E-newsletter of Investing for the Soul April 29, 2014
Top ethical investing news for April 2014
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!
These 50 Companies Are The Champions Of The World. "The list was compiled by having all of Citi's analysts contribute candidates, before a "selection committee" whittled the list down to 50. Among the well-known names on the list: eBay, Apple, American Express, inBev, Gilead, Starbucks, and Schlumberger."
[COMMENTARY] Though I haven't
analyzed who is on the list, I suspect the majority of these companies
are in most ethical portfolios. Still, it might be interesting for some
ethical investors to review the list. It's likely that the companies
listed are also the ESG leaders in their respective industries.
6,000 European Sustainability Reports... coming soon. "On 15th April, 599 members of the European Parliament passed a vote to amend Directive 2013/34/EU and require mandatory disclosure of non-financial and diversity information by certain large companies and groups on a ‘report or explain’ basis for all European-based ‘Public Interest Entities’ (PIEs) of 500 employees or more (or by parent companies of European-based 500+ PIEs). This Directive will come into force when ratified by the EU Member States in the European Council which is expected to formally adopt the proposal in the coming weeks."
Europe leads the US in CSR! This time large European companies are now
mandated to report their CSR activities and results. Again though, as I
understand the legislation and the various reporting vehicles that can
be used by companies, there's no requirement for outside independent
verification of exactly what any individual company reports.
Furthermore, with the variety of reporting frameworks that can be used,
there's no standardization in reporting either. Despite these
substantial concerns, I welcome this legislation wholeheartedly.
Furthermore, since most of these companies operate in the US, Japan,
etc., and many large US companies have huge European operations, this
legislation will have enormous spill over effects to numerous
non-European headquartered multi-national companies.
Green Bond Principles Governance Framework Announced. "The governance framework of the recently-created Green Bond Principles was released today, with the support of 25 international financial institutions. The voluntary guidelines will allow for diverse stakeholder input into the Principles, provide effective oversight, and support their further development, the International Capital Markets Association, which will provide administrative duties for the project, said in a release."
[COMMENTARY] This is a terrific
development. Green bonds are going to be huge in the years ahead and
it's important that they incorporate some standardization. For instance,
when can you call a bond a green bond? What defines that? Anyhow, with
so many green bonds about to be issued in the future it's good that
these standards are coming out now. It's really good news too for
ethical investors who would like to replace some portion of their fixed
income portfolios with green bonds.
RepRisk: The Most Controversial Companies of 2013. "In the course of 2013, RepRisk has detected news on thousands of companies across the globe in relation to their environmental, social and governance (ESG) risks. This report analyzes documented negative incidents, criticism and controversies related to the 10 firms that received the highest Reputational Risk Index (RRI) in 2013... The information has been captured and systematically analyzed from a wide range of third-party sources including online and print media, NGOs, government agencies, blogs and more."
[COMMENTARY] Their most
controversial companies include: HSBC Holdings PLC, GlaxoSmithKline PLC,
BNP Paribas SA and Samsung Group. Ethical investors might want read what
RepRisk says about each of the ten worst companies they write about.
More institutional investors consider ditching fossil fuel stocks. "Investors have been continuing the trend toward environmental activism during the current proxy season, with more shareholder resolutions on environmental issues being filed in 2014 than any previous year."
[COMMENTARY] At the margin, I expect
continued momentum towards disinvestment in fossil fuel companies. I say
'at the margin' because until the average voter starts to demand that
their politicians legislate carbon taxes, trading and or caps, not much
of significance is going to happen. Paralleling this would be the
average consumer being happy with paying much higher gas prices for
their vehicles and homes. It's going to require many more extreme
weather events to convince them of that! But it will happen, but who
knows when. Consider this too. Look at America's euphoria concerning
shale gas and oil and then realize the enormous uphill battle
Citigroup says the ‘Age of Renewables’ has begun. "Investment banking giant Citigroup has hailed the start of the 'age of renewables' in the United States, the world’s biggest electricity market, saying that solar and wind energy are getting competitive with natural gas peaking and baseload plants – even in the US where gas prices are said to be low."
[COMMENTARY] For Citigroup to come
out and say this indicates that big finance is realizing the days of
carbon-based energy utilities are closing. Furthermore, with their huge
and unpredictable fixed costs etc., nuclear energy is going nowhere.
