Ethical Investing News/Commentaries
Commentaries by Ron
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Deloitte Report Encourages Companies To
Incorporate ESG Measures.
"Deloitte released its research report, 'Disclosure
of Long-Term Business Value: What Matters?'
providing an in-depth look at how companies are
determining environmental, social and governance (ESG)
materiality and some of the challenges managers
face. The report suggests that sustained and
superior performance depends not only on maximizing
traditional financial metrics, but on leveraging ESG
performance." More good news on the ESG
front--and encouraging to ethical investors as well.
Determining Environmental, Social and Governance
Materiality Is One Key to Sustainable, Superior
Performance, Deloitte Report Suggests, press
release, March 28, 2012, USA.
Stock Exchanges Support Corporate
"A report released today, 'Sustainable Stock
Exchanges: A Report on Progress', has found that a
majority of stock exchanges remain committed to
promoting greater corporate responsibility on
sustainability issues but are restricted in the
actions they can take... Written by Responsible
Research, today’s report seeks to capture the
progress on promoting corporate sustainability by
surveying 27 of the largest exchange entities across
the world’s markets."
This report is noteworthy when it refers to how
restricted the stock exchanges are in regulating
sustainability reporting. Stock exchanges compete
for business (listings), thus many companies
gravitate to the exchanges with the least
regulations. This is a call for global cooperation
on corporate sustainability reporting. I believe
will happen in the next few years.
Aviva Investors: Stock Exchanges Support Corporate
Sustainability Reporting, press release, March
27, 2012, AVIVA, UK.
Investors Press US Shale Oil Drillers To
"Investors representing $500 billion in assets are
pushing energy companies in the shale oil rush in
North Dakota and other states to disclose the amount
of natural gas they burn - a practice they see as a
wasteful financial risk." This burning, needless
to say, is also bad for the environment. As the
world becomes increasingly intimate with the mammoth
scale of global warming and climate change, expect
sustainability and ESG to play an ever-increasing
role in investment analysis--and stock values!
Exclusive: Investors press U.S. shale oil drillers
to control flaring, by Timothy Gardner, March
28, 2012, Reuters, USA.
Among Millionaires It's The Younger Ones Who
Most Favour SRI.
"Half of Millionaires age 44 and younger say
societal implications are an important investment
selection factor, according to our latest quarterly
study on the attitudes and behaviours of affluent
investors. (Millionaires are defined as having a net
worth of $1 million to $5 million, not including
primary residence.) Young Millionaires are more
likely than their older peers to make socially
responsible investments. About 40 percent of baby
boomers and 30 percent of investors age 65 and older
identify social responsibility to be a key
This is good news for the future of SR-ethical
investing, as we all know that young people are our
Young Millionaires drawn to socially responsible
investments, by Adriana Reyneri, March 27, 2012,
Millionaire Corner, USA.
63% Of Global Socially Conscious Consumers Are
Under 40, Says Nielson Survey.
"Consumers in Asia Pacific (55%), the Middle East
and Africa (53%) and Latin America (49%) are more
willing to pay extra for products and services from
socially-responsible companies than consumers in
North America (35%) and Europe (32%). According to
Nielsen’s survey, the highest concentration of
socially-conscious consumers is in the Philippines,
where 68 percent of respondents are willing to pay
extra for products, while the lowest concentration
is in the Netherlands, where 21 percent of
respondents indicated a willingness to spend more."
Most people believe that it's young North
American and European consumers that are most
willing to pay more for sustainable products. Yet,
this survey says it's the young people in the
Asia-Pacific region that do so! Ethical investors
could checkout the green companies they invest in to
see where they market their products.
Nielsen Identifies Attributes of the Global,
Socially-Conscious Consumer, press release,
March 27, 2012, Nielson Holdings N.V., USA.
Canada's 2012 Globe Award Winners Include
Unilever Canada, Royal Bank of Canada, & Canadian
- [COMMENTARY] Awards were for
environmental and sustainability actions of these
2012 GLOBE Awards Winners, March 22, 2012,
29 UN Global Compact Member Companies Failing To
Deliver CSR Reports.
