E-newsletter of Investing for the Soul August 30, 2011
Top ethical investing news for August 2011
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!
Is China About To Invest In US SRIs?
- [COMMENTARY] "Zuo Xiaolei, chief
economist at China Galaxy Securities Co Ltd, said that China's
foreign-exchange reserves are likely to be invested in US projects for
clean energy and automobiles and a technological upgrade, all of
which would boost the US industrial sector. 'China can use the money to
buy the stock of US companies, facilitate merger and acquisition
projects and increase socially responsible investment,' Zuo said."
China could easily begin selling a small part of its huge hoard of US
treasuries and invest the proceeds in the US, and as some are
speculating, a good portion could go into US socially
Israeli Study Says Corporate CSR Has Little Impact On Stock Prices. - [COMMENTARY] "Stocks of companies that are committed to corporate social responsibility (CSR) policies perform statistically similarly to those corporations that do not have these programs, according to a new study by Ben-Gurion University of the Negev... [However] they believe that greater importance is being placed on these [CSR] policies and that investors will ultimately seek out companies with these initiatives."
Interesting, but what I believe they did not do was to compare how CSR
programs affected stock prices of companies within individual industry
sectors. Instead, they compared the "U.S. Dow Jones Sustainability
Indexes from 2004 to 2009 and 19 companies listed on the Israeli MAALA
CSR Index from July 2010."
New York State Subpoenas Three Natural Gas Producers For Possible
Investor Misrepresentation. -
[COMMENTARY] "New York State’s attorney general has
sent subpoenas to three large energy companies as part of a broad
investigation into whether they have accurately described to investors
the prospects for their natural gas wells, according to several sources
familiar with the inquiry... Subpoenas were sent to the three companies
— Range Resources, Cabot Oil and Gas, and Goodrich Petroleum — according
to the sources, who have direct knowledge of the investigation." The
concerns around natural gas deposits and extraction are heating-up.
Investors in such companies--often excited about the opportunities for
natural gas--should be aware of the possible problems!
Indian Companies Lag Badly In Community Engagement, Survey.
- [COMMENTARY] "Of 500
companies studied by independent think tank, only 10 were found to
perform rigorous corporate social responsibility activities for the
community." This study was somewhat restrictive and might not
reflect the full range of CSR activities among Indian companies.
Large Multinationals Accused Of Duplicity In Their Climate Change
Pronouncements & Actions. -
[COMMENTARY] "Many companies have taken official
stances on climate pollution, pledging to reduce their greenhouse
footprint in order to reduce the threat of a destabilized climate.
However, a number of these same companies are sponsoring toxic,
far-right denial of climate science. The American Legislative Exchange
Council (ALEC) pushes an extremist denier agenda throughout the United
States, funded in secret by
Continuing, "The radical anti-science agenda of ALEC stands in direct contravention to the official public policies of its funders, which include top health-care companies like Bayer, Merck, Pfizer, and Johnson & Johnson, and top energy companies like Chevron, ConocoPhillips, and Entergy."
Ethical investor should review the list of companies mentioned in this
article that are deemed duplicitous. Then determine whether to contact
them--or sell their stock!
Major SRI Fund Groups Target Oil Companies Operating In Syria. - [COMMENTARY] "A group of social investment firms plans an e-mail campaign to urge 11 oil companies to either stop operations in Syria or communicate their condemnation of the violent crackdown on protesters to the government, said Maureen O'Brien, head of engagement at the Conflict Risk Network, which is spearheading the effort for the investors... The investors are Boston Common Asset Management, Calvert Asset Management, Domini Social Investments, GES Investment Services and Capricorn Investment Group."
Some believe it was the international condemnation and boycott by
multinationals against apartheid in South Africa that eventually brought
down the racist regime there. Could it work with Syria? It's worth a
US Asset Managers Trail European Counterparts In Implementing ESG
Analysis. - [COMMENTARY]
"Less than a quarter of US asset managers are using ESG
risk analysis to inform their investment decisions, and European
managers are considerably out-performing their American and global
counterparts in integrating sustainability considerations, a report from
MSCI ESG Research has revealed." European asset managers, and
especially those in the UK, have been leaders for years in applying ESG
criteria in selecting investments.
Mining Companies With Good Stakeholder Relations Perform Better Financially, Study. - [COMMENTARY] "Wharton Professor of Management Witold Henisz has found a way of measuring the benefits of stakeholder engagement activities to public mining companies that operate in risky environments. Henisz and two co-authors researched the role that stakeholder events played in companies’ efforts to maximize profits. The answer: huge."
