Deep Misalignment Between Corporate Economic
Performance, Shareholder Return And Executive
Compensation. "New research details an
over-reliance on accounting metrics that do not
measure capital efficiency, and how total
shareholder return obscures a line of sight to the
underlying drivers of economic performance... Only
12% of CEO Pay Determined by Economic Performance;
More than 75% of S&P 1500 Companies Not Equipped to
Measure, Manage Key Factors Driving Sustained
Echoing other researchers and commentators, these
findings again demonstrate that reliance on total
shareholder return (i.e. stock price increases and
dividends) over durations of mostly one to three
years -- the most common way of basing executive
compensation -- is absurd. Such measures only focus
management on short-term stock market public
relations and stock buybacks! Thus, medium and long
term corporate prospects and profitability are
frequently sacrificed for short term stock gains.
Ethical investors might want to scrutinize
executive compensation when selecting investments.
Deep Misalignment Between Corporate Economic
Performance, Shareholder Return And Executive
Compensation, press release, November 24, 2014,
Analysis Shows Growing Support from U.S.
Mutual Funds for Action on Climate Change Risks.
"One-third of votes cast across 42 fund families
supporting climate-related shareholder resolutions
on average in 2014, according to an analysis by the
sustainability advocacy group, Ceres... the 2014
proxy season saw one of the sharpest increases ever
in support for climate-related resolutions in the
past decade, with 11 fund groups – including GMO,
John Hancock, Delaware and Oppenheimer – increasing
their support for climate... Morgan Stanley, for
example, supported climate resolutions 70 percent of
the time in 2014 – a shift from supporting only 13
percent in 2013... however, eight fund families
failed to cast a single vote in support of a
climate-related resolution in 2014, the most
noteworthy being Vanguard."
Mutual fund managers -- increasingly applying ESG
criteria to their investments -- are beginning to
see the financial significance to companies
incorporating climate change risks/mitigation and
sustainability in their operations. It's strange
that Vanguard is a hold out since it's a signatory
to the UN's Principles for Responsible Investment
(PRI) which demands adherence to ESG principles.
Analysis Shows Growing Support from U.S. Mutual
Funds for Action on Climate Change Risks, press
release, Ceres, USA.
US Sustainable, Responsible and Impact
Investing Assets Grow 76 Percent in Two Years.
"Sustainable, responsible and impact investing
(SRI) assets have expanded 76 percent in two years:
from $3.74 trillion at the start of 2012 to $6.57
trillion at the start of 2014, according to the US
SIF Foundation’s latest biennial survey, the Report
on US Sustainable, Responsible and Impact Investing
Trends 2014. As a result, assets managed with SRI
strategies now account for more than one out of
every six dollars under professional management in
the United States...
The assets managed at the start of 2014 by
investment firms considering ESG issues grew more
than three-fold—from $1.4 trillion at the start of
2012 to $4.8 trillion."
The numbers are great, though note that the growth
in assets managed with an ESG orientation accounts
for more than the entire growth in the headline
number. Obviously, the proven relatively higher
financial returns by integrating ESG factors into
portfolio screening, is drawing ever more asset
managers into ESG believers.
US Sustainable, Responsible and Impact Investing
Assets Grow 76 Percent in Two Years, press
release, November 20, 2014, US SIF Foundation, USA.
Green investment ‘nosediving.’ "Global
investment in low carbon technologies fell for the
second consecutive year in 2013 to $331bn from
$359bn in 2012, according to a report by Climate
Policy Initiative... The declining cost of solar PV
accounted for a large part of the fall in private
investment. Solar deployment cost $40bn less in 2013
than would have been the case with 2012’s solar
investment costs, CPI said."
The headline is a somewhat misleading. True,
investment in low carbon technologies is not growing
as fast as many would hope, but with declining costs
for such energy systems, actual energy output
continues to rise significantly.
Green investment ‘nosediving,’ November 20,
2014, RENews, UK.
Banking culture breeds dishonesty, scientific
study finds. "A banking culture that
implicitly puts financial gain above all else fuels
greed and dishonesty and makes bankers more likely
to cheat, according to the findings of a scientific
study. Researchers in Switzerland studied bank
workers and other professionals in experiments in
which they won more money if they cheated, and found
that bankers were more dishonest when they were made
particularly aware of their professional role."
