Ethical Investing News/Commentaries
Commentaries by Ron
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The Tipping Point: Women on Boards and
Financial Performance. "This year, we
analyzed U.S. companies over a five-year period
(2011-2016). U.S. companies that began the period
with at least three women on the board experienced
median gains in Return on Equity (ROE) of 10
percentage points and Earnings Per Share (EPS) of
37%. In contrast, companies that began the period
with no female directors experienced median changes
of -1 percentage point in ROE and -8% in EPS over
the study period (see below exhibits)."
One would think after so many studies showing the
financial benefits accruing to companies
having women on boards, that
shareholders would be demanding it. Yet relatively few
do, especially in North America. The ’old boys’ network
is flourishing and only slowly breaking down.
The Tipping Point: Women on Boards and Financial
Performance, by Linda- Eling Lee, January 31, 2017,
Steps remain to fully integrate ESG. (Article
also reviews important new ESG study.)
"Across all 12 industries, the positive effect on equity
return is 6.12 percentage points higher for ESG
companies on average. And, if one looks at only the
eight industries with clearly higher ESG returns, this
difference jumps to an average 14.08 percentage points
for ESG companies compared with their peers...
Adding ESG to fundamental analysis is akin to
presenting magnetic resonance imaging to medical
practitioners used to X-rays. It is likely a
game-changer in the way we operate in capital markets.
But we have to be careful and creative in order to
capture its full potential."
Terrific new research and great observations about the
use and issues around implementing ESG in portfolio
study referred to in the article.
Steps remain to fully integrate ESG, by Rodrigo
Tavares and Daniela Barone Soares, January 25, 2017,
Why green bonds are reaching record highs.
"According to a recent report by Moody’s Investors
Service, the rise of green bonds issuances in 2016 is
projected to carry over into 2017 as well. The report
projects that green bond issuances will increase to over
$200 billion in 2017 from $93.4 billion in 2016 if green
bonds grow at their 2016 rate."
This post mentions that corporations are far behind
governments in issuing green bonds as corporations
presently see no financial upside in issuing them.
Hopefully, that’ll change soon.
Why green bonds are reaching record highs, by Keith
Larsen, January 25, 2017, GreenBiz, USA.
RepRisk Releases the Most Controversial
Companies 2016 Report. "RepRisk′s MCC 2016
Report spotlights ESG issues faced by globally-active
companies, and was developed as part of RepRisk′s
commitment to providing transparency into ESG risks and
encouraging companies to systematically take into
account such risks in their strategies and processes."
Most of the companies at greatest reputation risk are
Asian. Volkswagen is the only western company in the top
RepRisk Releases the Most Controversial Companies 2016
Report, press release, January 25, 2016,
Green Bond Giant Awakened by Countries
Spending to Save Climate. "Sovereign debt
pool of $44.5 trillion starts going green."
It appears that sovereign debt issuance of green bonds
is about to take-off! Many responsible-ethical investors
will be happy about this. Nonetheless, it’ll be
worthwhile to review the country’s ESG rankings before
investing. Helpful in this regard are RobeccoSam’s
Country Sustainability Ranking, and the EIRIS
Country Sustainability Ratings.
Green Bond Giant Awakened by Countries Spending to Save
Climate, by Anna Hirtenstein, January 19, 2017,
Bloomberg Markets, USA.
2017 Global 100 (Corporate Knights).
"An index of the Global 100 most sustainable
corporations in the world."
This annual index is one of the best around in its
sphere. To obtain a complete download you need to
register name and email address.
2017 Global 100, January 19, 20-17, Corporate
Major banks ’still not doing enough’ to embed
climate risk in decisions. "Major banks are
largely failing to align their business practices with
international climate targets and are still not doing
enough to effectively manage climate risk. That is the
stark conclusion of a new survey [by Boston Common
Assets Management] of 28 of the world’s largest banks,
which found more than 80 per cent of those polled are
not integrating the results of environmental stress
testing into their business decisions."
This is probably a case where the banks announce their
concerns about climate change, sustainability, etc., but
don’t quite believe it enough to engage in it
internally. It’s likely just a question of time before
Major banks ’still not doing enough’ to embed climate
risk in decisions, by Michael Holder, January 17,
2017, BusinessGreen, UK.
