E-newsletter of Investing for the Soul January 30, 2012
Top ethical investing news for January 2012
Links may only be valid a limited time Commentaries by Ron Robins
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Companies Adopting Sustainability Outperform Financially, Say Harvard
& London Business School Researchers.
- [COMMENTARY] "Companies
that adopted environmental, social and governance policies in the 1990s
have outperformed those that
didn’t." One wonders how much more effort it takes to convince
companies--and particularly investment advisors--that sustainability
pays! Most investors realize this. It’s a pity that their advisors
Nanomaterials Need Further Study For Health & Environmental Risks, Says US National Academy of Sciences. - [COMMENTARY] "Tiny substances called nanomaterials have moved into the marketplace over the last decade, in products as varied as cosmetics, clothing and paint... nanotechnology market... represented $225 billion in product sales in 2009 and is expected to grow rapidly in the next decade."
I’m totally astonished how the protectors of our health and environment
have let nanomaterials grow to such a mammoth industry without any real
oversight! I’ve been warning for years that letting nanotechnology run
amok might be as harmful to us as letting a deadly flu virus out of the
lab. Ethical investors might want to review the products in some of the
companies they own that use nanotechnology and really ask themselves if
they want to own stock in such companies.
Corporate Knights Lists Its Top Global 100 Sustainable Companies. - [COMMENTARY] "The Global 100 is an annual project initiated by Corporate Knights Inc., the company for clean capitalism. The Global 100 is the most extensive data-driven corporate sustainability assessment in existence, and inclusion is limited to a select group of the top 100 large-cap companies in the world. Launched in 2005, the annual Global 100 is announced each year during the World Economic Forum in Davos."
The top three companies are, Novo Nordisk A/S, Natura
Cosmeticos SA, and Statoil AS. Most of the best companies are European.
The highest-ranking US company, Life Technologies Corp., comes in at
UK Holden & Partner’s Show No Significant Difference In Capital Appreciation Between An Ethical And ’Conventional’ Portfolio. - [COMMENTARY] "Over the last five years Holden & Partners have worked with a charity client who have strict ethical screens, including animal testing, intensive farming, tobacco and human rights (among others)... One of the main concerns for the charity trustees has been the long term impact on performance that such a screen would have... from a capital perspective an active manager in the UK market can perform in line with the broader market, even with an ethical screen which excludes almost half of the market."
Another broker study showing that even excluding half of
the companies in a given stock market, an ethical investment portfolio
does not mean lower returns.
Green Bond Bankers In Japan, Sweden Beat US. - [COMMENTARY "Five of the 10 top underwriters on about $7 billion of the bonds issued by international finance institutions were drawn from the two countries, according to a ranking by Bloomberg New Energy Finance released today. London-based HSBC Bank Plc and JPMorgan Chase (JPM) & Co. of New York took third and fourth place."
We are just in the
early stages of green bond issuance. I believe that they will become a
major force in debt finance in the years to come.
Major US Investors Seek Disclosure Of Company Lobbying Activities.
- [COMMENTARY] "Investors
today announced the filing of shareholder resolutions at 40
corporations, for votes at 2012 shareholder meetings; the resolutions
urge the corporations to report on lobbying expenditures, including
indirect funding of lobbying through trade associations." To me, it
would seem that such reporting should be part of the annual management’s
review of company operations. It should be enforced by auditors as full
and fair disclosure.
Attitudes Of Religious Organisations Towards Responsible Investment,
Survey. - [COMMENTARY]
"Religious organisations are major investors... An
important question for them is how to make investments in, and to earn
returns from, companies and activities
Everyone interested in faith-based investing should
review this important survey.
FORTUNE Magazine Lists Top 100 US Companies To Work For. - [COMMENTARY] "Call it a hat trick: for the first time in the 15-year history of Fortune′s Best Companies to Work For list, we have a three-time champion, as Google reclaims the top spot for workforce happiness (it debuted on our list at no. 1 in 2007, and stayed there in 2008). We′ve had a couple double headers before -- Container Store, SAS and Edward Jones have all clinched the no. 1 spot twice -- but Google this year marks the first three-peat."
Such top companies often outperform in the stock market
too. Is that a co-incidence? I don’t believe so. Ethical investors might
want to review this year’s top one-hundred companies.
Efficiently Weighted Indices Can Lead To SRI Outperformance – EDHEC.
- [COMMENTARY] "Investors can
achieve outperformance with socially responsible investment (SRI)
indices if they use efficient weights, says financial research centre
EDHEC-Risk Institute, despite its earlier studies suggesting SRI funds
produced little alpha." This article should be read by all ethical
investors, as it offers an interesting perspective on how to perhaps
construct outperforming ethical investment portfolios.
American Socially Responsible Investors Don’t Want to Sacrifice Returns, Wharton Study. - [COMMENTARY] "Investors interested in socially responsible investing do not necessarily expect to sacrifice a portion of their gains. Thus, to encourage socially responsible investing, its returns should be comparable to returns for conventional investing."
Fortunately, the conclusion generally drawn from the dozens of studies indicate that over the long term, socially responsible-ethical investors don’t have to sacrifice returns. However, this study does contradict many surveys that show SR-ethical investors would tolerate lower returns if they are invested in industries and companies that relate to their values.
It could be that many newly converted SR-ethical
investors, investing in green-sustainable companies, don’t really share
the same values of the more traditional SR-ethical investors.
Sustainability Nears A Tipping Point, Says MIT Sloan Survey. - [COMMENTARY] "In our survey, we found that more respondents than ever before say their companies are putting sustainability on their management agendas. Our survey this year involved 2,874 managers and executives from 113 countries... According to the respondents, 70% of companies that have placed sustainability on their management agendas have done so in the past six years; 20% have done so in just the past two years."
These findings are welcome news and should warm the
hearts of ethical investors.
UK Markets Value Corporate Social Responsibility. - [COMMENTARY "In this paper, using corporate social responsibility (CSR) measures constructed from EIRIS data and mapped onto Environment, Employee and Community dimensions, as well as a Composite indicator, we show that all two out of the three dimensions of CSR, together with the Composite measure, are positively valued by markets... Overall, our results are consistent with CSR engagement enhancing shareholder value."
This study is further confirmation that companies that
score highly on CSR engagement (and incorporating it), perform better
financially and in financial markets.
Socio-Psychological Motives Of Socially Responsible Investors--A New
Harvard Study. - [COMMENTARY]
"In the aftermath of the 2008/09 World Financial
Crisis, SRI is an idea whose time has come. Socially conscientious asset
allocation styles add to expected yield and volatility... The pursuit of
crisis-robust and sustainable financial markets through strengthened
Financial Social Responsibility targets at creating lasting societal
value for this generation and the following." It is great to see
researchers getting around to this type of study.
Screw Business as Usual, by Richard Branson, Portfolio Hardcover
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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 © 2012 Ron Robins. All rights reserved.