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Shareholder Values

 
"Thirty-eight percent of financial advisors express strong interest in recommending sustainable investments to their clients; 72% express some interest."
--
Calvert Foundation
   
(USA) June 2012

"Canadian investors are generally favourable towards SRI. A third (32%) said they are 'very' or 'somewhat' interested. [Another] 55 per cent indicated that they would consider SRI if the return was 'as good or better' than other investments... The majority of investors surveyed view SRIs as 'futuristic' (78%) and 'a win-win for the individual and society' (77%)."
--
Ipsos Reid/
    Standard Life
   
(Canada) October 2011

"Some 83% of British women want their personal values to be reflected in their investments, with the majority saying they would be unhappy if they knew their money supported unethical practices."
--
Abundance
    Generation
   
(UK) January 2014

 
 

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        Links may only be valid for a limited time                                                August 23, 2014

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Generation Y's savings shortage may hit green investment. "Scepticism about the financial industry means 18-34 year olds are keeping savings as cash, reducing pot for much-needed green infrastructure funding."

[COMMENTARY] As this article states, it's important that generation y understands and makes green investing a priority or the future of the planet becomes increasingly hazardous. Investment returns would suffer as well.
Generation Y's savings shortage may hit green investment, August 22, 2014, Business Green, UK.

UK corporate giving: rise in donations. "In the last five years the UK’s biggest companies have doubled the amount of donations to charities, according to a report by the Charities Aid Foundation. The report, Corporate Giving by the FTSE 100, reveals big companies increased their donations to charities to £2.5bn in 2012, a rise of £1.2bn since 2007. Since 2007 the average amount donated to charity from these big companies has trebled from £1 million to £3 million."

[COMMENTARY] Improved corporate reputation occurs when a company gives to charities, thereby potentially, though usually marginally, positively affecting its stock price. Some ethical investors might want to investigate this relationship.
UK CORPORATE GIVING: Rise in donations, by Alan Cole, August 19, 2014, Xperedon, UK.

Are Socially Responsible Funds a Smart Way to Invest? "A TIAA-CREF Asset Management survey taken in January asked 1,000 plan participants about their interest in socially responsible investments. Among survey respondents under age 35, 76 percent said they were interested or very interested in SRI options versus 64 percent of all survey takers. Seventy percent of women surveyed were also interested in SRI strategies, which take social, environmental and corporate governance factors into account, compared with 55 percent of men."

[COMMENTARY] Again, given a choice, most investors want to invest in SR-ethical investment strategies. Almost always, the impediment for them doing so is their investment advisors and financial planners.
Are Socially Responsible Funds a Smart Way to Invest? By Casey Quinlan, August 19, 2014, US News & World Report, USA.

Female clients' unique approach to investing. "As they do with most things, men and women think about investing differently. Heather Locus, principal at Balasa Dinverno Foltz, points to a meeting she had with a brother and sister to highlight those differences. Both had inherited funds, and while the brother said, 'Give me what's going to do the very best,' the sister sought out socially responsible investments for a good portion of the money."

[COMMENTARY] In every survey I've seen concerning SR-ethical investing, women are more favourably inclined towards it. This is something that investment advisors seeking to maximize their 'book' might want to emphasize in the marketing of their services. They should also note that, "According to the Center for Talent Innovation, women control $11.2 trillion, or 39%, of the investible assets in the U.S."
Female clients' unique approach to investing, by Liz Skinner, August 17, 2014, Investment News, USA.

Pension beneficiaries prepared to sacrifice returns in favour of responsible investing. "Forty percent of pension participants are willing to forfeit part of their retirement income if the fund’s investment strategy matches their view on responsible investment, a survey has suggested."

[COMMENTARY] The researchers at TIAS Business School of Tilburg University, Netherlands, also found that those with higher education and incomes, as well as women, were more likely to be comfortable with lower returns if investments met with their views on responsible investment. Of course, this whole premise--that one has to sacrifice returns for ethics--is wrong to begin with! It just shows how much education is needed, not only in the Netherlands but everywhere, that investing ethically can actually benefit returns!
Pension beneficiaries prepared to sacrifice returns in favour of responsible investing, by Olaf Boschman, August 14, 2014, IPE, UK.