I have seen similar research and findings before
concerning financial industry employees. However,
despite such observations, investors follow almost
without question the financial recommendations from
the financial/investment advisors at these
institutions. Rarely do investors ask how
independent and impartial (for instance,
preferential fees for selling particular products)
is the advice they're given.
Similarly, why do the media almost always go to
the large (biased) financial institutions for
comments on the economy and financial markets? I've
investigated this before. The media say that
economists in academia (who I argue are less likely
to be biased) are difficult to reach, whereas
economists at financial institutions respond on the
first ring of the phone!
Banking culture breeds dishonesty, scientific study
finds, by Kate Kelland, November 19, 2014,
New study: Are Ethical Investments Good?
"We find that there are positive and
statistically significant long-run abnormal returns
for firms being included in the MSCI KLD400. These
abnormal returns are associated with higher
shareholdings by institutional investors (who are
subject to higher public scrutiny), higher analyst
coverage and higher growth opportunities."
The benefits of ethical investing are again seen in
this study, which analyzed the returns on
companies both included and dropped from the MSCI
Are Ethical Investments Good? By Gariet Chow
(University of Western Australia), Robert B. Durand
(Curtin University of Technology), and SzeKee Koh
(Singapore Institute of Technology), November 13,
2014, Australian Journal of Management, Vol. 39, No.
4, 2014, Australia.
Barclays and MSCI announce launch of Green
Bond Index family. "Barclays, a publisher of
leading broad market bond benchmarks, and MSCI Inc.,
a leading provider of investment decision support
tools worldwide, announced today the launch of a new
green bond index family measuring the global market
of fixed income securities issued to fund projects
and initiatives with direct environmental benefits.
The Barclays MSCI Green Bond Index family
complements the existing Barclays MSCI ESG
(Environmental, Social, and Governance) Fixed Income
Index family, and is now available to clients.
Eligibility for the Barclays MSCI Green Bond
Index family is based on an independent and
objective assessment of securities by MSCI ESG
Research along four dimensions closely tracked by
green bond investors: use of proceeds, project
evaluation, management of proceeds, and reporting.
Additional fixed income index criteria are then
applied to this screened universe to identify index
membership on a monthly basis. These assessment
criteria and thresholds for eligibility were
finalized following a market consultation."
This illustrates the fast growing interest and
development of green bonds. It's a welcome sign. For
too long ethical investors haven’t had the
opportunities to invest in properly developed green
Barclays and MSCI announce launch of Green Bond
Index, press release, Barclay's/MSCI, November
Study Links SRI With Enhanced Portfolio
Performance. "Harvard University professor
Allen Ferrell and two colleagues at Tilburg
University in the Netherlands won the 2014 Moskowitz
Prize for Socially Responsible Investing, awarded
yesterday at the 25th annual SRI Conference--The
Conference on Sustainable, Responsible, Impact
Investing--in Colorado Springs, Colo. Almost 600
financial professionals are attending the three-day
Congratulations to Allen Ferrell, Hao Liang and Luc
Renneboog for their insightful and valuable study
that has won them the 2014 Moskowitz Prize! What's
truly useful about their study is that they reviewed
ESG activities of companies in 59 countries. Most
studies of a similar nature were usually more
regional. Also, their findings -- with such a huge
dataset to use -- are really exciting, finding that
"certain aspects of CSR (e.g., environmental,
labor and social protection) are associated with
increased executive pay-for-performance sensitivity
and the maximization of shareholder value."
Study Links SRI With Enhanced Portfolio Performance,
by Leila Boulton, November 11, 2014, FA Magazine,
Why companies should shelter in Sustainability
Accounting Standards Board's (SASB) safe harbor.
"People often ask me if SASB will replace the
Global Reporting Initiative, compete with the
International Integrated Reporting Committee or
eliminate the need for research by socially
responsible investment firms and other sources of
sustainability information. Based on these
questions, I have concluded that very few people
actually understand what SASB is or how it fits into
the world of sustainability metrics.
I personally believe that SASB is creating a 'safe
harbor' for nonfinancial, sustainability-related
reporting, meaning legal and regulatory protection
for companies regulated by the U.S. Security and
Most of you are aware of 'generally accepted
accounting principles,' or GAAP, which underpins the
structure for financial reporting. So SASB is trying
to do the same for non-financial reporting, such as
what to, and how to, report on environmental and
social issues that might materially affect corporate
performance and financial affairs. All ethical
investors should read this article.
