Ethical Investing News/Commentaries
Commentaries by Ron
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How solar can become the world′s largest
source of electricity. "One, with the right
policies in place, solar could be the largest
provider of global electricity by 2050.... The
second interesting bit is that IEA [International
Energy Agency] has gotten much more bullish on PV
[photovoltaic], even since May. The agency now sees
it providing 16 percent of total global electricity
by 2050 (in the 2DS scenario), up from less than 1
[COMMENTARY] The fact that the
establishment’s energy agency, the IEA, is now so
very bullish on solar should say to all the doubters
that they should give up their doubts. The IEA
observes that, "Based on its competitive
advantage in distributed applications, PV is
unbeatable by any generation technology, distributed
or not." Still, ethical investors have to be
careful. In any burgeoning technology there are
always winners and losers. But this is great news
for the environment.
How solar can become the world′s largest source of
electricity, by David Roberts, September 29,
2014, grist, USA.
Ethiquette: New interactive responsible
investment Web platform. "Fabien Durif,
professor at UQAM’s School of Management and
director of the latter’s Responsible Consumption
Observatory (RCO), and Brenda Plant, senior
consultant at Ellio, proudly announce the launch of
Ethiquette, a new, independent, interactive,
educational Web platform dedicated to responsible
investment (RI). The new tool follows in the wake of
the findings of a study entitled ’Québecers and
Socially Responsible Investment: Portrait for 2014’
, published in February of this year. According to
this study, individual investors were found to be
little aware of responsible investment (RI), and
information available to them insufficient to
elucidate the complexity of RI financial products."
[COMMENTARY] This new ethical
investing tool for Québecers could be most helpful
to furthering ethical investing in Quebec and
Canada, generally. I wish the venture every success.
Ethiquette: New interactive responsible investment
Web platform, press release, September 26, 2014,
Launch of Solactive CK Low Carbon Indices.
"The Solactive CK Low Carbon Index family is the
first in the industry to use the Sustainable
Industry Classification System™ (SICS®), established
by the Sustainability Accounting Standards Board® (SASB®)
to categorize industries based on resource
intensity, sustainability impact, and sustainability
A defining feature of these Low Carbon Indices is
that they ensure a minimum 50% reduction in carbon
intensity against the market benchmarks, as verified
by South Pole Carbon."
[COMMENTARY] These new indices
represent a unique and interesting approach for
sustainable investing. Congratulations to the
sponsors. Though launched September 25, I couldn’t
find a link to them for current values and holdings.
Launch of Solactive CK Low Carbon Indices, press
release, September 25, 2014, Corporate Knights
Capital and Solactive, September 25, 2014,
Socially Responsible Investments Can Match
Broader Market Gains: TIAA-CREF. "A recent
TIAA-CREF white paper authored by Lei Liao and Jim
Campagna found that investors with a conscious don′t
have to sacrifice gains to put their money where
their beliefs are. Liao and Campagna analyzed the
performance of several leading equity-focused SRI
indexes–the Calvert Social Index, Dow Jones
Sustainability U.S. Index (DJSI U.S.), FTSE4Good US
Index, MSCI KLD 400 Social Index, and MSCI USA IMI
ESG Index–in relation to the performance of broader
benchmarks. They found ’no statistical difference’
in the SRI index′s returns when compared to the
[COMMENTARY] Well designed studies on
SRI vs conventional investment portfolios
consistently demonstrate that there’s no performance
loss by applying SRI screens. In fact, the majority
of studies using ESG criteria demonstrate superior
stock returns. TIAA-CREF has over $500 billion in
Socially Responsible Investments Can Match Broader
Market Gains: TIAA-CREF, by Teresa Rivas,
September 25, 2014, Barron’s, USA.
Montreal Carbon Pledge Attracts Large
Institutional Investors. "A group of large
institutional investors have signed on to the
Montreal Carbon Pledge, agreeing to measure and
publicly disclose the carbon footprint of their
investment portfolios on an annual basis. Overseen
by the UN-backed Principles for Responsible
Investment, the pledge hopes to attract $3 trillion
of portfolio in time for next year′s UN climate
[COMMENTARY] The pledge is good news
for those of us interested in this issue. One
concern though: how smaller listed companies have
the resources to gather such information.
Montreal Carbon Pledge Attracts Large Institutional
Investors, by Doug Watt, September 25, 2014, SRI
US Sustainable Investment Association calls
for US Government to demonstrate leadership in
climate crisis and set price for carbon.
"National governments and multilateral organizations
must create the framework to enable the additional
trillions of dollars in investments needed in
low-carbon technologies and climate change
adaptation. We urge the US government to demonstrate
leadership by supporting multilateral efforts to
impose a meaningful price on carbon and to stop
subsidizing carbon pollution. With these policy
signals, investors can fully rise to the challenge
of building the low-carbon future."