Russian banks lobby central bank to draft Islamic finance law. "A lobby group for Russian banks has written to Moscow's central bank seeking measures to promote Islamic finance at a time when the banking sector is facing a squeeze on foreign financing due to economic sanctions imposed over the Ukraine crisis. The Association of Russian Banks (ARB) said in a letter sent to the central bank late last week that promoting Islamic finance could give a boost to the economy and draw significant investment from the Middle East and Southeast Asia, regions where Islamic finance is flourishing."

[COMMENTARY] No matter what one thinks about western sanctions against Russia, Iran, etc., there is an interesting potential side outcome: increasing the growth of Islamic finance. Whether this is to the detriment of western banking, finance and investment, remains to be seen. However, Islamic finance, depending on how it's organized, could be a force to spur higher ethics, ESG and CSR in the world of finance, globally. Thus, possibly, even benefiting ethical investing.
Russian banks lobby central bank to draft Islamic finance law, by Bernardo Vizcaino and Alexander Winning, August 14, 2014, Reuters, UAE/Russia.

Head-To-Head Comparison Of Top Global Household Products Companies On Environmental, Social And Governance Metrics. "This blog provides environmental, social and governance (ESG) performance metrics for four global household products: Colgate-Palmolive (NYSE:CL), Kimberly-Clark (NYSE:KMB), Unilever (NYSE:UL) and Procter & Gamble (NYSE:PG). My contribution is to provide readers with current analytics that go beyond financial metrics, to evaluate how well these companies perform on comparable environmental, social and governance – or ESG – metrics, also known as sustainability metrics."

[COMMENTARY] Besides providing great ESG analysis of these companies, this blog post shows readers how some professionals conduct such research.
Head-To-Head Comparison Of Top Global Household Products Companies On Environmental, Social And Governance Metrics, by Katherine Schrank, August 13, 2014, Seeking Alpha, USA.

GEMS study uncovers leaders, laggards in environmental management. "Along with my data provider, IW Financial, I [Peter Soyka] have just released a newly updated and expanded study, '2014 GEMS Benchmarking Analysis of U.S. Corporate Environmental Practices.' It identifies the U.S. firms with the strongest reported environmental policies and infrastructure and finds that — notwithstanding noteworthy improvements during the past several years — many publicly traded companies have limited discernible capability with which to manage complex environmental and sustainability issues."

[COMMENTARY] The study evaluates all the companies in the Russell 3000 stock index. Overall, companies are getting better at disclosing their environmental practices. Also, it seems that the bigger the company, the better it's reporting. This is a useful article for ethical investors to read.
GEMS study uncovers leaders, laggards in environmental management, by Peter A. Soyka, August 7, 2014, GreenBiz, USA.

The socially responsible corporation? It’s a myth argues researcher. "Question of whether corporations could be socially responsible when you looked at all the components of the value chain or the individuals underlying this – the workers, the investors, and the managers. Whether you could have a socially responsible corporation when, in fact, the natural tendencies of the individuals in the corporation were, in the value chain of the corporation, were themselves not going to be prepared to sacrifice for their conscience, in some sense."

[COMMENTARY] Timothy Devinney, leadership chair in international business at Leeds University, UK, found that consumers, investors, and corporate employees will not always act socially responsibly or ethically and that there really isn't an 'ethical consumer.'

I believe what Professor Devinney is really describing has been observed many times in recent years: that individuals are only partly ethical and happy to cheat if it suits them. And it goes all the way back to their years at school. For instance, in a 2011 post, Free Markets Need Higher Consciousness of Participants, I wrote that, "Cheating by students has grown alarmingly in US schools, colleges and universities in recent decades. The highly respected US Educational Testing Service says that 'while about 20 per cent of college students admitted to cheating in high school during the 1940s, today between 75 and 98 per cent of college students surveyed each year report having cheated in high school.'" Cheating and poor ethics are everywhere!

