E-newsletter of Investing for the Soul December 30, 2015
Top ethical investing news for December 2015
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!
Largest-ever analysis of ESG investment studies sees ‘well-founded’ relation to profit. "The analysis of more than 2,200 academic studies and more than 60 review studies published since the early 1970s concludes that investment based on ESG criteria has a positive effect on corporate financial performance (CPF) that is ‘stable over time’.
The authors, including Timo Busch of the University of Hamburg, Alexander Bassen of the University of Reading and Gunnar Friede of Deutsche Asset and Wealth Management, say that 90 percent of the studies they reviewed showed a non-negative relationship between ESG investment and corporate financial performance. They also say the ‘large majority’ report positive findings."
[COMMENTARY] This is a phenomenal
study and should put-to-rest any argument about ESG being unimportant to
corporate profits. It might well win next year's Moskowitz SRI Prize!
ESG & Corporate Financial Performance, PDF.)
Climate Bonds releases new Standard V2.0 - post COP21 global guidance for green bond market participants. "Climate Bonds Initiative has released the Climate Bonds Standard V2.0, the next iteration of an overarching multi-sector standard that allows investors and intermediaries to easily assess the environmental integrity of bonds claiming to be green and funding the low carbon and climate resilient future.
Standard V2.0 has been built on consultation with market actors, incorporates the latest amended Green Bond Principles and is a key part of Climate Bonds’ work to mobilise debt capital markets and develop sound and sustainable international green bond frameworks."
[COMMENTARY] As the market for green
bonds escalates, it's imperative that some standards be incorporated in
their structure, issue and marketing. I greatly welcome the Climate
bonds initiative in this direction.
Pension funds agree ESG is vital to investment returns. "The vast majority of pension funds (93%) say that environmental and social governance (ESG) issues are linked to investment returns, a significant increase since 2013, when only 81% viewed the link.
The Pensions and Lifetime Savings Association has released its annual survey which also found that there is near universal agreement that pension funds have stewardship responsibilities (98%)."
[COMMENTARY] Again, more evidence of
the rise of ESG in the investment community. The massive belief of the
surveyed fund managers that they have stewardship responsibilities for
their investments is also highly encouraging to the hearts of ethical
IBE Survey Highlights Key Public Concerns in Business Ethics. "The Institute of Business Ethics (IBE) recently released the findings of its latest survey on the British public’s opinion about business behavior. The survey revealed that the people’s general opinion about ethical business conduct has not shown any improvement over the last three years, with nearly 40 percent of the respondents still saying they believe British business behaves unethically."
[COMMENTARY] Possibly the percentage
of people behaving unethically -- in some manor -- is probably similar
to the 40% of UK public thinking that business behave unethically. After
all, since businesses employ the majority of adults, they must largely
reflect the ethics of those it employs.
50 Best (US) Workplaces for Diversity. "Fortune and Great Place to Work partnered with Essence and People en Español to survey companies that make inclusiveness a top priority. Rankings were determined by employee feedback and the representation of racial and ethnic minorities and women."
public companies, the top three are: Camden Property Trust (which was
ranked #1 over all); Ultimate Software (#4); and Workday (#6). This is a
must see list for those ethical investors who rate diversity highly when
Two contradictory studies! (Are they looking at the same parameters CSR versus ESG?)
1) How Ethical Compliance Affects Portfolio Performance And Flows: Evidence From Mutual Funds. "Using an asset-weighted composite CSR fund score based on firm-level ratings, we find that funds with high CSR scores display poor performance and strong performance reversal. Furthermore, high-CSR funds exhibit weaker performance-flow relationships and slightly stronger flow persistence."
[COMMENTARY] Well, funds with "high
CSR scores display poor performance." Now go to 2).
2) Responsible Investing Is Hot: ESG AUM Hits $21 Trillion. "According to HSBC, companies with significantly improving ESG indicators outperformed those who lagged by 26pp since 2008. So, by investing responsibly, you could also improve your returns."
[COMMENTARY] Furthermore, "HSBC’s
analysis is in line with the broader academic literature, where 80% of
studies have shown that prudent corporate sustainability programs tend
to boost company performance."
Northern Trust Survey: Majority of Institutional Investors Expect to Introduce Climate Risk Profiling Within Two Years. "Eighty percent of institutional investors surveyed at a recent event hosted by Northern Trust (Nasdaq: NTRS) in Stockholm expect their firm to introduce climate risk profiling within the next two years.
“The Nordic region has for many years had a strong emphasis on sustainable business, with many institutional investors demonstrating strong leadership addressing climate change risks.” More than 30 Nordic institutional investors were surveyed including some of the largest and most sophisticated asset owners in the world about their perspectives on sustainable investing and maintaining investment oversight."
[COMMENTARY] Scandinavia has a
history of leading in CSR/ESG issues, so it's unsurprising that the
survey got such good results. However, there's no doubt that ESG/climate
change corporate initiatives are gaining ground. The COP21 Paris climate
change talks are also infusing a new thrust for sustainability in
corporations globally. The future is bright for ESG!
Companies with greater carbon efficiency outperform markets. "According to a new report published by the world’s largest asset manager BlackRock, businesses that have been at the forefront of improving their carbon efficiency for the last three years have dramatically outperformed the ones that have been laggards in this area.
The report analyzed the stock market performance of over 1,850 companies that have joined the CDP (formerly, Carbon Disclosure Project). It includes companies across sectors, ranging from energy and auto giants such as BP and General Motors to technology leaders such as IBM."
[COMMENTARY] A study like this from
the world's largest asset manager is likely to influence corporate
boards globally. Blackrock is clearly showing that ethical investors
positioned in companies with carbon reducing strategies -- especially
compared to their peers -- offers the opportunity for superior financial
Stronger Focus Needed on Business Ethics and Whistleblowing Arrangements: IBE Survey. "The Institute of Business Ethics (IBE) has published its Ethics at Work Surveys for Britain, France, Germany, Italy and Spain. The survey shows that about half of employees who aware of misconduct do not voice their concerns. According to Philippa Foster Back, Director of IBE, weak speak-up arrangements leave companies vulnerable. If managements do not know what is going on, they cannot protect their businesses against crisis.
The survey showed that 61 percent of those who did speak up said they were dissatisfied with the outcome. This percentage has more than doubled when compared with 2012."
[COMMENTARY] Unsurprising that
ethics is still an issue at most companies. Generally, businesses
reflect the ethics of the society where they operate. It's obvious that
only in a highly ethical society will the majority of businesses behave
with high ethics. I believe ethics is largely a societal issue. However,
that's not to say that individual businesses should not attempt to be
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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.
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