Ethical Investing News/Commentaries
Commentaries by Ron
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President Trump & Congress get a letter:
One thousand companies and investors have signed the
Business Backs Low-Carbon USA statement.
"We want the US economy to be energy efficient
and powered by low-carbon energy. Cost-effective and
innovative solutions can help us achieve these
objectives. Failure to build a low-carbon economy
puts American prosperity at risk. But the right
action now will create jobs and boost US
competitiveness. We pledge to do our part, in our
own operations and beyond, to realize the Paris
Agreement’s commitment of a global economy that
limits global temperature rise to well below 2
Clearly, a good number of American companies support a
low-carbon economy. Despite President Trump's present
anti-climate rhetoric, a broad-based business case for
low-carbon initiatives might eventually reduce the
President's antipathy towards it.
Business Backs Low-Carbon USA, press release, March
More Catholic capital flows toward impact
investing. "Pope Francis may be only the
world’s third-greatest leader (behind Theo Epstein and
Jack Ma, according to Fortune), but his 2014 endorsement
of impact investing was still a big deal. Last year, the
Vatican doubled down at a second conference to explore
how the church and faith-based institutions can 'harness
the power of impact capital to attain and sustain their
Religious leaders of almost all faiths are increasingly
promoting the importance of private capital in assisting
in their faith's social, economic, and environmental
goals. This account of Catholics' increasing impact
investing investments demonstrates what is happening
More Catholic capital flows toward impact investing,
by Marina Leytes, Impactalpha, USA.
Clearing the Deck For ESG Integration.
"Advisors are rapidly running out of excuses to
avoid, environmental, social and governance investing
(ESG)... A recent survey by State Street, voluminously
Investing Enlightenment: How Principle and Pragmatism
Can Create Sustainable Value through ESG, casts
light on the increasing client demand of ESG investments
and financial viability of integrating ESG factors into
active investment strategies.
It questioned almost 600 institutional investors
and 750 individual investors about incorporating ESG
factors into investing and business decisions. In doing
so, it also identified a single major sticking point
preventing widespread acceptance of ESG analytics — 'a
lack of transparent, standardized and quality data.'"
This article is a great, brief read on the results of an
important and extensive study by Robert Eccles
(Chairman, Arabesque Partners) and Mirtha Kastrapeli
(Head of Sustainable Investment Research, State Street).
There are some surprising statistics in their study for
the responsible-ethical investment industry to digest!
Clearing the Deck For ESG Integration, by David H.
Lenok, March 27, 2017, Wealth Management, USA.
Global RI assets surpass US$22.89 trillion, a
25% increase from 2014. "The largest
responsible investment strategy globally is
negative/exclusionary screening (US$15.02 trillion),
followed by ESG integration (US$10.37 trillion) and
corporate engagement/shareholder action (US$8.37
trillion). Negative screening is the largest strategy in
Europe, while ESG integration leads in the United
States, Canada, Australia/New Zealand and Asia ex Japan.
Japan’s primary RI strategy is corporate
engagement and shareholder action. The fastest growing
strategy, although also the smallest in absolute dollar
terms, was impact/community investing."
The continuing rapid growth of RI assets is great news.
It's interesting to see that globally
negative/exclusionary screening comprises 65.62% of
these assets! I suspect that ESG integration and
engagement/shareholder actions will rise as a proportion
of RI assets in the years ahead.
Global RI assets surpass US$22.89 trillion, a 25%
increase from 2014, press release, March 27, 2017,
The Global Sustainable Investment Alliance.
ESG-oriented millennials may have too-high
hopes. "Citing the 2016 Schroders Global
Investors Survey, Waterman told attendees at the ALFI
European Asset Management Conference that investors aged
35 and under expected an average of 10.2% per year in
returns, compared to a global stock market performance
of 3.75% at the time of the survey...
Waterman noted a general trend toward
'short-termism' as investors planned to hold their
investments for an average of just 3.2 years. Among all
respondents, just 18% said they would hold their
investment for more than five years. Zero in on
millennials, and the statistic shrinks to just 8%, while
41% said they would invest for under a year."
Despite all the good things being said about millennials
interest in ESG-focused investing, their expectations on
investment returns and holding periods are troubling.
