Ethical Investing News/Commentaries
Commentaries by Ron
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Sachs Invests In First U.S. Social Impact Bond.
"Goldman Sachs has signed on as the investor in the
U.S.’s first social impact bond, a new
public-private financing structure that asks
investors to bear at least partial risk for the
outcomes of government-funded social programs. While
Goldman’s risk has been somewhat attenuated by
Bloomberg Philanthropies, the investment suggests
that a proper social impact bond market might not be
too far away." This is something that must be
Such bonds could save governments significant
sums of money while earning decent returns for
ethical investors. It's great that a big investment
firm is getting engaged in this. Hopefully, it's not
only about improved public relations for Goldman Sachs
that it's getting involved! Thanks to Benefits and Pensions
Monitor for this lead.
Goldman Sachs Invests in First U.S. Social Impact
Bond, by Katie Gilbert, August 29, 2012,
Institutional Investor, USA.
ESG Integration In Investments, Useful Report.
"In this report, we assess current trends around
environmental, social, and governance (ESG)
integration in mainstream investments and provide
specific recommendations for companies to attract
investors with long-term investment perspectives."
This is a good overview of the present situation.
Trends In ESG Integration In Investments, August
2012, BSR, USA.
Conflict Minerals Vote Comes Under Fire.
"Humanitarian groups said they were disappointed
with the final rule, which included a provision
allowing companies to report that they couldn't
determine the origin of their products. 'It’s a huge
loophole that undermines the rule,' said Corinna
Gilfillan, head of the U.S. office at Global
Witness, of the clause. 'The SEC seems more
interested in protecting the bottom line of these
companies rather than helping the citizens of the
I agree there shouldn't be such a loophole. Many
companies are likely to choose the easy way out and
say they couldn't determine where the minerals came
from. I don't know if this is the case with the
rule, but it would only be valid to me if a company
using the loophole were able to show documentation
that their search as to the source of the minerals
revealed it was impossible to discover.
SEC's conflict minerals vote comes under fire,
by Alison Moodie, August 23, 2012, GreenBiz, USA.
Firms Accepting Screens To Get Faith-Based Business.
"Hedge fund managers hungry for institutional assets
are increasingly willing to incorporate exclusionary
screens into their investment approaches to keep
portfolios in line with the socially responsible
investment values of church-affiliated investors."
Acceptance of ethical investment principles keeps
Hedge fund firms accepting screens to get
faith-based business, by Christine Williamson,
August 23, 2012, Pensions & Investments, USA.
Corporate Governance Ratings Demonstrates Superior
"Over the 10-year period ended July 1, 2012, a
portfolio of companies with top-decile AGR ratings
would have outperformed the lowest-decile portfolio
by 55%... AGR reflects a broad spectrum of
accounting irregularities and weaknesses in
corporate governance statistically associated with
an elevated risk of anomalous events likely to cause
precipitous contractions in equity value."
This is most interesting. Very few ratings
organizations consider only governance-litigation
risk. It's fascinating to see that by screening for
that alone investors can outperform. Ethical
investing just got another plus!
GMI Ratings’ Accounting and Governance Risk (AGR)
Ratings Can Help Investors Significantly Improve
Equity Returns, press release, August 22, 2012,
China Association of Public Companies Urges Listed
Companies To Issue CSR Reports.
"The move would allow companies to timely release
operational information, focus on investors' returns
and boost market confidence, the association said.
By the end of April, 586 companies listed on the
A-share market had released 592 corporate social
responsibility reports. The figure increased 11.49
percent compared with a year earlier. However, those
companies only accounted for 25 percent of the total
A-share companies." This is great news for
ethical investors interested in Chinese companies.
Companies asked to report on social responsibility,
by Chen Jia, August 20, 2012, China Daily, China.
Study Finds SRI-Ethical Funds Performing Positively.
"The empirical results show that SRI funds
outperformed conventional funds in EU and U.S. In
addition, the results of EU are among the
top-performing categories. Environmentally friendly
funds do not perform as well as SRI, but perform in
manners equal or superior to conventional funds.
These results show statistically significant in some
cases." This study adds an interesting twist in
its statistical analysis. Read about it in the link
Performances of Socially Responsible Investment and
Environmentally Friendly Funds, by Yutaka Ito,
Shunsuke Managi, and Akimi Matsuda, August 15, 2012,
Tohoku University, Japan.
Investment Advisors Ignorant Of Islamic Products.
"Close to two-thirds of UK investment advisers
surveyed admitted their limited knowledge of Islamic
fund providers has prevented them from recommending
products, according to a new report from Islamic
asset manager BLME... Nigel Denison, head of asset
management at BLME, said: 'Focusing on the parallels
between ethical and Islamic investing may help to
bridge the knowledge gap that currently exists and
overcome some of the common misconceptions about
I'm guessing that the numbers would be worse in
the USA and similar in the rest of Europe.
New study claims IFAs ‘overlook’ Islamic
investments, by Donia O'Loughlin and Michael
Trudeau, August 16, 2012, FT Advisor, UK.
Islamic Index Underlies Potential For Huge
"In a bid to attract Sharia/ethical investors to
Nigeria's budding stock market, Islamic wealth
manager Lotus Capital and the Nigerian Stock
Exchange (NSE) on Monday launched a debut index of
NSE-listed companies that comply with Islamic
investment principles." Though this is a
relatively minor event it represents a trend that
ethical investors might want to be aware of. Islamic
finance is growing rapidly worldwide and with it is
its demand for higher ethical investment principles.
Nigeria: Islamic Index Underlies Potential for Huge
Investment, by Kayode Ogunwale, August 12, 2012,
Survey Reveals A Different Way To Think About
Corporate Social Responsibility.
"Specifically, these data suggest that the socially
responsible corporate activities that resonate most
strongly with customers are those that are local and
community-based. And lost in the shuffle among all
of the competing activities people tend to discuss
is perhaps one of the most important, but often
overlooked, socially responsible actions companies
can take: creating jobs."
What this says to me is that economic issues are
still foremost in people's minds. It's probably also
an issue of semantics: what is really meant by the
term 'corporate social responsibility?'
A Different Way to Think About Corporate Social
Responsibility, by John Fleming, August 10,
2012, Gallup, USA.
Investors Push Companies For Impact Of ESG Issues.
"The Australasian Investor Relations Association’s (AIRA)
biannual survey of IROs finds two thirds of
respondents have fielded more questions on ESG
issues in the last 12 months than before. Almost
three quarters also say they have received requests
for more information on the ‘broader impact’ of
company operations and governance."
This is the kind of push many companies need to
take seriously ESG issues. So many studies have
found that companies that excel on ESG do
better financially and have relatively higher stock
prices. It amazes me how many companies still resist
the benefits of an ESG focus.
Australian investors push companies for impact of
ESG issues, by Tim Human, August 2, 2012, Inside
Investor Relations, Australia.
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