Why companies should shelter in SASB’s safe harbor,
by Bahar Gidwani, November 11, 2014, GreenBiz, USA.
Charities prefer active investments says
Newton survey. "Respondents from 74 UK
charities with just under £6bn of combined
investment assets took part. Broadly, the survey
found that 65% choose a purely active management
approach to investing; 67% are either exclusively or
predominantly invested in pooled funds; Just over a
quarter (25.7%) are invested in alternative assets;
60% apply a socially responsible policy, but
appetite for social-impact investment remains low;
and finally portfolio returns and income are the
biggest concerns for respondents."
The data speaks for itself. What I find both
surprising and happy about is that 60% of the
charities are now investing with an SRI orientation.
However, it's uncertain if these findings are
applicable to any other country.
Charities prefer active investments says Newton
survey, press release, November 5, 2014, FTSE
Global Markets, UK.
Conservation impact investing is about to
boom. "The conservation impact investing
market totalled $23 billion from 2009 to 2013 and is
expected to increase to $37.1 billion over the next
five years, according to a report released Thursday
by The Nature Conservancy’s NatureVest division and
EKO Asset Management. Conservation impact
investments are intended to return principal or
generate profit while driving a positive impact on
natural resources and ecosystems.
In April, with support from JPMorgan Chase & Co.,
the Conservancy launched NatureVest, a dedicated
division focused on deploying $1 billion in impact
capital for conservation over the next three years
by convening investors, developing and executing
innovative financial transactions and building an
investment pipeline across multiple sectors."
It seems a whole new area of investing is opening up
for ethical investors--that of conservation impact
investing. Investing for profit in projects
benefiting the environment. This could be a truly
win win situation both for investors and the
Conservation impact investing is about to boom,
by Mike Hower, November 5, 2014, GreenBiz, USA.
UN calls on pension funds to cut investments
in fossil fuels. "The United Nations is
calling on pension funds to cut investments in oil
companies and other fossil fuel businesses in a bid
to tackle climate change.
Speaking at a climate change summit in Copenhagen
yesterday, UN secretary-general Ban Ki-moon said big
investors such as insurers and pension funds should
cut their investments in fossil fuels and focus on
renewable energy sources instead."
Ban Ki-moon's advocacy for fossil fuel divestment is
in some ways significant--but also' ceremonial.'
It's significant in that the head of the UN is
advocating for fossil fuel divestment but ceremonial
in that it largely falls on deaf ears until
governments enact carbon caps and limits. However,
carbon caps and limits will (must) happen
eventually, so ethical investors taking his advice
could be rewarded over the long-term.
UN calls on pension funds to cut investments in
fossil fuels, by Samuel Dale, November 4, 2014,
Money Marketing, UK.
Emerging Markets Are Leading The Way On Clean
Energy Growth. " Climatescope 2014, looks at
what is happening in 55 emerging markets in Africa,
Asia, Latin America and the Caribbean. The results
suggest renewable technologies can be just a cost
competitive solution in developing countries just as
they are in the industrialised world."
For those who might not know, China is now the
world's largest manufacturer of wind and solar
generating equipment while also having the highest
demand for those products. Renewable energy is
becoming competitive around the world with
conventional energy production. Given the warnings
of the latest IPCC report--that's just as well! For
ethical investors, the expansion of renewable energy
globally offers many potentially profitable
opportunities in the sector.
Emerging Markets Are Leading The Way On Clean Energy
Growth, by Mike Scott, October 31, 2014, Forbes,
Europe retail market for socially responsible
investing up 18 pct. "The European retail
market for funds focused on socially responsible
investing grew 18 percent to 127 billion euros
($161.82 billion) in the 12 months to June 2014, a
report on Wednesday showed. The number of funds also
rose, to 957 from 922 in the year earlier period,
the report by Vigeo, which evaluates corporate
responsibility, and fund analyst firm Morningstar
France and the UK led the growth. It's great to see
the SR-ethical retail funds significantly outpacing
conventional funds in asset growth rates.
This is a further sign that ethical investing is
into the mainstream investing arena.
