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"Almost three-quarters of investors (74 percent) would be more likely to work with an advisor who could give them competitive investment returns from investments that also made a positive impact on society and 65 percent of investors would be more likely to stay with an advisor who could discuss responsible investing with them."
--
TIAA Global Asset
    Management
(USA)
    May 2016

"92% of Canadians say that it's important to choose investments that are aligned with their values. By contrast, only 14% of advisors raised the topic of RI [responsible investing] with their clients."
--
Deb Abbey referring
    to 2014 NEI study
    Investment
    Executive
   
(Canada) April 2015

"70% of people [in UK] want to invest ethically but the financial services industry is failing to respond." Referencing research by Abundance.
--
Acquisition
    International
   
(UK) June 2015

 

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Links may only be valid for a limited time  September 25, 2016

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Canada's Responsible Investment Week Events, October 17-21, 2016. Details here. This is the third year for this great event and it grows bigger every year!

AMNT: Climate change scores lowest on biggest risks facing (UK pension) schemes. "Trustees believe climate change is the lowest risk for their schemes, according to this year’s Association of Member Nominated Trustees (AMNT) survey. Only 1% of respondents said climate change is a threat in contrast to the 2015 survey where it was ranked as the second top concern with 16% of MNTs calling it their biggest worry.

Despite climate change coming bottom this year, environmental social governance (ESG) implications was the fifth most important concern for MNTs, with 9% calling it their top concern. Importantly, ESG, which is a broad term for many things including climate change, was not an option in last year's survey."

[COMMENTARY] A survey question changed between 2015 and 2016 to include ESG. This might account for some of the differences in responses to the climate change concerns between those years. The number one concern for the funds was market volatility.
AMNT: Climate change scores lowest on biggest risks facing (UK pension) schemes, by Michael Klimes, September 22, 2016, Professional Pensions, UK.

Investors abandon principles as low interest rates put pressure on returns. "A survey of more than 100 institutional investors found that 60pc believe that environmental, social and corporate governance (ESG) risks justify rejecting an otherwise attractive investment – down from 67pc a year ago."

[COMMENTARY] The responses to such questions should be expected to change -- up and down -- each year, though trending higher over the long-term, which has been seen over the past several years. Even at 60%, this is a remarkable improvement from responses to similar surveys some years back.
Investors abandon principles as low interest rates put pressure on returns, by Tim Wallace, September 19, 2016, The Telegraph, UK.

Canada’s 3rd annual RI Week: October 17-21, 2016. "Canada’s third annual Responsible Investment Week will take place from October 17th to 21st, 2016. Responsible Investment Week is a week dedicated to education and awareness about responsible investment (RI). The Responsible Investment Association (RIA) is coordinating a week of events across Canada to promote learning about environmental, social, and corporate governance (ESG) issues that affect investments."

[COMMENTARY] Congratulations to RIA Canada for organizing this important, now annual event. I urge all ethical investors in Canada to take part in whatever way possible.
Canada’s 3rd annual RI Week: October 17-21, 2016, press release, September 14, 2016, Canada.

S&P lays out plans for green bond and ESG market tools. "Influential ratings agency S&P Global has launched plans for a new tool to examine the environmental impact of projects or initiatives financed by bonds.

Dubbed the Green Bond Evaluation Tool, the market instrument would identify projects that aim to reduce greenhouse gas emissions or mitigate the impact of natural catastrophes."

[COMMENTARY] This is a welcome initiative and necessary development. Only time will tell if they can get it right.
S&P lays out plans for green bond and ESG market tools, September 13, 2016, Jocelyn Timperley, GreenBiz, USA.

New Study Shows Corporate America Continuing to Invest in Sustainability. "Since its inception, the study, which was first conducted in 2006, 2009, 2012 and now in 2015, has created a five-stage sustainability scale ranging from those companies that do not include sustainability as part of their mission to those who view sustainability as a transformative driver for their business.