[COMMENTARY] Though I agree with the
above sentiment I first believe that there has to be
a global understanding of what are the real total
societal costs of different types of energy
production--and Britain’s Carbon Trust has hit this
nail on the head.
Carbon Trust September 23, 2014, press release,
"The redefinition of the electricity cost
calculation from the most prominently used Levelised
Cost of Electricity (LCoE), to Society′s Cost of
Electricity (SCoE), means additional factors not
normally accounted for are included which presents a
more complete picture on the cost-benefit of energy.
Additional factors include subsidies, grid access
costs, variability costs, social costs, economic
benefits and geopolitical impact."
Were this new definition adopted, many renewable
and alternative energy sources would demonstrate
superior long run financial returns and beneficial
societal and climate impacts. Then, governments will
be able to more easily regulate in ways that favour
renewable and alternative energy. Until then, it’s
an uphill battle to convince the likes of US
US Sustainable Investment Association calls for US
Government to demonstrate leadership in climate
crisis and set price for carbon, press release,
September 22, 2014, US SIF: The Forum for
Sustainable and Responsible Investment, USA.
Site of interest: Climate Bonds
Initiative. "The Climate Bonds Initiative is
an international, investor-focused not-for-profit.
It’s the only organisation in the world focusing on
mobilizing the $80 trillion bond market for climate
[COMMENTARY] It has several high
level partners, but needs more of them to get off
the ground in a big way. I’m sure it will happen.
The site has some useful resources for ethical
investors under the tab, ’Resources.’
Rockefellers, Heirs to an Oil Fortune, Will
Divest Charity From Fossil Fuels. "John D.
Rockefeller built a vast fortune on oil. Now his
heirs are abandoning fossil fuels. The family whose
legendary wealth flowed from Standard Oil is
planning to announce on Monday that its $860 million
philanthropic organization, the Rockefeller Brothers
Fund, is joining the divestment movement that began
a couple years ago on college campuses."
[COMMENTARY] This is significant! It
brings into public awareness that despite the hoopla
about shale gas and oil, the future for fossil fuels
is growing dimmer. The Rockefellers are to be
congratulated. Their precedent could set the stage
for many others to divest themselves of fossil fuel
investments. It could increase the funds moving
towards alternative and renewable fuels. It’s a good
day for investors oriented to sustainable investing.
Rockefellers, Heirs to an Oil Fortune, Will Divest
Charity From Fossil Fuels, by John Schwartz,
September 21, 2014, The New York Times, USA.
Investment giants are demanding climate
action, so why aren’t corporates delivering?
"As investors renew calls for climate action, a
survey shows nine out of 10 investors see
sustainability as a competitive advantage - so why
are the firms they invest in not making faster
Yesterday saw the latest intervention from
many of the world’s largest institutional investors,
as more than 340 companies with over $24tr (£14.7tr)
of assets under management issued a fresh
declaration calling for world leaders to deliver
’stable, reliable and economically meaningful carbon
pricing’ and increased support for clean
[COMMENTARY] My impression is that
most company CEOs believe they’re performing better
on sustainability issues, but except for some key
outliers, investors don’t see it. Thus, investors
want regulatory changes to force companies to be
more sustainable. This is a good article for ethical
investors to read.
Investment giants are demanding climate action, so
why aren’t corporates delivering? By James
Murray, September 19, 2014, BusinessGreen, UK.
New report (from UN Principles for Responsible
Investment) shows that ESG can mitigate risk,
provide value in debt capital markets.
"Analysis of Environmental, Social and Governance (ESG)
issues such as corruption and climate change should
be considered as a natural fit for fixed income
investors as it can help to manage risk and identify
credit strength, according to a new report released
by Principles for Responsible Investment (PRI).
report is intended as a guide for fixed income
investment managers and their clients on how to
incorporate ESG into their investment strategies to
gain the available information advantage."
[COMMENTARY] That latter point, "to
gain the available information advantage," is really
what will increasingly attract fund managers. Not
only have we seem inordinate confirmation of higher
returns when ESG analysis is applied to equities,
but that same type of confirmation is coming with
fixed income investments. Most ethical investors
have only thought of applying ESG to their stocks.
This is a prompt to them that they should also apply
such values and analysis to their fixed income
investments as well.
New report shows that ESG can mitigate risk, provide
value in debt capital markets, September 18,
2014, KFW Group, Germany.
Shares prices boosted by corporate
sustainability policies, says University of Oxford
study. "The University of Oxford′s Smith
School of Enterprise and the Environment and
Arabesque Asset Management, a sustainable investor,
carried out a so-called meta-study of more than 190
academic studies and other literature on the impact
of environmental, social and governance (ESG)
policies on performance.
They found that corporate sustainability helps
to lower a business′s cost of capital and boosts a
company′s operating performance.
In addition, 80pc of studies – 31 out of 39 –
showed a “positive correlation” between
sustainability and stock market performance."
full report) to all those advisors and fund
managers still dubious of socially
responsible-ethical investing! Their claims that
such investing lowers returns are nonsense.
