E-newsletter of Investing for the Soul October 30, 2012
Top ethical investing news for October 2012
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!
BSR Survey: Investors Don’t Read CSR Reports. - [COMMENTARY] "Sustainability has traveled lightyears in the last two decades, but is not yet woven into the fabric of the American corporation, according to this year’s BSR/Globescan State of Sustainable Business 2012 survey of 550 member companies. The survey, looking at the last 20 years in honor of BSR’s 20th anniversary, shows that transparency and reporting have been the greatest area of progress, but that this increased knowledge has not yet changed the behavior of investors, R&D and product design, or government affairs."
What an interesting analysis. One can see the consciousness of
Americans in the recent Presidential debates: discussion of climate
change didn't rate a mention. Is it any wonder that most investors don't
yet take it seriously too?
US Consumers More Likely To Purchase Products/Services Of
Companies Who Practice & Promote CSR.
- [COMMENTARY] "86 percent of consumers
are more likely to trust a company that reports its CSR results; 82
percent say they are more likely to purchase a product that clearly
demonstrates the results of the company's CSR initiatives than one that
does not; 40 percent say they will not purchase a company's products or
services if CSR results are not communicated." This report is useful
for both ethical investors and companies.
Newsweeks 2012 Green Rankings. Top 3: Santander Brasil (Brazil), Wipro (India), and Bradesco (Brazil). - [COMMENTARY] "We compared the world’s largest 500 companies according to their environmental footprint, management (policies, initiatives, controversies), and transparency. We partnered with Trucost and Sustainalytics, two leading research companies. The methodology was developed in consultation with an advisory panel of experts in corporate sustainability. The resulting ranking is the most comprehensive available on the topic."
It's interesting that two of the top three are Brazilian companies!
There are separate rankings for the US and for a number of different
segments. Considering the companies involved in doing the assessing,
this listing and analysis must be taken seriously. Newsweeks green
rankings are a must read for ethical investors.
Funds With $2 Trillion In Assets Say Oilsands Companies Must Cut Environmental Risks. - [COMMENTARY] "'But (we) are concerned that the current approach to development, particularly the management of the environmental and social impacts, threatens the long-term viability of the oilsands as an investment.' The statement is signed by 49 funds. Some are controlled by labour and church groups, such as the United Church of Canada and the Canadian Labour Congress. There are also public-sector pension funds from both sides of the border and private funds from Canada, the U.S. and Europe."
This is good news that such funds are finally speaking to oilsands
companies to reduce their environmental risks for the sake of long-term
viability for these companies.
UK Investors Act On Carbon Control. - [COMMENTARY] "A grouping representing investors from UK charities and pension funds plans to target FTSE 350 companies... The investors are focusing on utilities companies and those in the extractive industries that have scored badly in a carbon reduction survey. They plan to file a series of shareholder resolutions at annual general meetings in 2013-14 if the companies do not improve... CCLA, which is leading the initiative said it was part of a long-term engagement programme ... The group includes the Local Authority Pension Fund Forum which represents £100bn in assets under management and the Church of England’s Ethical Investment Advisory Group, which looks after £8bn."
It's good to see powerful and large asset managers get involved in
such initiatives. They may have considerable influence over the
companies they lobby for change.
Research Claims Non-Sustainable Funds Perform Similarly To SRI
Funds. - [COMMENTARY]
"Traditional funds often behave similarly to funds with clear
environmental, social and corporate governance in terms of reputational
risk, research claims." The research was conducted by AfU Investor
Research GmbH and RepRisk AG. This is interesting. Unfortunately, it is
true that many SR-ethical funds are almost indistinguishable from
UK Charities Move Gradually Towards Ethical Investments. - [COMMENTARY] "Following research published by UK Sustainable Investment and Finance Association reporting that three in five adults with investments want charities to take a leadership role in responsible investment of assets, Charity Finance Group have released findings from a survey of its members showing that 51% of charities now have an ethical investment policy. This figure, from the survey for National Ethical Investment Week, is an increase from 46% in a similar survey carried out in 2009."
It's a pity we don't see surveys like this in North America. I
suspect similar progress is being made there too. For charities to fear
lower returns through ethical investments demonstrates a lack of
understanding of the data--or rigidity to change.