Hence, we need a new, higher consciousness in society before true CSR is possible. Nonetheless, I believe gains are being made in this direction and am thus hopeful for the future for CSR. (Unfortunately, the article linked to below might not be available to all readers.)
Transcript: The socially responsible corporation? It’s a myth, Karl Moore of the Desautels Faculty of Management at McGill University, Canada, interviews Timothy Devinney [leadership chair in international business at] Leeds University, UK, August 5, 2014, The Globe & Mail, Canada.

Why sustainability leaders don’t impress Wall Street. "Investors don’t have the data they need, or understand how sustainability connects to creating shareholder value. And companies don’t know how to tell a story that’s relevant to Wall Street. What we have here is a multi-trillion-dollar failure to communicate."

[COMMENTARY] This is a great article focusing on the soon to be published work of Sheila Bonini and Steven Swartz at McKinsey & Company. Their research highlights ways in which mainstream Wall Street and investors can connect on corporate sustainability and how it relates to shareholder value.
Why sustainability leaders don’t impress Wall Street, by Joel Makower, August 4, 2014, GreenBiz, USA.

McKinsey: company leaders rallying behind sustainability. "Some 43% said their companies are seeking to align their sustainability with their overall goals, mission or value, compared to the 30% that said this in 2011. McKinsey links this trend to business leaders themselves placing more importance on sustainability, the number of CEOs that described it as their top priority was double that seen two years ago."

[COMMENTARY] Survey results like this from a firm such as McKinsey are credible. Also, indirectly, these results support ethical investing. As more companies take sustainability to heart they perform better on ESG issues, subsequently improving their attractiveness to ethical investors.
McKinsey: company leaders rallying behind sustainability, by Charlotte Malone, August 2, 2014, Blue & Green Tomorrow, UK.

The carbon taxes we're already paying. "The world's 3,000 biggest companies, according to a U.N. Environment Program report, cause $2.15 trillion in annual environmental costs, most of which are not accounted for in their profit/loss statements."

[COMMENTARY] This is a good article describing the carbon 'taxes' that we're already paying and asks who should pay them!
The carbon taxes we're already paying, by Mark Shapiro, July 29, 2014, Justmeans, USA.

Benchmarking Utility Clean Energy Deployment 2014, Ceres. "Benchmarking Utility Clean Energy Deployment assembles data from more than 10 sources, including state Renewable Portfolio Standard (RPS) annual reports, U.S. Securities and Exchange Commission 10-K filings and Public Utility Commission reports, to show how 32 of the largest U.S. investor-owned electric utility holding companies stack up on renewable energy and energy efficiency."

[COMMENTARY] This is a terrific review of the major public US energy utilities concerning their clean energy development and performance. As we know, many investment advisors regard energy utilities as one of those basic holdings, but for ethical investors they are often a problem because of their carbon footprints. This review should help ethical investors gain a better perspective on these utilities. You have to register for the free report.
Benchmarking Utility Clean Energy Deployment 2014, July 2014, Ceres, USA.

9 key trends in corporate sustainability reporting. "Nearly three-quarters of sustainability professionals ranked CSR above seven out of 10 in relation to their business objectives (with one being low and 10 being high.) Meanwhile, most organizations dedicate between $34,000 and $84,000 of their budget to CSR reporting activity."

[COMMENTARY] For investors, this provides an interesting perspective on how sustainability professionals within corporations rate who and what's important to them. Interestingly, 45% said that the most important stakeholder group for their CSR strategy was customers, while investors and boards were a distant 20%.
9 key trends in corporate sustainability reporting, by Victoria Knowles, July 23, 2014, GreenBiz, USA.

Survey: Increasing number of professionals value sustainability as reason to invest. "A survey of more than 360 international investment professionals on sustainable investment has outlined how environmental, social and governance (ESG) policies are becoming increasingly fundamental for the sector. The survey, by Thomson Reuters and the UK Sustainable Investment and Finance Association (UKSIF), assessed 179 buy-side firms and 14 brokerage firms and research houses."

[COMMENTARY] See my commentary for the post immediately below.
Survey: Increasing number of professionals value sustainability as reason to invest, by Ilaria Bertini, July 17, 2014, Blue & Green Tomorrow, UK.

