioned here many times--are due to the short-termism orientation of the investment industry itself! The consciousness of the investment and financial industries must change. However, I fear it will be another meltdown, perhaps of the 'bail-out' bubble, before these industries do change.
New Report: Investment Managers Still Lagging in Response to Climate Change Risks and Opportunities, press release, January 6, 2010, Ceres and Investor Network on Climate Risk (INCR), USA.

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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.