E-newsletter of Investing for the Soul July 30, 2016
Top ethical investing news for July 2016
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!
In Pleas to SEC, Businesses Slam Sustainability Disclosures. "In a letter sent to the agency on July 20, the U.S. Chamber of Commerce's Center for Capital Markets Competitiveness harshly criticized the push for ESG disclosures, arguing that requiring more of this information from companies would exceed the materiality standards for disclosure set by federal securities laws.
'The objective of many calling for new public company ESG disclosures is primarily to obtain some social impact or achieve a political goal,' the chamber wrote. 'These goals, if met, would in many cases contribute to an environment that makes it more difficult for businesses to innovate, compete and grow...'
The former [U.S.] Treasury chiefs said that climate change is a material risk under the Securities and Exchange Act, but that most companies disclose information about this risk 'poorly, if at all.'"
[COMMENTARY] Companies need to be truthful
about climate and environmental risks to their businesses and show how
they're mitigating them if they are to earn the trust of investors.
Otherwise, it'll likely backfire on them as investor interest in their
stocks declines together with their stock prices.
Alternatives managers split on the benefits of ESG, finds Unigestion. "The survey suggests ESG is growing in importance for hedge funds with 53 per cent of managers saying they currently have ‘no interest’ compared with 60 per cent who 12 months ago said they were ‘reluctant’ to consider ESG as part of their strategies. In addition, some 30 per cent of hedge fund managers surveyed are now actively incorporating ESG into their strategies."
is more evidence of the mainstreaming of ESG in the financial community.
Japan pension fund to try socially responsible stock picking. "Japan's Government Pension Investment Fund will make room in its huge portfolio for domestic companies picked for their environmental, social and governance merits, a move that could lend momentum here to this kind of investing... The GPIF ranks as one of the biggest investors in Japanese equities, with a portfolio worth around 30 trillion yen [appr. US$283 billion)."
great news for ethical investors with continuing large funds entering
the ESG investment space.
2016 Sustainable Stock Exchange report released. "Euronext Amsterdam tops ranking of 45 global exchanges measured on overall sustainability disclosure...
The study, Measuring sustainability Disclosure: Ranking the World’s Stock Exchanges 2016, finds that of 4469 large companies analysed, only 47 per cent disclosed GHGs, arguably the most closely tracked sustainability indicator. Furthermore, over the 2010-2014 period, the number of large companies that disclosed GHGs nudged up just 12 points from 33 per cent to 47 per cent despite a number of high-profile policy initiatives aimed at sustainability disclosure in the last few years."
to Aviva Plc and Corporate Knights for producing this report. It's
needed to determine the extent of corporate sustainability reporting by
the world's stock exchanges and to see who among them stands out.
Foundations Slowly Come Around to Responsible Investing. "A new study released jointly by the Council on Foundations and Commonfund Institute found that a third of U.S. private, public and community foundations have implemented or are actively considering mission-related investing practices in managing their endowed assets... However, impediments to adoption remain. Concern over returns was the single most commonly reported barrier, with 23% of foundations considering it a significant one and 48% a moderate one."
seems many foundations are still under the impression that they might
have to sacrifice returns for mission-related investments. It's clear
they need to familiarize themselves with what current research says:
that returns from responsible investment portfolios are comparable to or
often better than more 'conventional' ones.
ESG Ratings: Four Myths And A Truth. "Recent criticisms of ESG ratings reflect an outdated and inaccurate notion of the ingredients and value of an ESG rating... Today, applying analytical tools and modeling techniques to wider datasets beyond corporate disclosure has significantly improved the rigour, consistency, and relevance of ESG information to the investment process. "
Linda-Eling Lee has written a good article on the state of ESG rating
systems today. Recommended reading for all investors.
The Fastest-Growing Cause for Shareholders Is Sustainability. "In fact, the largest number of shareholder resolutions filed by investors — the method through which activists work — now concern social and environmental issues. This is a recent phenomenon, according to my research; the number of these resolutions has increased dramatically over the past five years. Political spending, climate change, diversity, and human rights are now some of the most frequent resolutions that investors file."
Serafeim (of Harvard) has written an insightful article about ESG
shareholder resolutions. Worth reading by all ethical investors.
Does SRI Deliver? "According to a WealthManagement.com survey of 780 advisors across all business channels, while only 35 percent of advisors said they were 'very familiar' with SRI funds, 66 percent said they have offered one to clients, mostly due to client requests. Nearly six in 10 advisors expect it to become a bigger part of their practice in the next five years."
most advisors are getting the message that they need to be much more
understanding of their clients' personal values and utilize that
knowledge in assisting them in selecting appropriate SR-ethical
securities and funds. Another important article for advisors to read.
Unintended Biases in ESG Index Funds. "ESG index strategies can be effective tools for values-based investing, but they may introduce some additional bets that investors may not intend to make."
have written a great article examining the biases in the holdings of
various ESG index funds. (Incidentally, the same issues are present in
ESG ETF funds too.) Investors holding these funds should definitely read
US SIF Foundation Releases Report On Impact Of Sustainable Investment. "Sustainable, responsible and impact investors have influenced the investment industry, companies, governments and other actors to address environmental, social and governance (ESG) challenges in four major areas, according to The Impact of Sustainable and Responsible Investment, a report released today by the US SIF Foundation."
is a good compilation of the many successes of sustainable, responsible
investing over the past 25 years in the US.
The US Civic 50: Civic-minded companies show that community engagement is linked to corporate success. "America’s largest corporations are increasingly turning good intentions into sound business practices. That’s the promising bottom-line from an analysis of the 2016 Civic 50, the annual Points of Light initiative that recognizes and honors the 50 most community-minded companies in America. In the continuing shift to go beyond checkbook philanthropy, this year’s Civic 50 honorees affirm the trend that companies are supporting community engagement through policies, core business functions, and incentives that indicate sustainable long-term commitment to addressing community challenges."
SR-ethical investors concerned about US companies getting more engaged
in civic and community affairs, this is an interesting list to peruse.
It's also worthwhile to understand the methodology of how they arrive at
this list. As always, despite the appearance of objectivity, there's
always considerable subjectivity to determine what gets measured -- and
how it's measured.
Nonetheless, it's good that companies strive to be on this list as in
doing so they become better corporate citizens and enhance the morale of
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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 © 2016 Ron Robins. All rights reserved.