Europe retail market for socially responsible
investing up 18 pct., October 29, 2014, Reuters,
Are Canada's Corporate Giants Re-engineering
US Politics? "Canadian corporations helped
raise significant amounts of money for political
parties in the United States and spent big bucks on
lobbying efforts, according to a paper released
The report, from the Shareholder Association for
Research and Education (SHARE), details involvement
of Canadian corporations in Political Action
Committees (PACs) and lobbying in the U.S. this
year. The group is an advocate for ethical
It seems anyone, whether you are American or of some
other nationality, can provide 'influence money' to
US politicians. Though, when you read the actual
numbers provided for this endeavour by Canadian
companies, it's quite small. SHARE estimates it's
about $1.2 million for the 60 large Canadian
companies it investigated. A further $15 million was
spent on their lobbying efforts. However, SHARE believes
it's a lot more than the publicly available
information provides and suggests Canadian laws need
to be changed to make full disclosure of these sums.
Investors should have the right to know this
Are Canada's Corporate Giants Re-engineering US
Politics? By Jeremy J. Nuttall, October 30,
2014, The Tyee, Canada.
Good for Harvard, good for the world: Why HMC
embraced ESG with a passion. "Harvard
Management Corporation (HMC) signed up to the
UN-supported Principles for Responsible Investment
(PRI) less than a year ago, but the company that
manages the $36 billion Harvard University endowment
is already moving rapidly to build environmental,
social and governance (ESG) factors into every
investment decision it makes."
Harvard's endowment fund integrating ESG into all
its investment decisions sends a strong message to
all asset managers that they should do it too! For
ethical investors, it means more money flowing into
the stocks and bonds they're already invested in.
It's good news ethical investors.
Good for Harvard, good for the world: Why HMC
embraced ESG with a passion, by Simon Hoyle, Top
1000 Funds, USA.
Green bonds to exceed $40 billion in 2014.
"The market for green bonds has existed in one form
or another since about 2007, but only recently
exploded. According to Bloomberg, $18 billion of
green bonds has been issued as of early August 2014.
That already matches, in seven months, the total
volume done from the inception of the market in 2007
to the end of 2013, a six-year period. At this pace,
the market will exceed $40 billion this year."
This article provides a good overview of what's
happening with the green bond market.
Green bonds to exceed $40 billion in 2014, by
Suzanne Buchta, October 27, 2014, GreenBiz, USA.
Survey: half of surveyed financial
professionals have offered SRI options to clients.
"But Major Perception "Gender Gap" About SRI Seen
Among Brokers, Investment Advisors; Broad Agreement
Found that 'Millennial Investors' Will Require Major
Changes by Financial Industry."
This surveys findings are valuable reading for all
financial professionals. What is also interesting is
that most of the financial professionals who offered
SRI options did so because clients requested it.
Again, it's the market (clients) who lead and not
the mainstream investment industry! In any case,
it's great that it is happening regardless of the
reticence exhibited by most investment
Survey: half of surveyed financial professionals
have offered SRI options to clients, press
release, October 23, 2014, First Affirmative
Financial Network, USA.
Insurer Climate Risk Disclosure Survey Report
& Scorecard: 2014 Findings & Recommendations.
"Amid growing evidence that climate change is having
wide-ranging global impacts that will worsen in the
years ahead, Insurer Climate Risk Disclosure Survey
Report & Scorecard: 2014 Findings & Recommendations,
ranks the nation's 330 largest insurance companies
on what they are saying and doing to respond to
escalating climate risks. The report found strong
leadership among fewer than a dozen companies but
generally poor responses among the vast majority."
Anyone who invests in insurance companies or who has
insurance policies (probably everyone) might want to
read this review. Obviously, if a costly climate
event occurs and the company can't payout your
policy, you might want to know the financial
preparedness of the insurer before continuing to pay
Insurer Climate Risk Disclosure Survey Report &
Scorecard: 2014 Findings & Recommendations,
Mark Carney (Governor of the Bank of England):
most fossil fuel reserves can't be burned.
"The governor of the Bank of England has reiterated
his warning that fossil fuel companies cannot burn
all of their reserves if the world is to avoid
catastrophic climate change, and called for
investors to consider the long-term impacts of their
decisions. According to reports, Carney told a World
Bank seminar on integrated reporting on Friday that
the 'vast majority of reserves are unburnable' if
global temperature rises are to be limited to below
I just saw (October 23) this report courtesy of The
Responsible Investment Association (Canada). As one of the
world's top central bankers, this is truly
astonishing! Can anyone imagine Janet Yellen, Chair
of the Board of Governors of the Federal Reserve,
ever making a remark like that! She'd be 'fried
alive.' As readers here know, I've long argued that
many fossil fuel companies could have significant
write-downs and losses as the affects of climate
impact government policies entailing the reduction
of our carbon footprint.