Fixed income managers shift focus to ESG. "A majority of global fixed income managers are now taking environmental, social and governance (ESG) factors into serious consideration, according to a JANA survey. The JANA ESG in Fixed Interest Survey, which recorded the responses of 63 of the largest fixed income managers, found 88 per cent of respondents believe ESG factors influence the financial outcomes of fixed income investments."

[COMMENTARY] The good news confirming the mainstreaming of ESG in investment analyses continues. However, according to other more in-depth research (I believer by Mercer, particularly), analysts who say they consider ESG factors in their work generally only utilize it in a peripheral manner. They have yet to fully systemize and integrate it in their research work.
Fixed income managers shift focus to ESG, staff reporter, July 15, 2016, Investor Daily, Australia.

US corporate polluters are almost never prosecuted for their crimes. "More than 64,000 facilities are currently listed in [EPA] databases as being in violation of federal environmental laws, but in most years, fewer than one-half of one percent of violations trigger criminal investigations, according to EPA records."

[COMMENTARY] Before investing in a company, I've always advocated that ethical investors might want to check what environmental regulations a company might've broken and understand the possible legal penalties. Well, now we know that in the US the likelihood of costly environmental penalties are mostly nil. What a farce! And this is a nation that boasts about its 'rule of law.'

Unfortunately, it seems that US legislators purposely starve its regulatory agencies of funds (SEC, CTFC, EPA, etc.) due to the successful lobbying and manipulative efforts of potentially affected corporations--who just happen to be significant contributors to their political campaigns. There are names for this style of government--but I won't offend my US readers by using them.
Corporate polluters are almost never prosecuted for their crimes, by John Upton, July 15, 2014, GreenBiz, USA.

World Council of Churches pulls fossil fuel investments. "An umbrella group of churches, which represents over half a billion Christians worldwide, has decided to pull its investments out of fossil fuel companies. The move by the World Council of Churches, which has 345 member churches including the Church of England but not the Catholic church, was welcomed as a 'major victory' by climate campaigners who have been calling on companies and institutions such as pension funds, universities and local governments to divest from coal, oil and gas."

[COMMENTARY] This is a terrific step forward for coping with climate change. It will make many of their followers do the same and possibly even more. Exxon, Shell and other major oil and gas companies have been downplaying any possibility of carbon use restrictions ever happening. This is one of the first indications that a groundswell of public opinion to limit first, investments, and then carbon use, can and will happen. This is continuing good news for renewable fuels and bad news for carbon-based companies. Thank you, Desislava Dechkova, for bringing this article to my attention.
World Council of Churches pulls fossil fuel investments, by Adam Vaughan, July 11, 2014, The Guardian, UK.

New Vatican bank chief vows focus on 'Catholic, ethical investments.' "The newly appointed head of the Vatican's bank, the Institute for Religious Works, pledged on Wednesday to focus on 'Catholic, ethical investments,' as part of plans to clean up the scandal-plagued institution. Over the decades, the Vatican bank has been involved in a long list of financial scandals, allegedly offering safe haven to the funds of Italian mobsters, politicians and entrepreneurs, going beyond its prime remit of assisting worldwide church operations."

[COMMENTARY] Of all the religious institutions that should invest according to spiritual and ethical principles, you would think that the Vatican Bank would've been in the forefront. I guess it's better late than not doing it at all. Hopefully, the Vatican Bank will become a major force for spiritual and ethical investing. If it's able to influence Catholics everywhere to invest similarly, then it'll help create a better world for everyone, both Catholics and non-Catholics alike.
New Vatican bank chief vows focus on `Catholic, ethical investments,' by Alvise Armellini, July 9, 2014, The Record, Canada.

Millenials favour impact investing, real assets. "The number of Millennials that own or employ socially responsible investments is significantly higher than in any other age group, according to a study that explores family dynamics in wealthy families. US Trusts’ Insights on Wealth and Worth 2014 found that 63% of Millennials, those born between 1980 and 2000, own or are interested in socially responsible investments compared with 40% of Generation X. Generation X is defined as people born between 1960 and 1980."