BMO Tops 2012 Carbon Disclosure Project Canadian Rankings.
- [COMMENTARY] "Only one
company scored high enough to make the 2012 Canada 200 Carbon
Performance Leadership Index (CPLI) – Bank of Montreal. Performance is
grouped into 6 bands A, A-, B, C, D and E. The CPLI includes only
Performance band A, which this year was achieved only by Bank of
Montreal." It's clear that large Canadian companies have a long way
to travel in reducing their carbon use and reporting of it.
59% Of UK Investors Want Charities To Lead on 'Stewardship' (Ethical) Issues. - [COMMENTARY] "The YouGov survey of 1,291 investors, released as part of National Ethical Investment Week, which began on Monday, found that 59 per cent felt it was the job of charities to take a lead on ‘stewardship’ issues by engaging with companies to make sure their environmental, social and governance policies were sufficiently ethical. And 56 per cent of respondents said they believed that charities should measure the social impact of their investments to the same extent that they measured that of their charitable activities."
Other data show that charities in the UK and around the world have
far to go in aligning their goals with their investments. It just
shouldn't be this way. Charity boards are 'missing-in-action' on this.
The Environment Is The Top Issue Among Ethical Investors.
- [COMMENTARY] "The latest
results from Worldwise Investor suggest that the environment is the
biggest ethical issue amongst ethical investors and highlights why new
fund launches have tended to come with minimal social screens, but
instead focus on the positive impact investment can have." The
results of this survey are unsurprising. It is useful reading for
ethical investors though.
Investors Representing More Than $1 Trillion In Assets Win Better Sustainability Disclosure And Performance From Emerging Market Companies. - [COMMENTARY] "The Emerging Markets Disclosure Project (EMDP) released its final report today, Lessons Learned: The Emerging Markets Disclosure Project, 2008 – 2012, documenting a five year initiative championing greater transparency among emerging market companies on key environmental, social and governance (ESG) issues."
The group comprises: the US SIF (The Forum for Sustainable and
Responsible Investment); the Boston Common Asset Management, LLC;
Calvert Investments; and the United Nations (UN) Principles for
Responsible Investment (PRI) Secretariat. The work of this group is
helping to significantly improve the opportunities for ethical investors
in emerging markets.
Companies’ Sustainability Improves – But Reputations Worsen, Says
Brandlogic and CRD Analytics Survey.
- [COMMENTARY] "AXA, Coca-Cola,
Deustche Bank, EADS, General Electric and L’Oreal – companies that last
year were not getting enough credit for their actual environmental,
social and governance performance – have now earned reputations that
match their relatively high sustainability achievements, according to a
report by Brandlogic and CRD Analytics... [but] corporations face
growing skepticism among professional investors, supply chain officials
and recent higher education graduates." Interesting, is it that
companies are failing to properly communicate their sustainability
successes or is it part of the growing distrust in business?
Half Of Investors Expect IFAs (Independent Financial
Advisors) To Offer ‘Green’ Advice.
- [COMMENTARY] "IFAs must be prepared
to discuss environmental investment issues post-Retail Distribution
Review according to the UK’s ethical investment trade body, which has
published data showing 58 per cent of adults expect IFAs to be able to
advise on green issues that might shape their choices." The data in
this YouGov survey will not surprise most investors. It provides further
confirmation that many investment advisors don't know the interests of
Investments In Emerging Markets Up Almost 30% Since 2009, Says EIRIS. - [COMMENTARY] "The total AUM [assets under administration] of the 2012 survey respondents came in at a figure of nearly USD 2.4tn. Of the USD 2.4tn around USD 161bn, approximately 7%, was allocated to emerging markets. The respondents to the 2009 survey reported that they had around USD 125bn allocated to emerging markets. This means that emerging market AUM in 2012 is almost 30% higher than the 2009 figure, despite the respondent group being smaller."
EIRIS's views regarding ESG in emerging markets are that, "It is clear that there are a number of strong currents within emerging markets that are carrying forward ESG disclosure and performance by companies. These currents include; the continuing process of the integration of emerging markets into the global economy with increasing inflows of investment into emerging market companies; the growing determination of investors to include ESG factors in their investment decisions as evidenced by the expansion of responsible investment organisations such as the PRI; and the significant materiality of ESG issues in emerging markets."