The findings demonstrate that the percentage of companies at the high end of the scale has grown from 15% in 2006 to 41% in 2015. However, there has also been a slight increase in those at the lower end of the scale as well, with 21% in 2015 compared to 17% in 2012."

[COMMENTARY] The corporate march towards an orientation to sustainability continues to grow. Soon, with most of the world's major stock exchanges demanding more detailed ESG reporting, the present 41% will rise significantly over the coming years.
New Study Shows Corporate America Continuing to Invest in Sustainability, press release, September 8, 2016, Dodge Data & Analytics/Siemens, USA.

Results Announced for 2016 Dow Jones Sustainability Indices Review. "The three largest additions and deletions (by free-float market capitalization) to the DJSI World this year include: Additions: Cisco Systems Inc, Royal Dutch Shell PLC, Adobe Systems Inc.. Deletions: Intel Corp*, Samsung Electronics Co Ltd, British American Tobacco PLC."

[COMMENTARY] The DJSI is a great list of sustainable companies, focusing on 'best of sector.' However, the results would be greatly improved if their analysis incorporated the sustainability of the products and services with respect to the revenues of the listed companies. The full 2016 results will be published September 12 on their RobecoSAM website.
Results Announced for 2016 Dow Jones Sustainability Indices Review, press release, February 8, 2016, RobecoSAM, Switzerland.

What Big Data Says About ESG. "ESG factors can be used to identify signals for higher return and reduced downside risk, so long as investors possess the 'necessary sophistication.'"

[COMMENTARY] This is fascinating research from a whole new perspective, that of 'data science.' This is, "Large scale, deep data, and advanced statistical analysis — allowing researchers to identify what is happening in the real world as opposed to what should happen according to economic theory." The study's author is Andreas Hoepner, a data scientist and professor at UK's Henley Business School professor.
What Big Data Says About ESG, by Amy Whyte, September 6, 2016, Chief Investment Officer, USA.

PRI launches A practical guide to ESG integration for equity investing. "To guide investors - both asset owners and investment managers - who are implementing ESG integration techniques in their investment process, this report is the most comprehensive description to date of what ESG-integrated analysis is, and how it works in practice."

[COMMENTARY] This appears to be an invaluable guide to ESG investing. By using case studies, it demonstrates real life practices of ESG integration in investment analysis utilizing a variety of investment approaches.
PRI launches A practical guide to ESG integration for equity investing, September 2016, UN's Principles for Responsible Investing (PRI), UK.

Does ESG Boost Returns? "And though there is convincing evidence that good performance on selected industry-specific materiality data leads to increased returns, translating those aggregate-level insights into portfolio-appropriate ideas is not a linear process.

With these issues in mind, it seemed natural to ask what readers of CFA Institute Financial NewsBrief thought of how examining these disclosures might yield better returns."

[COMMENTARY] In their survey question, "Do you think analyzing ESG factors can boost returns?" 37% say they include it in any complete analysis and only 15% said "no way." Read the article as the results are interesting.
Does ESG Boost Returns? By Will Ortel, September 1, 2016, Enterprising Investor, CFA Institute, USA.

How ETFs Are Incorporating Sustainability. "While the two largest diversified sustainable investment options have been around for a decade, the diversified set now totals 20 funds, with 17 launched in just the past two years, nine of them so far in 2016, reflecting growing demand for sustainable investment products as well as more general investor interest in passive portfolios."

[COMMENTARY] Another informative article from Jon Hale at Morningstar. It will interest most ethical investors.
How ETFs Are Incorporating Sustainability, by Jon Hale, September 1, 2016, Morningstar, USA.

Climate change is ‘overblown nonsense’ and not a material risk, says industry representative. "The latest Pensions Buzz poll - conducted by Professional Pensions between 22 August and 23 August among 101 trustees, scheme managers and pension professionals - found more than half (53%) did not see climate change as a financially material risk to their own or their clients' portfolios."