[COMMENTARY] Perhaps it is that millenials--who are now starting careers and families--think more about the long-term for themselves and their kids and realize that they want a better, future world. If so, it offers promise for improved societal ethics, a better climate change response and the mainstreaming of ethical investing.
Millenials favour impact investing, real assets, by Michael Finnigan, July 2, 2014, CampdenFB, UK.

New Web Tool Provides Easy Access to SEC Climate Change Disclosure from 3,000 Public Companies. "Ceres and CookESG Research today launched a free, easy to use web tool for accessing climate change-related disclosures in company filings with the U.S. Securities Exchange Commission, which issued formal climate disclosure guidance in 2010. Available at www.ceres.org/secsearchtool, the tool allows users to filter and customize company 10-K filing excerpts relating to clean energy, renewables, weather risk and climate-related regulatory risks and opportunities."

[COMMENTARY] This is great tool for ethical investors. You have to register (which is free) to use it. Thank you Ceres!
New Web Tool Provides Easy Access to SEC Climate Change Disclosure from 3,000 Public Companies, press release, June 30, 2014, Ceres/CookESG Research, USA.

British Islamic bond debut becomes a market hit. "Britain has become the first western country to sell a five-year Islamic bond or 'sukuk'. The $340 million offering drew in orders of $3.9 billion which was more than ten times oversubscribed... 'Demand for high credit quality sukuk in the triple-A and double-A space far exceeds supply, particularly among the fast growing Islamic banks who need an increasing amount of high grade assets to address forthcoming Basel III liquidity requirements,' Reuters quotes Khalid Howladar, Moody's global head of Islamic finance."

[COMMENTARY] Given the Basel III requirements, it's difficult to assess what would've been the real underlying demand. Nonetheless, this first ever western government sukuk launch was highly successful. Considering that developed country governments around the world want to encourage Islamic finance in their domestic markets, government sukuk offerings might become more common. If at some point the US Treasury finds it difficult to sell its dollar denominated bonds--after all, the Fed, China and others are reducing their purchases--perhaps it will even consider selling sukuk? That'll be the day!
British Islamic bond debut becomes a market hit, June 26, 2014, RT, UK.

Fossil Free Indexes Launches First US Index. "Fossil Free Indexes LLC (FFI))... is the first index to leverage the long-term growth of US large cap indices while protecting investors from the risk of a carbon bubble. Over the ten years ending 5/30/14 the correlation between returns on FFIUS and the S&P 500 has been very high, suggesting that index investors need not sacrifice returns when choosing not to invest in the biggest carbon resource companies."

[COMMENTARY] From an ethical investors' viewpoint this index might protect from the possible, eventual, cost of carbon-based stranded assets among many fossil fuel companies. Of course, with Wall Street's current love affair with shale oil and gas production, this would be a contrarian investment.
Fossil Free Indexes Launches First US Index, press release, June 26, 2014, Fossil Free Indexes, USA.

How do you demonstrate a 'sustainability premium' to investors? "More companies are translating their sustainability efforts into revenue and productivity. But for the most part, investors don't understand or even know about the shareholder value that sustainability initiatives can create."

[COMMENTARY] The discussion in this article is pertinent for companies and investors. For investors, it provides insight into what they might demand companies to report.
How do you demonstrate a 'sustainability premium' to investors? By Deb Gallagher, June 26, 2014, GreenBiz.com, USA.

Scientists Strengthen Link Between Prolonged Fracking and Large Quakes. "A study conducted by Southwestern Methodist University and the University of Texas in 2010 found that there was “plausible” evidence that injection wells were causing earthquakes in the Dallas-Fort Worth area. But nine different studies looking at recent earthquake sites in north, central and south Texas have now confirmed that suspicion."

[COMMENTARY] Will the environmental risks of fracking be overridden? Yes, but it'll take unfortunate loss of life and significant property damage attributed to fracking before its use will be restrained. And again, unfortunately, that'll happen in time.
Scientists Strengthen Link Between Prolonged Fracking and Large Quakes, by Jan Lee, June 16, 2014, Triple Pundit, USA.

Presbyterians Vote to Divest Holdings to Pressure Israel. "After passionate debate over how best to help break the deadlock between Israel and the Palestinians, the Presbyterian Church (U.S.A.) voted on Friday at its general convention to divest from three companies that it says supply Israel with equipment used in the occupation of Palestinian territory."