"For the fifth year, a coalition of signatories to
the Principles for Responsible Investment (PRI) are
pressuring companies to fulfill their stated
commitments to corporate sustainability reporting.
The investors, from 12 countries and with more than
$3 trillion in assets under management, have
identified 29 companies that are members of the UN
Global Compact (UNGC) but 'have failed to produce
the mandatory annual report that communicates their
progress on corporate sustainability.'"
This type of peer pressure is good.
Unfortunately, the non-compliant companies aren't
named in the associated press release, so they can't
be publicly scorned.
29 firms fail to file promised sustainability
reports, by Robert Kropp, March 21, 2012,
Investment Banks Produce Best ESG Research,
Says Research By Integrity Research Associates.
"Asset managers plan to increase spending on
research analyzing the environmental, social and
governance performance of publicly traded companies,
according to a recent study. Investors ranked ESG
research produced by investment banks more highly
than independently produced research." Though
Mercer a few weeks back indicated that only about 9%
of managed portfolios truly incorporated ESG in
their portfolio design, they did indicate that ESG
was growing in importance. Integrity's survey is
further vindication of that.
Investment Banks Top Independents in ESG Research
Survey, March 15, 2012, Integrity Research
Ethisphere Publishes Its 2012 Winners.
"Each 2012 honoree -- including U.S. industry
standard-bearers like Cisco, Ford and Timberland,
and smaller international firms like the Ethical
Fruit Company (UK), Tokio Marine Holding (Japan) and
the Panama Canal Authority -- was chosen for
promoting ethical business standards and practices
by exceeding legal minimums for compliance,
introducing innovative ideas that benefit the public
and forcing their competitors to follow suit."
I think it is a good list, but the preponderance
of US companies on the list makes me wonder how deep
is their research since European and Japanese
companies report more widely on CSR matters and
appear to take ESG more seriously.
Ethisphere Institute Unveils 2012 World's Most
Ethical Companies, press release, March 15,
2012, Ethisphere Institute, USA. See
The Goldman Ethics Fuss.
- [COMMENTARY] I'm both astounded
and somewhat bemused by the media frenzy surrounding
Greg Smith's critique of Goldman Sachs' ethics. I
didn't even bother commenting on it myself yesterday
because after what we experienced in 2008/9, I
believed that everyone knew Wall Street and many
bankers' ethics were atrocious anyway! After all,
2012 Edelman Trust Barometer finds public trust
in banking and finance the lowest of any industries.
Yet, despite the anger, the public refuse to
appoint politicians who will aggressively tackle the
real ethical issues in the financial system. The
reason: the public knows that to do so means they'll
take a financial hit! For instance, ethical
practices should require marking assets at market
values on balance sheets. On that basis, it's likely
that a huge swath of the US banking and financial
industry would be insolvent and the public forced to
take mammoth losses.
Until Mr. Joe public improves upon their own
ethical conduct, putting ethics above financial
gains or losses, we're unlikely to see much change
among politicians or in the financial and banking
industries. That's why I don't see what all the fuss
Green Energy Continues to Grow.
"All together, solar PV, wind and biofuel markets
expanded by 31 percent last year to $246 billion
globally, according to Clean Edge’s 11th annual
edition of Clean Energy Trends 2011, a wrapup of key
green-energy indicators. The expansion caps a
five-year run during which these markets have grown
by roughly a third each year." The outlook for
green energy improves as oil prices move higher.
Despite naysayers, green energy keeps growing,
by Adam Aston, March 14, 2012, GreenBiz, USA.
SEC Expected To Rule On Conflict Materials In
"Rules being written into the Dodd-Frank Act
intended to crack down on the use of 'conflict
minerals' mined in the eastern Democratic Republic
of Congo will also impact Canadian issuers trading
in the United States." 60% of the world's mining
finance originates in Canada. So if you invest in
mining, what happens in the USA is relevant to
mining finance and operations in Canada.
SEC rules on conflict minerals expected this year,
by Jennifer Brown, March 10, 2012, Canadian Lawyer
Study Says SRI Funds Might Be Less Concerned
About ESG Issues Than Conventional Funds!