Shares prices boosted by corporate sustainability
policies, by Ben Martin, September 15, 2014, The
Shareholder pressure fails to promote
sustainable practices – survey. "Barely one
in 10 companies feel compelled to improve their
sustainability record, despite pressure from
institutional investors, a study by the UN-backed
Principles for Responsible Investment (PRI) has
[COMMENTARY] The criticism seems to
be that shareholder activism concerning corporate
sustainability efforts is too diffuse, short-term in
nature, and not focused on specific, identifiable
actions that companies can undertake. One great
finding: 80% of executives viewed sustainability as
a key competitive advantage!
Shareholder pressure fails to promote sustainable
practices – survey, by Jonathan Williams,
September 12, 2014, IPE, UK.
Banks showing limited commitment to
responsible investing. "Only 7% of banks
surveyed by Sustainalytics report that the share of
responsible assets is more than 5% of total assets
under management. Nearly all of these institutions
are from Europe, with three from North America and
one from South America.
Another 96 institutions (27%) either have less than
5% of AUM dedicated to RI assets or do not disclose
the value of their RI assets. Two hundred and
forty-one institutions (67%) don′t provide any
evidence of RI assets under management."
[COMMENTARY] The research findings of
the Sustainalytics survey are quite an indictment of
western banking. In comparison with the investment
industry--which is increasingly applying ESG in
stock and portfolio selection--banking institutions
are way behind.
Banks showing limited commitment to responsible
investing, by Doug Watt, September 12, 2014, SRI
Global water availability ’could limit
fracking developments’. "A new report that
looks into the potential environmental effects of
fracking has revealed that drilling and fracturing
shale gas wells poses a ’significant risk’ to
freshwater supplies across the globe."
[COMMENTARY] I might add a huge risk
to geological stability (earthquakes) as well. All
the excitement in the US about what fracking means
for their gas and oil supplies could be severely
hampered as the environmental problems associated
with fracking become known and the industry forced
to become liable for environmental and human health
damages and costs. Many companies in this industry
will eventually have ’stranded assets.’ That means,
gas and oil assets that has to be written down,
greatly impairing the financial results of many,
many of these companies.
Global water availability ’could limit fracking
developments,’ September 9, 2014, edie newsroom,
Swiss pension fund members willing to
sacrifice returns for sustainability. "More
than 70% of pension fund members in Switzerland want
their schemes to apply sustainability criteria when
selecting investments, according to a survey
commissioned by RobecoSAM.
Approximately 40% of the 1,200 participants surveyed
said they would be willing to sacrifice returns in
exchange for sustainable investments, with 20% of
that number willing to give up as much as half the
More than 70% of respondents said they were
convinced the application of ESG criteria would lead
to more cautious investment decisions and probably
even better ones."
[COMMENTARY] Note the latter comment
that plan participants actually expected possibly
superior returns by investing sustainably! Too many
times these types of questionnaires start with the
premise that investing in sustainable, socially
responsible, impact, or ethical investments, must
lower returns. Now we see that not only in this
survey, but in many such surveys, investors/plan
participants probably expect better results from
investing with ESG, etc., criteria. This is why
we’re seeing asset/fund managers everywhere
beginning to incorporate ESG analysis in their
portfolio selection criteria. It’s about time too!
Swiss pension fund members willing to sacrifice
returns for sustainability, by Barbara Ottawa,
September 9, 2014, IPE, UK.
Study links high ESG ratings to positive
investment portfolio performance. "Asset
managers can create better-performing portfolios by
excluding stocks with lower environmental, social
and governance (ESG) ratings, according to new
research. The study by New Amsterdam Partners used
the Thomson Reuters Corporate Responsibility
Ratings, which screens the ESG ratings of almost
[COMMENTARY] Of course, one needs to
understand all the screening parameters and
methodologies of this study to competently remark as
to its conclusions. Nonetheless, at face value and
considering the reputation of the study’s sponsors,
the study appears to offer further confirmation that
screening companies for their ESG performance can be
Study links high ESG ratings to positive investment
portfolio performance, by Tom Revell, September
5, 2014, Blue & Green Tomorrow, UK.
How to make Wall Street notice sustainability
leaders. "As Joel Makower noted in August in
’Why sustainability leaders don′t impress Wall
Street,’ (GreenBiz) investors seem unconvinced that
strong sustainability performance delivers
shareholder value. More specifically, he argues that
investors don′t have the data they need to connect
[COMMENTARY] This article harps on
themes I’ve been talking about for many, many years.
In particular, the lack of ESG reporting
standardization, independent assessment of data, and
direct relevance to corporate success and profits.
Daniel Esty has done a good job in presenting this
case. It’s important reading for all concerned with
How to make Wall Street notice sustainability
leaders, by Daniel C. Esty, September 2, 2014,
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