[COMMENTARY] Many are comparing this divestment campaign to the one that helped to end South African apartheid. However, there is one big difference: divestment to end apartheid included the support of many governments. As yet, this present campaign seems to have little, if any, government support. Hence, until this happens--which may well not happen--this campaign is unlikely to make sufficient headway to sway Israel from its current course of action. As for it affecting stock prices of companies engaged in these activities with Israel, it'll depend on the size of the company and how far this campaign goes.
Presbyterians Vote to Divest Holdings to Pressure Israel, by Laurie Goodstein, June 20, 2014, The New York Times, USA.

Harvard Universities' Initiative for Responsible Investment details global ESG regulatory and stock exchange reporting requirements. (Interactive map by ESG Analytics.) "This map... summarizes recent requirements by governments and stock exchanges related to CSR/ESG disclosure by country."

[COMMENTARY] Thanks to Daniel Bressler at ESG Analytics for this link. This research centre at Harvard should be interesting to watch!
Harvard Universities' Initiative for Responsible Investment interactive ESG global reporting, ESG Analytics, USA.

Global Consumers Are Willing to Put Their Money Where Their Heart is When It Comes to Goods and Services from Companies Committed to Social Responsibility. "Fifty-five percent of global online consumers across 60 countries say they are willing to pay more for products and services provided by companies that are committed to positive social and environmental impact, according to a new study by Nielsen. The propensity to buy socially responsible brands is strongest in Asia-Pacific (64%), Latin America (63%) and Middle East/Africa (63%). The numbers for North America and Europe are 42 and 40 percent, respectively."

[COMMENTARY] It's fascinating that consumers in the Asia-Pacific and Latin American regions lead by a wide margin in their desire to purchase goods and services from socially responsible companies. Ethical investors might want to consider this information in selecting companies for their investments.
Global Consumers Are Willing to Put Their Money Where Their Heart is When It Comes to Goods and Services from Companies Committed to Social Responsibility, press release, June 17, 2014, Nielsen/Natural Marketing Institute, USA.

Canadian Responsible Investment Funds Challenge Status Quo – Support ESG Resolutions. "Canadian mutual funds with responsible investment (RI) mandates take more active ownership roles than many of their counterparts, according to a study released today by the Responsible Investment Association (RIA), a non-profit membership association that promotes the integration of environmental, social and governance (ESG) issues in Canada’s investment sector."

[COMMENTARY] I welcome this type of research--even if the results are unsurprising. To me it highlights the shareholder apathy and unwillingness to challenge corporate management on issues--any issues--by most mainstream funds. I guess with their incredibly high churn rate of corporate holdings among funds, most fund managers just sell their stocks in companies they don't like rather than challenge management to do better!
Responsible Investment Funds Challenge Status Quo – Support ESG Resolutions, press release, June 17, 2014, Responsible Investment Association, Canada.

How Can Fixed-Income Investors Address ESG Considerations? "We spoke with Christoph M. Klein, CFA, who is a managing director, portfolio strategist, and head of ESG credit at Deutsche Asset & Wealth Management, based in Germany."

[COMMENTARY] A useful discussion of ESG factors as they pertain to fixed income securities.
How Can Fixed-Income Investors Address ESG Considerations? Usman Hayat interviewing Christoph M. Klein, June 17, 2014, CFA Institute, USA.

S&P/TSX 60 ESG Index Launched by S&P Dow Jones Indices, RobecoSAM and Toronto Stock Exchange. "The S&P/TSX 60 ESG index is designed for market participants who currently use the S&P/TSX 60 and are looking to deepen the scope of their stock analysis to include sustainability criteria. The construction methodology is based on the S&P/TSX 60, while companies' sustainability profiles are evaluated using the RobecoSAM Corporate Sustainability Assessment (CSA). Companies are then re-weighted according to their sustainability score, meaning those with a higher score are weighted higher in the S&P/TSX 60 ESG index than in the S&P/TSX 60."