Continuing, "Professor Witold Henisz... notes in a paper entitled Spinning Gold: The Financial Returns to External Stakeholder Engagement (PDF 480KB): 'There is a powerful business case to win the hearts and minds of external stakeholders. We found in our research that the value of the relationship with politicians and community members is worth twice as much as the value of the gold.'”
This could be a landmark study for all mining companies! It clearly
demonstrates that proper CSR policies can be of enormous benefit for all
stakeholders while greatly enhancing the financial performance of the
US Debt Deal May Gut Clean Energy Support, While China Increases It! - [COMMENTARY] "'I don’t see clean energy avoiding that hatchet,' said Richard Caperton, policy analyst for progressive think tank the Center for American Progress. The House has already taken steps to cut the budgets for several federal agencies, including the EPA, a favourite target of conservative Republicans. In July, the House cut around $1.5 billion, or 18%, from the EPA’s budget, setting it at $7.4 billion for the 2012 fiscal year, which begins on 1 October."
Barring high inflation that supports higher oil prices, and thus clean
energy prices, the reduction in US government support for clean energy
could be very significant for the US clean energy industry.
Regarding China, the reverse is happening! "China announced a
national feed-in tariff (FiT) for solar power installations this week,
possibly signalling a long-awaited boom in solar development in China."
Eiris Ranks Sovereign Bonds On Sustainability. -
[COMMENTARY] "The US, with the largest and most liquid
sovereign debt market, comes only 34th in Eiris’ sustainability ranking
of 73 major economies, which is headed by Sweden, Austria, Switzerland,
Finland, Germany and the UK." Ethical investors have been calling
for such ratings for sometime. Finally, the SRI ratings community has
gotten the message!
US Cleantech Investment Plunges In 2Q2011. -
[COMMENTARY] "The second quarter of 2010 was a
record-breaking era for investment in clean technology companies, which
makes this year's numbers seem all the worse. According to
just-published research from Ernst & Young, investment in clean
technologies companies dropped by a whopping 44 percent in the second
quarter of 2011, though there is still plenty of activity in the
market." Cleantech investment seems in some ways to mirror economic
activity, hence this is not surprising.
US Shareholder Voting On Environmental & Social Issues Continues To Increase. - [COMMENTARY] "Environmental and social issues were at the top of shareholders’ attention during the 2011 proxy season, according to Ernst & Young (E&Y). About 40% of all resolutions that proceeded to a vote revolved around environmental and social issues, up from 31% last year, marking the second year in a row that these resolutions comprised of the largest portion of shareholder proposals that came to a vote, according to the consultancy firm’s 2011 proxy season update."
This illustrates the increasing influence of
green-ethical investors on corporate behaviour!
German Institutional Investors Lead In Sustainable Investing.
- [COMMENTARY] "On average German
institutional investors apply sustainable factors to half their assets,
but this rises to almost three quarters (73%) for foundations, according
to the survey, by Union Investments of 218 large-scale investors
managing about €1trn." This is great news. However, if only
circumstances could change so that individual Germans could invest
similarly as well.
CSR Often Promoted To Counter Corporate Social Irresponsibility,
Study Says. - [COMMENTARY]
"Economists Matt Kotchen of Yale University and Jon Jungbien Moon of
Korea University suggest that an important reason companies do good is
to paper over the bad stuff they’ve done." One only needs to look at
the CSR reports from tobacco companies to realize that this is, sadly,
often the case.
ESG Investing Outperforms, Says RCM of Allianz Global Investors. - [COMMENTARY] "Introducing environmental, social and governance criteria into an investor’s stock selection process has no negative impact and is more likely to lead to outperformance over the longer term, research suggests. A study by RCM, a company of Allianz Global Investors, tested the impact of ESG issues on portfolio performance over the period 2006 to 2010. The evidence found investors could have added 1.6% a year over five years to their investment returns by allocating to portfolios that invest in companies with above-average ESG ratings."
I read a critique of ESG-based investing by Mark Harrison, director of
publications at the UK's CFA Institute, in the FT today. He said,
"Like conventional active managers, SRI/ESG funds are failing to beat
similar benchmarks..." I suggest he needs to update his research!
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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 © 2011 Ron Robins. All rights reserved.