It's good to see the figures and get EIRIS's survey results on ESG in
Reaching £806 Million, Responsibly Invested Assets In UK Now 18%
Of European Total. -
[COMMENTARY] "The survey [by YouGov] found a 50% rise
in the number of investors UK-wide who want their bank or financial
adviser to tell them about 'impact investing' – investments that produce
both a financial and a social or environmental benefit – up from 36% a
year ago to 55%." This week, the UK begins its National Ethical
Interesting Research At UK University On Difference in Ethical and Islamic Funds. - [COMMENTARY] "the average efficiency of socially responsible funds is slightly higher than that of Islamic funds. Although this result is robust across the state-of-the-art methods considered to measure mutual fund performance, further testing indicates that the differences are, in general, not statistically significant. When they are significant, it only happens for some particular quantiles of the distribution of efficiencies. When geographical focus is considered, their research shows that on average, investing in the West yields higher returns, and lower in the MENA region including the GCC."
There is nothing earth shattering here, but is a useful read for
those ethical investors interested in this subject.
WWF Publishes Guide To Responsible Investment In Agricultural,
Forest, and Seafood Commodities.
- [COMMENTARY] "Providing distilled
guidance based on leading industry practice, The 2050 Criteria is
designed to serve as a field guide for investors to access mainstream
agricultural, forest, and seafood commodities in a responsible manner."
This type of investment could be really interesting to many ethical
Major Investment Consultants Lag In Efforts To Integrate Environmental, Social and Governance Factors Into Investment Practices, Says Ceres. - [COMMENTARY] "A new Ceres report shows that investment consultants retained by major asset owners such as pension funds, foundations and endowments have generally not considered environmental, social and governance (“ESG”) risks and opportunities as they advise their investor clients on their portfolios. Of the 13 U.S. and international consulting firms surveyed for the report, few have developed expertise in ESG investing, fewer than half believe environmental and social factors can impact long-term financial risk and reward, and only one integrates ESG into its risk/return and asset allocation modeling."
These findings will come as shock to most ethical investors! When we
consider all the studies saying how companies with high ESG scores
outperform financially and in relative stock prices, these investment
consultants have a lot to answer for to their clients. I can only
conclude that their clients are ignoramuses for retaining consultants
that don't regard ESG as important in stock and portfolio selection!
Socially Responsible/Ethical Investments Growing Rapidly In
Europe. - [COMMENTARY]
"The European SRI Study 2012 shows that all responsible
investment strategies surveyed have outgrown the market, and four out of
six have grown by more than 35% per annum since 2009. The combined
growth of all strategies at European level continues to outpace the
overall investment market, demonstrating the continuous appetite by
investors to take into account Environmental, Social and Governance
factors, despite (or maybe due to) the ongoing economic and market
have continuing good news with this report. Not sure this study
adds too much to what we already know. However, it does provide good
detail and perspective on the subject.
Public Pension Plans More Than Twice As Likely To Implement SRI/ESG Strategies Than Corporate Plans, Says BNY Mellon. - [COMMENTARY] "35% of public pension funds have adopted SRI/ESG strategies, compared to 27% of foundations & endowments, and 16% of corporate pension plans. Concerns around ERISA [Employee Retirement Income Security Act] weigh on U.S. corporate clients, with debate about their role as a fiduciary when integrating ESG investing."
Those US fund managers concerned about ERISA restricting stock
selection on ESG grounds are probably not considering that by leaving
out ESG considerations they could be also liable for possible
'imprudent' stock selection.
Winners Of 2012 Moskowitz Prize For Sustainable, Responsible, Impact Investing Study Announced. - [COMMENTARY] "Using 10 years of privately compiled data, three leading academics have tied positive market performance to corporate social responsibility (CSR) activities at major publicly traded U.S. companies. Their research has netted them the Moskowitz Prize for Socially Responsible Investing, the only global prize recognizing outstanding quantitative research in the field of sustainable, responsible, impact (SRI) investing."
This prize performs an admirable function in helping recognize
legitimate academic research that advances our understanding of the
interplay of human values and its impact on the world of corporate
behaviour and investing.
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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.