ESG-oriented millennials may have too-high hopes, by
Leo Almazora, March 24, 2017, Wealth Professional,
Think tank questions PRI signatories' ESG
capacity. "Dedicated ESG specialists are
rare at institutions signed up to the Principles for
Responsible Investment (PRI), in particular at asset
owners, according to analysis carried out by climate and
energy think tank E3G... E3G said this meant that over
500 PRI signatories directly employed one or no ESG
staff. There are more than 1,700 signatories to the
Many people, myself included, wonder how many of the PRI
dignitaries take ESG seriously and how much is for PR
purposes. Now E3G has provided some insight into that.
It's clear that a large number of those institutions who
signed the PRI aren't too serious about implementing
Think tank questions PRI signatories' ESG capacity,
by Susanna Rust, March 21, 2017, IPE, UK.
ESG factors can indicate overall stock risk,
says AQR. "In AQR Capital Management’s new
paper – 'Assessing Risk through Environmental, Social
and Governance Exposures' – the firm said it found a
strong positive relationship between companies’ ESG
exposures and the statistical risk of their equity."
In surveys where investment managers are asked about why
they use ESG criteria, they frequently say to manage
future risk. Now, AQR provides confirmation of that
belief. With research appearing almost daily supporting
the application of ESG in investment decisions, it seems
that investors everywhere should be applying it. (To
read the actual study,
ESG factors can indicate overall stock risk, says AQR,
by Rachel Fixsen, March 20, 2017, IPE, UK.
Webinar--Mission-Aligned Investing: What New
Positive Deviance Research Can Tell Us About What Moves
Institutional Investors to Action.
"Presenter Abigail Abrash Walton, Ph.D, will share:
Research findings related to mission-aligned investing,
leadership, and the decision-making process to divest
from fossil fuels by philanthropic organizations with
assets under management from $5 million to $1 billion;
what factors supported decision makers in moving to
mission-aligned investing while simultaneously
exercising their fiduciary duty to steward institutional
assets; how the divestment decision affected the
decision makers personally and their organizations."
The information presented in this webinar -- now online
to view anytime -- is useful information for anyone
interested in mission-aligned investing.
Webinar: Mission-Aligned Investing: What New Positive
Deviance Research Can Tell Us About What Moves
Institutional Investors to Action, March 2017,
Intentional Endowments Network, USA.
Are Sustainable Funds More Expensive?
"Funds with an ESG mandate tend to be a bit more
expensive than other funds, but the differences are not
large. There are reasonable explanations for this
pattern. Most ESG funds are not very large, so they are
not able to benefit from the economies of scale found in
funds with huge asset bases; as ESG funds gather more
assets, more of them should be able to lower costs for
Also, funds with an ESG or impact mandate usually
have extra costs for shareholder advocacy and similar
activities that aim to move companies in a positive
direction... There are plenty of cheap ESG options for
investors who seek them out, including a growing number
of sustainable index funds and exchange-traded funds."
There's been little in-depth objective analysis
comparing the costs of buying and holding ESG funds
versus those of conventional funds. Morningstar has done
a great service here in delving into them. This is an
important article for all investors to review.
Are Sustainable Funds More Expensive? By David
Kathman, March 17, 2017, Morningstar, USA.
‘Climate is King’ Says BlackRock; Companies
Must Now Address Risk. "The world’s largest
asset manager is stepping up pressure on companies to
address how climate risk will affect its portfolios. In
a recent post on its website, BlackRock said it believes
climate risk is a “systemic issue” and that corporations
should be compelled to develop disclosure standards."
Such remarks from the world's largest asset manager are
bound to influence corporate climate change policies
globally. Furthermore, Blackrock is backing-up its
remarks with actions as it seeks to discuss these issues
with the companies it invests in.
‘Climate is King’ Says BlackRock; Companies Must Now
Address Risk, by Jan Lee, March 16, 2017,
ESG growing in importance, ERM survey
reveals. "Over 95% of investors believe
their company portfolios contain untapped environmental,
social and corporate governance (ESG) opportunities,
according to a recent survey by London-headquartered
global environmental consultancy ERM."
The article reviews the results of a survey that show
extraordinarily positive views among private equity
managers regarding the importance of integrating ESG in
ESG growing in importance, ERM survey reveals, March
15, 2017, Environmental-Analyst, UK.
Ethisphere Announces 124 Companies to Make
the 2017 World’s Most Ethical Companies List.