Mark Carney: most fossil fuel reserves can't be
burned, by Jessica Shankleman, October 13, 2014,
The Guardian, UK.
SRI in Latin America: early stages.
"The financial world of socially responsible
investing (SRI) is gaining support in Latin America.
Governments, banks and investors are beginning to
understand the importance of shifting assets into
activities which support the triple bottom line.
Sustainalytics, a sustainability research and
analysis firm, recently published Inversión
Responsabley Sostenible, a report that describes the
context, growth and opportunity for SRI in Latin
America, dividing it into three levels of
involvement: Brazil as the first group, Chile,
Colombia, Perú and México as the second, and the
remaining countries in the third."
Latin America could be become a significant area for
ethical investing. This is a brief overview of the
current state of affairs there for SR-ethical
SRI in Latin America: early stages. By Julie
Fahnestock, October 21, 2014, 3BL Media and Just
Good Money Week: 83% of young Brits not
familiar with sustainable investment. "A poll
commissioned by the UK Sustainable Investment and
Finance Association (UKSIF) has revealed that the
majority of 18-24 year olds do not know what
sustainable investment is – with 37% even unsure of
what a bank actually is."
A mammoth hole in developed countries' education is
that of money management. It's truly startling that
one of the most important areas of life is not
taught in school. Mind you, where money education
exists, the curriculum is hugely influenced by
establishment interests such as banks! Thus, though
I'm in favour of money education, I'm not if it's a
one-sided viewpoint promoting establishment
Good Money Week: 83% of young Brits not familiar
with sustainable investment. By Ilaria Bertini,
October 20, 2014, Blue & Green Tomorrow, UK.
The 2014-2015 Ethics In Finance - Robin
Cosgrove Prize For People Under 35. "The
global Prize aims to promote greater awareness of
the importance of ethics in finance among young
people with an interest in accountancy, banking and
financial services. This is the fifth edition of the
Prize, originally launched in 2006, well before the
topic of 'ethics in finance' became fashionable. The
global financial crisis has since shown the
relevance of the theme and the significance of the
Prize. The Prize for Innovative Ideas for Ethics in
Finance is open to young people, aged 35 years or
younger, from throughout the world."
[COMMENTARY] This is a very worthy
endeavour and I encourage those under 35 with an
interest in this subject to submit their ideas. See
Global Ethics Prize Builds on Success. Website:
(UK) ‘Ethical’ funds still pouring money into
coal, oil and gas, new report finds. "Report
by advisers Barchester Green names winners and
sinners of ethical and environmental funds
[COMMENTARY] I suspect this is the
same in most countries. Ethical funds do this
sometimes because some energy companies are
diversifying into renewable/alternative energies and
also by holding shares ethical funds may have some
influence on how these companies operate. However,
with the fossil fuel divestment movement growing,
the potential for carbon taxes or caps as climate
change advances, and the possibility of balance
sheet write-down's due to 'stranded assets,' fossil
fuel investments might become problematic for many
‘Ethical’ funds still pouring money into coal, oil
and gas, new report finds, by Rupert Jones,
October 18, 2014, The Guardian, UK.
Why clean energy might be cheaper than you
think. "Wind and solar power often get a bad
rap for being more expensive than energy produced
from fossil fuels. But what happens when you factor
in, say, the health costs of people breathing smoggy
air? Or the financial impact of climate change’s
effect on ecosystems and precious resources like
Those are some of the questions the European
Commission sought to answer. A new report written
for the EC includes those environmental costs and
more in calculations of the total costs of producing
electricity from various renewable and nonrenewable
sources. The result? Wind and water are the best
bargains for making megawatts."
[COMMENTARY] It's great that a
major governmental body has finally produced these
calculations! Of course, the input data will be
controversial, but the discussion has to start
somewhere. This study provides governments with some
firepower for renewable energy. Incidentally, in their
calculations, solar is not that much expensive than
wind. Gas and coal powered plants are much more
Why clean energy might be cheaper than you think,
by Sam Bliss, October 14, 2014, grist, USA.