[COMMENTARY] The interesting twist in this index is in bold above. Most ethical/SR/sustainable indices actually exclude those companies that perform poorly in these measures. As in every market, it'll be fascinating to watch how this type of index performs! However, I wonder about the scale of the weightings, i.e., what will be the difference between top and poor performers?
S&P/TSX 60 ESG Index Launched by S&P Dow Jones Indices, RobecoSAM and Toronto Stock Exchange, press release, June 16, 2014, S&P Dow Jones Indices, RobecoSAM and Toronto Stock Exchange, Canada.

Saintly stocks turning the tables on the Sinners. "For the second year running, however, the Saints have gained ground, and they remain well ahead of the Sinners over one, three and five years, although the Sinners retain the upper hand over the past decade. But that long-term advantage may not last much longer."

[COMMENTARY] The reason for the last comment is that banks make-up a large proportion of this 'saints' index--as they do in many ethical portfolios--and the banks underperformance over the past ten-years is about to change for the better. However, I question that premise. Firstly, accounting rule changes a few years ago allowed the banks to hide immense losses, which just might have to be addressed at some point. Secondly, most major banks mammoth and growing derivatives exposure pose enormous risks as 'financial weapons of mass destruction' (quoting Warren Buffett) should we have another financial crisis. Thus, I have substantial concerns about bank stocks performing well until these problems are dealt with. Nonetheless, as I've written about many times, I do believe that 'saintly' or ethical portfolios will outperform 'sinner' portfolios over the long-term.
Saintly stocks turning the tables on the Sinners, by Heather Connon, June 13, 2014, Interactive Investor, UK.

Islamic funds lose their lustre. "Mohammed Hassan, an analyst at Eurekahedge, said that the popularity of many Islamic funds diminished after the US Federal Reserve’s tapering announcements last year. This triggered widespread volatility in emerging markets, which many Islamic funds are heavily exposed to."

[COMMENTARY] Islamic funds represent only about 5% of the Islamic finance industry. That industry, according to Ernst & Young, is scheduled to see it's assets rising to $1.8 trillion by 2018. As emerging markets and interest in ethical investing grows, it's likely that assets in Islamic funds will rise significantly as well. Thus, the present decline of Islamic funds is likely temporary.
Islamic funds lose their lustre, by Madison Marriage, June 15, 2014, The Financial Times, UK.

Green Bonds: European Acceptance, American Reluctance. (Page does not allow quoting.)

[COMMENTARY] The amount of green bonds issuance is growing substantially--up to about $20 billion in 2014, doubling that of 2013. However, as in believing that humans cause climate change, Americans are slow to buy into green bonds which are destined to be a significant portion of all bond issuance in the years ahead.
Green Bonds: European Acceptance, American Reluctance, by Joel Kranc, June 13, 2014, Institutional Investor, USA.

Addressing shortcomings in current corporate reporting. "Investors don’t have access to all the information they need today. Raj Thamotheram, Mark Van Clieaf and Alan Willis ask: why aren’t investors (and their clients) demanding it?"

[COMMENTARY] This is a terrific article about a topic that I've been writing about for many years! All investors should read it and take whatever action they can to demand improved corporate reporting.
Addressing shortcomings in current corporate reporting, by Raj Thamotheram, Mark Van Clieaf and Alan Willis, June 11, 2014, Top1000funds.com, USA.

Four in five investors consider sustainability issues – PwC survey. "Four in five investors have looked at sustainability issues in one or more investment contexts in the last year, according to research from PwC. However, investors also cited dissatisfaction with current reporting standards."

[COMMENTARY] The interest in sustainability results largely from investors needs to mitigate investment risk. This is fine. It just reinforces the need for companies to make ESG/CSR/ethical concerns central to their operations. Furthermore, as research increasingly demonstrates, those companies that lead in this way tend to have better financial and stock performance than their peers who underperform in these measures. The dissatisfaction with reporting standards is a common theme of mine too, as you would've noticed reading my many commentaries related to it.
Four in five investors consider sustainability issues – PwC survey, by Charlotte Malone, June 9, 2014, Blue & Green Tomorrow, UK.