"Ethisphere’s notion that the financial value and
ethics are inexorably tied together has been explained
through an analysis of how the stock price of
publicly-traded 2017 honorees compare to the S&P 500
over the last two years. The analysis demonstrates a
6.4% premium Ethisphere refers to as an ‘ethics
I like Ethisphere's work. Their list is always worth a
Ethisphere Announces 124 Companies to Make the 2017
World’s Most Ethical Companies List, press release,
March 13, 2017, Ethisphere, USA.
Why and How Investors Use ESG Information:
Evidence from a Global Survey. "Survey data
from more than 400 senior investment professionals
provides insights into why and how investors use
environmental, social, and governance (ESG) information
as well as the challenges in using this information.
This study also documents what investors believe will be
important ESG styles in the future...
The primary reason survey respondents consider
ESG information in investment decisions is because they
consider it financially material to investment
performance. ESG information is perceived to provide
information primarily about risk rather than a company’s
A study concerning ESG co-authored by Harvard's George
Serafeim is always an important read. The co-author Amir
Amel-Zadeh of Oxford University's Saïd Business School
has impressive credentials as well.
Why and How Investors Use ESG Information: Evidence from
a Global Survey, by Amir Amel-Zadeh and George
Serafeim, March 13, 2017, Harvard Business School
Working Knowledge, USA.
The World’s Leading Companies on Human
Rights. "One clear leader, as mentioned
throughout the study, was Marks and Spencer (M&S). The
U.K. retail giant... Ranking slightly behind M&S
were H&M and Adidas."
This article details important research for everyone
particularly interested in the 'S' of ESG in many of the
world's largest companies. The study cited in the
article was compiled by Aviva Investors, the Human
Rights Resource Center (BHRRC), and various non-profits
and European governments.
The World’s Leading Companies on Human Rights, by
Leon Kaye, March 13, 2017, TriplePundit, USA.
How 'Responsible' Are Europe's Mega-Managers
Investing $22.4 Trillion? "Research
conducted by ShareAction, a non-profit group in the U.K.
that campaigns for responsible investment, ranks the 40
mega-managers who, between them, invest over €21
trillion ($22.4 trillion) ... The top five performers
(scoring out of a possible 90 points) are: Schroder
Investment Management (82), Robeco Group (81), Aviva
Investors (80), Amundi (77.5), and Standard Life
It's informative for all of us in the ethical investment
world to see how managers are ranked using criteria
related to responsible investment. Now, where are
similar rankings for North American or Asian managers?
How 'Responsible' Are Europe's Mega-Managers Investing
$22.4 Trillion? By Dina Medland, March 12, 2017,
Is the finance sector really equipped to
assess climate risks? "10 years after the
sub-prime mortgage crisis that triggered a global
financial crash, analysts are still largely ignoring
long-term financial risks, such as those from climate
change, the energy transition and disruptive low carbon
Although most asset owners analyzed in the
report, such as pension funds and insurers, have
long-term liabilities of 20 years or more, those
managing these assets are far more short-term in their
thinking, turning over these portfolios every 21 months
As many of you will agree, a short-term focus concerning
portfolio performance may not be compatible with
long-term liability management. Although the financial
community is starting to embrace ESG, ESG is mostly
about long-term performance and so requires a different
Is the finance sector really equipped to assess climate
risks? By Michael Holder, March 9, 2017, GreenBiz,
Responsible Investing Growing in Importance
Driven by Ethical Principals, Institutional Investor
Demands, and Business Opportunities, Says New Survey
from CAIA and Adveq. "More than three
quarters (77%) of respondents to the survey agree
Responsible Investing1 is more important than it was
three years ago, while 78 percent anticipate it will be
more important three years from now. Adoption of
industry standards (71%), pressure from institutional
investors (67%), and positive investment return outcomes
(64%) will be the largest drivers of greater adoption of
Responsible Investing and ESG approaches, according to
Again, we see more good news regarding the adoption of
ESG in the investment industry. However, mentioned in
this survey by 69% of respondents, was again the need
for "standardized comparable data." When this
is finally available ESG will finally take its place at
the helm of investment analysis.
Responsible Investing Growing in Importance Driven by
Ethical Principals, Institutional Investor Demands, and
Business Opportunities, Says New Survey from CAIA and
Adveq, press release, March 9, 2017, The CAIA
Association and Adveq, USA.
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