Even China and India are switching massively to renewables. This
suggests that carbon-free portfolios could outperform in future
years--even in Canada. See below.
Carbon-free portfolios can outperform, even in Canada: study. "The returns of a carbon-free portfolio can closely mimic – even outperform – the returns of a broad market index, according to a study by Aperio Group. Annualized returns of Aperio’s hypothetical carbon-free portfolio in Canada were 9.23% over a 13-year period between 2000 and 2013, compared with 8.38% for the S&P/TSX Composite Index."
[COMMENTARY] Constructing a broad
market carbon-free index in Canada is a real challenge, given the huge
weightings of carbon-based companies in most Canadian broad market
indices. Yet, Aperio found it could be done and still able to outperform
the major Toronto Stock Exchange's S&P/TSX Composite Index! It's very
reassuring for Canadian ethical investors who want to invest primarily
in their home market.
European study finds no performance differences in SRI portfolios. "A study by European asset manager Amundi concludes that incorporating SRI to the investment process produces no significant underperformance or over-performance. In addition, the study says, the inclusion of SRI criteria does not produce a significant cost on either the European or global investment universes. 'Furthermore, some SRI factors are likely to become more important in the future, with differences in corporate practices having considerable impacts on profitability. SRI management can therefore be a relatively cost-free way to benefit from this evolution.'"
[COMMENTARY] I think the last part
of the above quote is significant. Many SR-ethical investors are going
to be much better positioned to ride the growing wave of investment
industry interest in ESG/CSR matters.
Affluent Investors to Socially Responsible Investing: We're Just Not That into You. "Just three-in-ten of households with a net worth between $1 million and $4.9 million (not including primary residence) consider social responsibility to be a primary investment factor. It is even less of a consideration for high net worth investors with a net worth between $5 million and $24.9 million (25 percent). Socially responsible investing is a higher priority among non-Millionaires with a net worth of a least $100,000."
[COMMENTARY] These survey findings
are unsurprising to me. I've seen several studies that show the very
wealthy tend to be a little bit more selfish and willing to cheat a bit
more for material gains--than those less well-off. However, even at 25%
of the high net worth investors being interested in SRI are very
significant! Were they to actually follow through with their values,
SR-ethical investing would get a terrific lift.
Norway wealth fund to ramp up renewable energy investments. "Norway's $860 billion oil fund should scale up its investments in renewable energy and weigh the risk to future returns posed by climate change, the finance ministry said on Friday, a shift green groups said was insufficient. The switch is part of government reforms of the fund - the biggest of its kind in the world - that also include changes to its ethical guidelines and a review of its activities in emerging markets."
[COMMENTARY] This unique fund has
been a great example of applying ethical investing principles to it its
assets. Now, the new right wing veering Norwegian government is scraping
the committee that had that responsibility and that ethical decisions
will now be made by the fund itself. It remains to be seen if they'll
uphold the previous ethical principles. Furthermore, less than 1% of the
funds assets are to be invested in renewable energy. That's just plain
Clicking Clean: How Companies are Building the Green Internet. "Here’s who hosts some of the internet’s most popular sites and services in their data centers – and whether those companies are using dirty or clean energy."
[COMMENTARY] Greenpeace has
researched and rated internet related companies concerning their green
energy usage. Google, Apple and Facebook do best. Amazon, eBay and
Microsoft don't do so well.
Australia: reporting ‘misrepresents’ business sustainability. "Analysis undertaken for Catalyst Australia found inconsistencies between how companies ranked their application of widely-used sustainability guidelines and publicly available information used to verify this... mining giant Rio Tinto and biotechnology firm CSL had the most inconsistencies in their reporting, with 50% of Rio Tinto’s report based on information that was either missing or unexplained."
[COMMENTARY] Without external,
independently audited ESG/CSR reports, such reporting inconsistencies
are not uncommon. This is a good article on the difficulties posed for
companies as well as what stakeholders want concerning these reports.
Note: Articles are linked to the original source. Some sites may require registration, and may, or may not, archive stories. All links were active at the time of publication.
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 © 2014 Ron Robins. All rights reserved.