Are Companies Still Committed to
Sustainability? "New Business Models: Shared
value in the 21st century, commissioned by Enel
Foundation, finds that 66 percent of companies
believe there is a link between sustainability and
long-term financial performance (see chart). More
managers also understand the wider importance of
sustainability and increasing efforts to embed it
into their strategies.
The report also shows an increasing minority of
business managers who do not believe there is a link
between sustainability and long-term financial
performance. This is up to 11 percent — an increase
from 6 percent in a similar survey carried out in
[COMMENTARY] The article's headline
gives the impression that many or most companies
were committed to sustainability, but now might be
faltering in that commitment. I would argue that it
is only a small percentage of companies that have
ever been really committed to sustainability and
that number is growing, but not nearly as fast as is
necessary to help mitigate or stem the problems of
climate change. In the US particularly, among
corporate leaders--who are mostly Republican--only a
minority believe in climate change.
Are Companies Still Committed to Sustainability?
October 14, 2014, Environmental Leader, USA.
Fortune 500 companies spend more than $15bn on
corporate responsibility. "The research,
carried out by economic consulting firm EPG, found
that there was a clear difference in how US and
British companies approached CSR, but that on both
sides of the Atlantic spending was dominated by only
a handful of groups. In-kind donations, such as
donating free drugs to health programmes or giving
free software to universities, accounted for 71 per
cent of the $11.95bn US spending on CSR.
In the UK, while donating goods and services
in kind was the largest component of the $3.25bn CSR
activity, it totalled just 46 per cent of the total.
Employee volunteering and fundraising made up 34 per
cent and cash contributions 20 per cent."
[COMMENTARY] This study had a very
narrow definition of CSR: mostly how much companies
and employees give to outside groups. I don't think
the researchers nor the FT should've used the term
CSR, but rather, 'philanthropic contributions'
would've been a more appropriate term. There are
many definitions of CSR, but one that is frequently
used is from
Mallenbaker. Quote, "CSR is about how
companies manage the business processes to produce
an overall positive impact on society."
Though CSR spending using this definition would
be extraordinarily difficult to calculate, it will
be hugely greater than the $15bn mentioned in this
Fortune 500 companies spend more than $15bn on
corporate responsibility, by Alison Smith,
October 12, 2014, The Financial Times, UK.
Ron Robins appeared on America Meditating
radio show, interviewed by Sister Jenna. In the
show I discuss the relevance of spirituality and
Transcendental Meditation® to investing and
economics. I emphasize that gaining individual inner
fulfillment is the only means to solving our
individual and collective financial and economic
Ron Robins on America Meditating radio show,
October 7, 2014, USA.
Impact investing market grows 132% from
2011-2013. "Responsible investment strategies
grew at a much faster rate than the European market
as a whole between 2011 and 2013, according to
research by the European Sustainable Investment
study is useful reading for everyone in the
investment industry. Though you might want to read
it on the weekend! It's a large and extensive
report. I find it particularly interesting that
portfolio strategies excluding particular stocks or
industries involve "41% (€7 trillion) of European
professionally managed assets." Many people
might think it's tobacco and alcohol stocks that are
the largest excluded segments, but no, its cluster
munitions and anti-personnel landmines that are.
It'll be interesting to follow how fossil fuel
divestments gain traction in future years.
Impact investing market grows 132% from 2011-2013,
by Stephanie Baxter, October 9, 2014, Professional
Japanese Investors Adopting New Stewardship
Code (Principles for Responsible Institutional
Investors). "Japanese Financial Service
Agency (FSA) launched a Japanese version of
'Stewardship Code' in February 2014, inviting
institutional investors to sign up. Modeled on the
British Stewardship Code adopted in 2010, these
Principles for Responsible Institutional Investors
were set out as a code of behavior for institutional
investors who hold corporate stocks...
As of May 2014, three months after it was
launched, 127 institutional investors had announced
their intention to adopt it. The number of the
investors increased to 160 as of August 2014. The
Government Pension Investment Fund (GPIF), managing
about 130 trillion yen (about U.S.$1.29 trillion),
is the biggest among them."
[COMMENTARY] Unlike some other
'stewardship codes' the Japanese version does not
explicitly cover environmental or sustainability
issues. Nor is the code legally binding.
Nonetheless, it does codify important governance
factors regarding corporate behaviour that should be
helpful for ethical investors.
