E-newsletter of Investing for the Soul October 30, 2014
Top ethical investing news for October 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!
Green bonds to exceed $40 billion in 2014. "The market for green bonds has existed in one form or another since about 2007, but only recently exploded. According to Bloomberg, $18 billion of green bonds has been issued as of early August 2014. That already matches, in seven months, the total volume done from the inception of the market in 2007 to the end of 2013, a six-year period. At this pace, the market will exceed $40 billion this year."
[COMMENTARY] This article provides a
good overview of what's happening with the green bond market.
Mark Carney (Governor of the Bank of England): most fossil fuel reserves can't be burned. "The governor of the Bank of England has reiterated his warning that fossil fuel companies cannot burn all of their reserves if the world is to avoid catastrophic climate change, and called for investors to consider the long-term impacts of their decisions. According to reports, Carney told a World Bank seminar on integrated reporting on Friday that the 'vast majority of reserves are unburnable' if global temperature rises are to be limited to below 2C."
[COMMENTARY] I just saw (October 23)
this report courtesy of The Responsible Investment Association (Canada).
As one of the world's top central bankers, this is truly astonishing!
Can anyone imagine Janet Yellen, Chair of the Board of Governors of the
Federal Reserve, ever making a remark like that! She'd be 'fried alive.'
As readers here know, I've long argued that many fossil fuel companies
could have significant write-downs and losses as the affects of climate
impact government policies entailing the reduction of our carbon
Good Money Week: 83% of young Brits not familiar with sustainable investment. "A poll commissioned by the UK Sustainable Investment and Finance Association (UKSIF) has revealed that the majority of 18-24 year olds do not know what sustainable investment is – with 37% even unsure of what a bank actually is."
[COMMENTARY] A mammoth hole in
developed countries' education is that of money management. It's truly
startling that one of the most important areas of life is not taught in
school. Mind you, where money education exists, the curriculum is hugely
influenced by establishment interests such as banks! Thus, though I'm in
favour of money education, I'm not if it's a one-sided viewpoint
promoting establishment interests.
The 2014-2015 Ethics In Finance - Robin Cosgrove Prize For People Under 35. "The global Prize aims to promote greater awareness of the importance of ethics in finance among young people with an interest in accountancy, banking and financial services. This is the fifth edition of the Prize, originally launched in 2006, well before the topic of 'ethics in finance' became fashionable. The global financial crisis has since shown the relevance of the theme and the significance of the Prize. The Prize for Innovative Ideas for Ethics in Finance is open to young people, aged 35 years or younger, from throughout the world."
[COMMENTARY] This is a very worthy endeavour and I encourage those under 35 with an interest in this subject to submit their ideas. See press release: Global Ethics Prize Builds on Success. Website: Robin Cosgrove Prize.
Why clean energy might be cheaper than you think. "Wind and solar power often get a bad rap for being more expensive than energy produced from fossil fuels. But what happens when you factor in, say, the health costs of people breathing smoggy air? Or the financial impact of climate change’s effect on ecosystems and precious resources like water?
Those are some of the questions the European Commission sought to answer. A new report written for the EC includes those environmental costs and more in calculations of the total costs of producing electricity from various renewable and nonrenewable sources. The result? Wind and water are the best bargains for making megawatts."
[COMMENTARY] It's great that a major
governmental body has finally produced these calculations! Of course,
the input data will be controversial, but the discussion has to start
somewhere. This study provides governments with some firepower for
renewable energy. Incidentally, in their calculations, solar is not that
much expensive than wind. Gas and coal powered plants are much more
Impact investing market grows 132% from 2011-2013. "Responsible investment strategies grew at a much faster rate than the European market as a whole between 2011 and 2013, according to research by the European Sustainable Investment Forum (EUROSIF)."
study is useful reading for everyone in the investment industry.
Though you might want to read it on the weekend! It's a large and
extensive report. I find it particularly interesting that portfolio
strategies excluding particular stocks or industries involve "41% (€7
trillion) of European professionally managed assets." Many people
might think it's tobacco and alcohol stocks that are the largest
excluded segments, but no, its cluster munitions and anti-personnel
landmines that are. It'll be interesting to follow how fossil fuel
divestments gain traction in future years.
War – a minefield for ethical investors. "'The world is changing,' says Ron Robins, a Niagara Falls, Ont.-based analyst who founded an ethical investing advice website called Investing for the Soul. 'Investors in sin industries may see their returns suffer due to government austerity programs,' he says.
Governments facing deficits, unfunded pension liabilities and rising health-care costs find it irresistible to boost taxes on the sin industries, particularly tobacco, alcohol and gaming, he says, eventually driving away consumers. Meanwhile, more socially responsible portfolios typically include sectors that are on the rise in the 21st century, he adds – finance, technology, medical equipment, clean energy, consumer gadgets and so on."
[COMMENTARY] I was pleased the
writer, David Israelson, used these quotes of mine, especially because I
believe most conventional investors seriously underestimate the
ramifications of most governments' mammoth unfunded liabilities as well
as the financial impacts of required adjustments concerning climate
change. Thus I suggest that ethical investors are in a superior position
to 'sin' or conventional investors with regards to long-term investment
New Numbers Show Increased Profits from ESG, Climate Action, and Sustainability Communications. "A recent study by New Amsterdam Partners finds that stocks with higher ESG ratings deliver superior returns and lower price volatility... CDP, formerly the Carbon Disclosure Project, has released a study that shows... an 18 percent higher return on equity by companies addressing climate change over their peers, and a 67 percent higher return than companies that do not disclose on climate change. Dividends to shareholders were also higher, by 21 percent."
[COMMENTARY] With report after
report showing that companies rated highly on ESG factors perform better
financially and offer superior stock returns, when will mainstream
investors wake-up and fully integrate ESG criteria for picking stocks?
This demonstrates how structurally impaired is the mainstream investment
world. Ethical investors can now enjoy their 'superiority'.
Will There Be Enough ESG Opportunities To Meet Demand? "But even as 87% of asset managers surveyed in the report, The Cerulli Edge: U.S. Monthly Product Trends (August 2014), said they viewed the growing awareness about ESG investing as a secular trend, the vast majority of them said it’s only somewhat important to offer it. Does that mean they’ll be slow to roll out products or invest in the space?"
[COMMENTARY] It seems a strange
headline, but what they're saying is that if most asset managers go for
ESG screened portfolios, there might not be enough ESG eligible stocks
around. Well, what a great day that'll be! I think the study authors
might be overlooking the fact that when company's see their peers with
higher ESG ratings and higher stock prices, they will gravitate to
improve their own ESG performance. Ideally, the majority of companies
would then also become high ESG performers. True, this would likely have
the effect of lowering ESG stock premiums--but hey, it'll mean higher
profits too for most companies, and thus, higher stock prices
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 percent today."
[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.
Featured New Book
Competing for a Sustainable World: Building Capacity for Sustainable
Innovation, by Sanjay Sharma, Greenleaf 2014.
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.