’Inflection point’ approaching for long-term
investors, says MSCI. "In 2017, the MSCI
researchers predicted the emergence of two approaches to
long-termism: new benchmarks that ’explicitly
incorporate views of the future’, and a shift towards
high-conviction, low-turnover portfolios."
I welcome MSCI’s prediction for 2017 of asset managers
taking a greater long-term, low-turnover portfolio view!
Short-termism and rapid turnover of investments are
detrimental to long-term economic health as they
discourage needed multi-year or even multi-decade
’Inflection point’ approaching for long-term investors,
says MSCI, by Nick Reeve, January 16, 2017, IPE, UK.
Church of England equips investors to monitor
climate impact. (Tool useful for all ethical investors!)
"The Transition Pathway Initiative (TPI), created in
partnership with the UK Environment Agency Pension Fund
and the London School of Economics (LSE), was launched
at the London Stock Exchange on Wednesday. It is
supported by 13 international asset-owners, and five
asset-managers, with more than £2 trillion under
management collectively, including Aviva Investors, BNP
Paribas Investment Partners, Hermes Investment
Management, PGGM, and Standard Life Investments.
TPI intends to offer accurate data, provided by
FTSE Russell and processed by the LSE, to enable
investors to scrutinise how companies are managing
The new site created for this,
The Transition Pathway Initiative, will be a welcome
new research site to help ethical investors everywhere
assess the progress of public companies towards climate
Church of England equips investors to monitor climate
impact, by Hattie Williams, January 13, 2017, Church
The Risk And Opportunity For America’s
Corporate Pension Plans. "Stated very
simply, while more and more companies are proclaiming
their commitment to ’sustainability,’ their pension
funds are virtually ignoring the topic."
This is an important article for investors to read and
portrays a real conundrum. Pension funds are under
tremendous pressure to perform and cannot now
legitimately ignore the potential better returns offered
them by incorporating ESG criteria into their analytical
The Risk And Opportunity For America’s Corporate Pension
Plans, by Dr. Bob Eccles, January 10, 2017, Forbes,
630 Companies And Investors Tell Washington:
Continue Accelerating the Low-Carbon Economy.
"The company signatories, which include DuPont, Gap
Inc., General Mills, Hewlett Packard Enterprise, Hilton,
HP Inc., IKEA, Johnson & Johnson, The Kellogg Company,
Levi Strauss & Co., L′Oreal USA, NIKE, Mars
Incorporated, Pacific Gas and Electric, Schneider
Electric, Sealed Air, Starbucks, VF Corporation,
Unilever, among others. These signatories collectively
take in nearly $1.15 trillion in annual revenue, are
headquartered across 44 states, and employ about 1.8
Most American CEOs know that a sustainability/ESG focus
assists profits, stock prices, and competitiveness.
There is no turning back, especially as renewable energy
becomes cost competitive with fossil fuels -- even
without any subsidies!
630 Companies And Investors Tell Washington: Continue
Accelerating the Low-Carbon Economy, press release,
January 10, 2017, Ceres, USA.
Is Your Mutual Fund Company Taking Climate
Change Seriously? "The vast majority of
climate scientists (97 percent) believe climate change
is real, but what about your mutual fund company? We
examined how the nation′s (America’s) largest mutual
fund companies voted on climate-related shareholder
resolutions in 2015 and 2016. The results are
This is an interesting chart for investors in many
countries as the same companies often have fund
management activities in numerous countries. Also, it
might affect your own investing activities. Thank you
Ceres for gathering this information.
Is Your Mutual Fund Company Taking Climate Change
Seriously? By Rob Berridge, January 6, 2017, Ceres,
Transparency or Greenwashing? Disclosing
Environmental, Social and Governance Risk Factors.
"To help senior finance leaders in
understanding how ESG risk disclosures affect the
perception of, and potential investment in, their
organizations, Financial Executives Research Foundation
(FERF) interviewed subject matter experts from a variety
of industries. "
The research provided in this report illustrates how far
ESG has come!
Transparency or Greenwashing? Disclosing Environmental,
Social and Governance Risk Factors, report, January
5, 2016, FEI Daily, USA.
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