Ethical Investing News/Commentaries
Commentaries by Ron
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CSR, Profits ‘Closely Linked.’
"In the AFA [Adam Friedman Associates] survey, 88
percent of respondents cited company reputation as a
factor in CSR decision-making. This was followed by
the company’s competitive positioning and social
consciousness, which 71 percent of respondents
mentioned. Profitability (38 percent) and pending or
existing legislation (32 percent) were determined to
be motivating factors, according to Corporate Social
Responsibility: Who’s Responsible?" With results
like those in this survey, it's clear why CSR
reporting by public companies is becoming almost
universal. CSR just needs proper standardization,
independent verification and auditing, etc., all
will happen in time.
CSR, Profits ‘Closely Linked,’ November 29,
2012, Environmental Leader, USA.
GMI Ratings Releases Second “Black Swan Risk
List” Of North American Companies.
"40 Companies with the Most Aggressive Accounting
Practices and the Highest Risk of Major Drops in
Share Prices." To focus on aggressive accounting
policies is a good one.
GMI Ratings Releases Second “Black Swan Risk List”
of North American Companies, press release,
November 26, 2012, GMI Ratings, USA.
"Believers In The Boardroom. Religious
Organisations And Their Shareholder Engagement
Practices." This is an important read for all
spiritually oriented investors.
Believers in the Boardroom. Religious Organisations
and their Shareholder Engagement Practices,
Greenpeace's 2012 Guide To Greener
"This 18th edition of Greenpeace’s Guide to Greener
Electronics evaluates leading consumer electronics
companies based on their commitment and progress in
three environmental criteria: Energy and Climate,
Greener Products, and Sustainable Operations."
Wipro, HP and Nokia have the top three spots. HP
today is involved in a major legal battle. The
company has put aside $8.8 billion to deal with it.
Guide to Greener Electronics 18, November 2012,
Greenpeace, The Netherlands.
CSR Tracking Tools Unreliable, Survey Finds.
"Global Corporate Citizens, an eight-country survey
of companies with revenue of over €100 million,
found that 63 per cent have tried to quantify the
financial contribution of CSR, compared with only 23
per cent in the 2010 edition of the study. This,
coupled with the decline in confidence, indicates a
lack of reliable reporting solutions that can
deliver accurate data, IDC says."
As investors become increasingly concerned with
CSR/ESG factors in corporate reports, this could be
a problem. CSR/ESG tracking is still very new
territory for many companies. The results in this
report are probably because many companies haven't
yet put into place appropriate and probably more
CSR Tracking Tools Unreliable, Survey Finds,
November 16, 2012, Environmental Leader, USA.
US Sustainable And Responsible Investing (SRI)
Assets Up 22 Percent In Two Years.
"Sustainable and responsible investing (SRI)
accounts for 11.23 percent of all assets under
professional management in the United States at year
end 2011. According to the report, $3.74 trillion
out of $33.3 trillion of investment assets is held
by individuals, institutions, investment companies
or money managers that practice SRI strategies."
More great news. In particular, mutual funds
and alternative investment funds utilizing ESG
doubled from 2010 to $641 billion. This shows retail
investors are increasingly choosing ESG-ethical
US Sustainable and Responsible Investing (SRI)
Assets Up, press release, November 14, 2012, US
SIF Foundation, USA.
UN-Backed Principles Of Responsible Investment
(PRI) Initiative Concerned About Signatories Hedge
Fund Governance & Strategies.
"Many signatories have significant allocations to
hedge funds and the PRI has a growing number of
hedge fund manager signatories... This paper marks a
first step in stimulating debate among PRI
signatories and supporting asset owners to
understand the implications of their hedge fund
investments Our aim is to equip them with the
information they need to reach their own conclusions
about whether their approach is consistent with
their commitments to responsible investment. [Quote
by said Rob Lake, director of responsible investment
PRI is right. Signatories to UNPRI should abide
by its ESG oriented rules. Hedge fund assets should
not be exempted!
PRI launches discussion on responsible investment in
hedge funds, press release, November 12, 2012,
Egypt Plans To Increase Islamic Banking Assets
From 5% to 35% Of All Domestic Bank Assets Within 5
"The new Muslim Brotherhood government aims to boost
the sharia-compliant share of total banking assets
from 5 to 35 percent within five years. The
potential is undoubtedly big. Egypt is predominantly
Muslim and only 10 percent of the 80 million people
have bank accounts. But the rise of Islamic finance
in Egypt might be slow. Hosni Mubarak, the long-time
former president, didn’t hold back Islamic finance,
although he didn’t encourage it either."