"We cannot find strong evidence of differences
between conventional and socially responsible mutual
funds. In particular, the calculated risk tolerance
parameters describing the real portfolio composition
best show that socially responsible mutual funds may
be even less concerned about the ESG-scores in the
preference functional than conventional funds."
Well this is interesting. No doubt a lot of SRI
fund managers and ethical investors will want to
review this research. Personally, if you can do it,
I've always favoured an individual stock portfolio
reflecting one's own personal values.
Is socially responsible investing just screening?
Evidence from mutual funds, by Markus
Hirschberger, Ralph E. Steuer, Sebastian Utz, and
Maximilian Wimmer, Humbold University, March 2012,
Women More Likely To Make Green Investments.
"Environmentally responsible or 'go green'
investments have a greater appeal among women
investors, who are more likely than men to align
their financial goals with their personal values,
according to the latest research from Millionaire
Corner. Nearly 42 percent of women - compared to
less than 27 percent of men - say they are 'very
likely' or 'likely' to make environmentally
responsible investments, according to our February
survey of 1,150 investors."
This is unsurprising to me. However, it would be
great if these women and men indicating their
interest in sustainable investments actually
followed through on investments linked to
environmental and corporate sustainability. Stock
prices would then reflect an even greater premium
for companies applying sustainability to the
activities than they do now.
Women Investors "Go Green," by Adriana Reyneri,
March 8, 2012, Millionaire Corner, USA.
Private Equity Firms See Pressure To Engage
Responsible Investment Policies, Says
"According to the report by PwC, 88% of buyout firms
expect investors to pay more attention to
responsible investment in the next five years, but
half of the respondents still lack a policy on
environmental, social and governance issues."
This is more good news for ethical investments. As
investors increasingly recognize that companies
exhibiting superior ESG performance perform better
in the stock market, it'll create a circle of
positivity for ethical stocks.
Investors urge buyout firms to keep pace with ESG,
by Ayesha Javed, March 7, 2012, Financial News, USA.
Ernst & Young Faults Companies On Quality Of
"the growth of reporting is limited, if not
undermined, by the tools companies are using to
produce them. 'Based on our survey responses, those
tools remain rudimentary, even primitive, compared
with those used for reporting on financial
measures.' When asked to name the tools used to
compile their sustainability reports, companies
cited spreadsheets, centralized databases, emails
and phone calls as the principal tools, with about
one in four (24%) using packaged software."
It's good that an accounting firm has compiled
such a report and demonstrated the need for much
greater rigor in corporate sustainability reporting.
To improve on this situation, securities regulators,
governments and stock exchanges, have to request
that all sustainability reports meet certain
reporting standards. Further, that these reports be
audited by qualified or licensed CSR/ESG auditors
who provide an opinion as to the quality and
meaningfulness of the sustainability information and
data presented. Yup, just like for financial
Will sustainability reporting ever grow up? By
Joel Makower, March 6, 2012, GreenBiz, USA.
European Central Bank (ECB) Urged To Examine
How Polluting & Environmentally Damaging Investments
Might Pose A Systemic Risk.
"In an open letter to Mario Draghi, president of the
European Central Bank and chair of the European
Systemic Risk Board, a coalition of experts,
investors, NGOs and universities have urged the ESRB
to investigate how the European Union's exposure to
polluting and environmentally damaging investments
might pose a systemic risk to the financial system
and prospects for long-term economic growth."
A similar proposal was recently made to the Bank
of England, and they seemed to respond positively to
the suggestion. Of course, with companies who
demonstrate superior ESG standards exhibiting better
financial and stock performance, one would think the
banking and financial community would take the above
recommendation seriously. Let's hope so.
European risk board urged to investigate
environmental investment, by Stephanie Denton,
March 1, 2012, Insurance Insight, UK.
City Of London Farsight Awards For Best
Ethical Investing Study To Responsible Research.
"Winner of The Farsight Award 2011/12: Responsible
Research for their report 'The Future of Fish in
Responsible Research receives the Farsight Award
March 1, 2012, press release, Z/Yen
Group Limited, UK.
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