How Solar Will Destroy The Power Companies, In 5 Easy Steps. "Barclays recently downgraded the entire U.S. electric utilities sector to 'underweight' on the threat posed by widespread adoption of solar-storage. These systems allow homeowners to use rooftop solar panels and a battery to cut all but the figurative emergency backup cord to their local electric grid, putting a severe strain on an industry that has been a defacto monopoly."

[COMMENTARY] With photovoltaic panel prices plunging and the real possibility of much less expensive solar storage on the horizon, Barclays believes that utility companies are going to face tremendous financial pressures. Additionally, this will come at a time when utilities have to upgrade their plants to meet increasingly tough and costly environmental and pollution regulations. Furthermore, should this transpire--what about the financial risks concerning the huge investments in new electrical/smart grid infrastructure if energy production becomes so decentralized?
How Solar Will Destroy The Power Companies, In 5 Easy Steps, by Rob Wile, June 8, 2014, Business Insider, USA.

Allergan, Adobe and Ball lead 2014 Newsweek Green Rankings. "Those in the lead among the top 500 U.S. companies are Allergan, famous for Botox; Photoshop creator Adobe Systems; and Ball Corporation, which manufactures beer cans and other packaging (and formerly the iconic Ball Mason jars). Compare that with two years ago. In 2012, IBM ruled as No. 1, followed by Hewlett-Packard and Sprint-Nextel. Today, IBM has plummeted to the 224th spot, with HP at No. 38 and Sprint at No. 32."

[COMMENTARY] In the article linked to here, GreenBiz does a good job in analyzing the ratings. Here's another list that's useful for ethical investors to review.
Allergan, Adobe and Ball lead 2014 Newsweek Green Rankings, by Elsa Wenzel, June 5, 2014, GreenBiz, USA. Review this too: Do Newsweek’s Green Rankings still matter? By Joel Makower, June 5, 2014, GreenBiz, USA.

Canada’s top 50 socially responsible corporations: 2014. "As the Canadian public becomes more aware of the impact of sustainability issues on the world around them, they are looking at the role of business in addressing these challenges,” said Michael Jantzi, Sustainalytics CEO. “Many of the world’s leading organizations have already embedded sustainability into their business models, and through the Top 50 feature Canadians can become more informed about corporate Canada’s efforts in this area.”

[COMMENTARY] Sustainalytics, the firm responsible for the list, has a long, reputable history in such analysis. Some ethical investors might be surprised by the inclusion of gold miners, but what Sustainalytics does is to provide best of sector analysis across all key industry groups. This is an excellent report for ethical investors to review.
Canada's Top 50 socially responsible corporations: 2014, June 6, 2014, McLean's, Canada.

Thomson Reuters launches Indian ESG index. "The Thomson Reuters CRI India 50 ESG Index, [tracks] the performance of Indian companies with high environmental, social and governance (ESG) standards... the index will serve as a credible reference for global investors seeking exposure to Indian companies and investment portfolios with ESG standards."

[COMMENTARY] Ethical investors everywhere welcome ESG investing indices of companies in the developing world. However, it is particularly interesting in India since its former government mandated CSR for its larger companies--and the enormous potential for growth of those companies.
Thomson Reuters launches Indian ESG index, by Simon Smith, June 4, 2014, ETF Strategy, UK.

Seventy-Two Percent (72%) of the S&P Index Published Corporate Sustainability Reports in 2013 — Dramatically Up from 52% in 2012 & Just About 20% in 2011. "Previously (in 2012) Governance & Accountability Institute's research showed for the first time the companies in the S&P 500 that were not reporting were in the minority. Now, the latest 2013 data just released shows that in 2013 that minority group has become even smaller."

[COMMENTARY] As I remark in my editorial below, if companies didn't believe that engaging in CSR activities was not material to their financial performance--they wouldn't do it! Clearly, CSR is mainstream now. But what still has to be done is for regulators around the world to create and enforce some common CSR reporting standards as well as an independent auditing process to ensure honesty and accuracy in CSR reports. Currently, many CSR reports, particularly if they lack quantification of CSR activities with goals and objectives clearly delineated--might be more PR than factual.
Seventy-Two Percent (72%) of the S&P Index Published Corporate Sustainability Reports in 2013, press release, June 2, 2014, Governance & Accountability Institute, USA.

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