This will be most interesting to watch! In the
next few years we could witness a massive 'sea
change' in banking towards Islamic banking and
finance throughout the Middle East and all Muslim
countries--at the expense of traditional western
oriented banking and finance.
Egypt may struggle to meet Islamic finance target,
by Una Galani, Reuters, published in the Kippreport,
November 12, 2012, UAE.
AXA Demonstrates Success With ESG & Shows Others
How It Can Be Done.
"Cheap (lowest price to intrinsic value) companies
with the best [ESG] scores returned 40%, whereas
cheap companies with the worst [ESG] board scores
returned -0.3% on an annualized basis." AXA are
doing some great work on integrating ESG into
mainline portfolios. Fund managers who have as yet
not used ESG or having difficulty implementing it
into their analytical framework should review this
report by AXA.
White paper: piloting ESG integration, November
2012, AXA Investment Managers, Europe.
What Motivates Corporate Managers To Make
Socially Responsible Investments?
"We find that larger firms, older firms, firms with
greater free cash flow, and higher advertising
outlays demonstrate higher levels of corporate
social responsibility (CSR)... companies with
stronger institutional ownership are less likely to
invest in CSR... female CEOs, younger CEOs, and
managers who donate to both Republican and
Democratic parties are significantly more likely to
invest in CSR... we find a strong positive
connection between the level of media scrutiny
surrounding the firm and its CEO, and the level of
This is interesting research--and the findings
make sense. It's useful reading for ethical
What Motivates Corporate Managers to Make Socially
Responsible Investments? By Richard Borghesi,
Joel F. Houston, and Andy Naranjo, University of
Florida, November 2012, USA.
Europe’s Wealthy Warm To Sustainable
"Sustainable investments by Europe’s wealthiest
investors has increased by nearly 60% over the past
two years, compared to an 18% increase in overall
European high net worth wealth over the same period.
The findings comes from a study by EuroSIF, the
European Sustainable Investment Forum, on High Net
Worth Individuals and Sustainable Investment,
created with the support of Bank Sarasin.
Sustainable investments rose to €1.15trn compared to
€729bn in 2009, reflecting persistent demand even in
volatile markets, the study showed."
Many, many more investors will be drawn to
sustainable investments as climate change impacts
Europe’s wealthy warm to sustainable investments
–study, by Caroline Allen, November 7, 2012,
Investment Europe, UK.
Responsible Investment Research Given Improved
"Global research on responsible investment has a new
voluntary quality standard, with CSRR-QS today
re-launched as ARISTA, complete with more detailed
certification available to a wider range of products
and services. The standard recognises organisations
that 'incorporate the key principles of quality,
integrity, transparency and accountability into
their research processes' and is currently run by
the Association for Responsible Investment Services
It's a wonderful idea to have such a standard.
The European Commission has helped in its creation.
Responsible investment research given improved
quality standard, by Alex Blackburne, November
6, 2012, Blue & Green Tomorrow, UK.
ESG Rankings Show Bric Risks.
- [COMMENTARY] "Sovereign debt
issued by the so-called Bric economies of Brazil,
Russia, India and China could be a riskier
proposition than their credit ratings indicate,
according to research by ING Investment Management.
ING’s study of 85 broadly defined emerging markets
looked at environmental, social and governance
standards to gain a long-term view of those
countries’ creditworthiness." The big concern of
ING was the historic instability of such countries.
ESG rankings show Bric risks, by Ellen Kelleher,
November 4, 2012, The Financial Times, UK.
Socially Responsible Corporations With Heavy
PAC Contributors Associated With Higher Stock
"'Especially for smaller public companies, if the
firm has been active in disclosing corporate social
responsibility measures and if the individuals in
the company are politically active, there’s a good
chance you will do better in the stock market if you
invest in that company,' said Paul Griffin, a
leading international authority in accounting and
corporate disclosure and a professor at the UC Davis
Graduate School of Management."
This is an interesting finding--linking political
action of executives with higher stock prices! And
those in Democratic states do best.
Socially responsible corporations with heavy PAC
contributors associated with higher stock returns,
press release, November 1, 2012, UC Davis Graduate
School of Management, USA.
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