Japanese Investors Adopting New Stewardship Code
(Principles for Responsible Institutional
Investors), by Junko Edahiro, October 6, 2014,
Japan for Sustainability, Japan.
War – a minefield for ethical investors.
"'The world is changing,' says Ron Robins, a
Niagara Falls, Ont.-based analyst who founded an
ethical investing advice website called Investing
for the Soul. 'Investors in sin industries may see
their returns suffer due to government austerity
programs,' he says.
Governments facing deficits, unfunded pension
liabilities and rising health-care costs find it
irresistible to boost taxes on the sin industries,
particularly tobacco, alcohol and gaming, he says,
eventually driving away consumers. Meanwhile, more
socially responsible portfolios typically include
sectors that are on the rise in the 21st century, he
adds – finance, technology, medical equipment, clean
energy, consumer gadgets and so on."
[COMMENTARY] I was pleased the writer,
David Israelson, used these quotes of mine,
especially because I believe most conventional
investors seriously underestimate the ramifications
of most governments' mammoth unfunded liabilities as
well as the financial impacts of required
adjustments concerning climate change. Thus I
suggest that ethical investors are in a superior
position to 'sin' or conventional investors with
regards to long-term investment returns.
War – a minefield for ethical investors, by
David Israelson, October 6, 2014, The Globe & Mail,
New Numbers Show Increased Profits from ESG,
Climate Action, and Sustainability Communications. "A recent study by New Amsterdam
Partners finds that stocks with higher ESG ratings
deliver superior returns and lower price
volatility... CDP, formerly the Carbon Disclosure
Project, has released a study that shows... an 18
percent higher return on equity by companies
addressing climate change over their peers, and a 67
percent higher return than companies that do not
disclose on climate change. Dividends to
shareholders were also higher, by 21 percent."
[COMMENTARY] With report after report
showing that companies rated highly on ESG factors
perform better financially and offer superior stock
returns, when will mainstream investors wake-up and
fully integrate ESG criteria for picking stocks?
This demonstrates how structurally impaired is
the mainstream investment world. Ethical investors
can now enjoy their 'superiority'.
New Numbers Show Increased Profits from ESG, Climate
Action, and Sustainability Communications, by John Howell, October 2, 2014, 3BL
Pension funds still concerned activist stance
could damage returns. "Two-thirds of the
pension funds surveyed – 35 in total, with nearly
€1.2trn in combined assets – agreed that the
greatest ESG risk facing a board was that of
underperformance due to ethical investment
[COMMENTARY] This is the central issue
for getting pension funds onside for ESG-ethical
investing. And it goes back to fiduciary duties and
how they're interpreted. If they invest for ethical
reasons and the investment turns sour, the pension
fund boards feel they could be found irresponsible
in their fiduciary duties. So, the real point
is--and it depends upon jurisdiction and whom
they're managing the funds for--they must be able to
demonstrate financially sound reasons when investing
with an ESG-ethical investing focus. And that, in
most cases, should not be too hard to do. Let's face
it, many boards are just too conservative and don't
want to 'rock-the-boat' to reorient themselves even
to potentially higher returns by investing with an
Pension funds still concerned activist stance could
damage returns, by Dominic Gane and Jonathan
Williams, October 1, 2014, IPE, UK.
Will There Be Enough ESG Opportunities To Meet
Demand? "But even as 87% of asset managers
surveyed in the report, The Cerulli Edge: U.S.
Monthly Product Trends (August 2014), said they
viewed the growing awareness about ESG investing as
a secular trend, the vast majority of them said it’s
only somewhat important to offer it. Does that mean
they’ll be slow to roll out products or invest in
[COMMENTARY] It seems a strange
headline, but what they're saying is that if most
asset managers go for ESG screened portfolios, there
might not be enough ESG eligible stocks around.
Well, what a great day that'll be! I think the study
authors might be overlooking the fact that when
company's see their peers with higher ESG ratings
and higher stock prices, they will gravitate to
improve their own ESG performance. Ideally, the
majority of companies would then also become high
ESG performers. True, this would likely have the
effect of lowering ESG stock premiums--but hey,
it'll mean higher profits too for most companies,
and thus, higher stock prices everywhere.
Will There Be Enough ESG Opportunities To Meet
Demand? October 1, 2014, FA Magazine, USA.
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