[COMMENTARY] The fact that in the same survey 36% said that climate change was a material financial risk and 16% didn't know if it was one -- are the numbers that impressed me. Go back a few years and this kind of survey would've not even been done.
Climate change is ‘overblown nonsense’ and not a material risk, says industry, by Michael Klimes, August 24, 2016, Professional Pensions, UK.

Deloitte Says Sustainability Reporting Adds Up To Real Numbers. "A recent CFA Institute Survey found that 69% of CFA Institute members globally believe it is important that ESG disclosures be subject to independent verification. Respondents, however, are split on what level of verification is necessary – 44% prefer a high level of assurance and 46% support limited verification. But it is clear that the movement toward 'investor-grade' ESG disclosure is still evolving with only 63% of the responding Global 250 companies obtaining some form of assurance on sustainability reporting."

[COMMENTARY] This is something I've been talking about for decades -- the need for independent verification of ESG disclosures in corporate reports. I believe they warrant the same scrutiny as auditors provide for financial statements. Overall, this article is useful and informative for all investors.
Deloitte Says Sustainability Reporting Adds Up To Real Numbers, by Christopher P. Skroupa, August 23, 2016, Forbes, USA.

Demonstrating Ethical Conduct Is A Priority Throughout Investment Relationship. "The level of importance of ethical actions is another of the themes uncovered in the results of the joint CFA Institute/Edelman survey From Trust to Loyalty: A Global Survey of What Investors Want. An earlier blog noted several topline findings of the report, such as fee transparency and disclosure of conflicts of interest.

Although these are clearly elements in building trust, I wanted to see how retail and institutional respondents viewed a commitment to ethical conduct over the lifespan of the advisory arrangement...

An unwavering commitment to ethical conduct combined with transparent and consistent communications will be keys to both building and maintaining loyal clients."

[COMMENTARY] When you read this article and the research it's based on it's clear that ethical conduct is the first requirement that investors demand of their advisors.
Demonstrating Ethical Conduct Is A Priority Throughout Investment Relationship, by Glenn Doggett, August 23, 2016, Seeking Alpha, USA.

Diversity makes dollars and sense. "Corporate boards and executive teams that lack gender and cultural diversity risk missing out on opportunities to generate long-term value."

[COMMENTARY] Deb Abbey convincingly argues the case for board and senior management diversity! She provides the reasoning why diversity is among the primary investment screens for SR-ethical investors. Thank you Deb for compiling and writing about the specific research that demonstrates the benefits of how diversity in boards and management improves financial and stockholder returns.
Diversity makes dollars and sense, by Deb Abbey, August 18, 2016, Investment Executive, Canada.

ESG performing well and in demand, but a shortage of ETFs is holding back adoption. "There are not enough SRI/ESG ETFs for all the different asset classes. It’s all very well having a global equities SRI ETF but if it’s Emerging Markets equity exposure you are after that won’t help. In fixed income it would be good to see more offerings, such as in High Yield. There are corporate bond SRI/ESG ETFs but nothing in the lower credit rating/higher yield spectrum.” -- Camilla Ritchie, UK.

[COMMENTARY] This concern in lack of diversity in ESG ETFs is common globally. Considering the growth of ESG ETFs, no doubt many ESG providers are planning to fill this void.
ESG performing well and in demand, but a shortage of ETFs is holding back adoption, by Rebecca Hampson, August 19, 2016, ETF Strategy, UK.

The Most Reputable Tech Companies In 2016. "Another takeaway from this year’s results is the importance of social responsibility to millennials — the 18- to 34-year-olds who are becoming the largest consumer base in the U.S. In fact, the most reputable tech companies are faring especially well with that age group. And to have a positive reputation among millennials, a company has to learn how to attach the critical issues that these young people care about to the company’s vision or strategy."

[COMMENTARY] Monica Wang's article provides a good overview of the results of this fascinating index. It's extraordinary that Google is eighth while Amazon, Samsung and Intel are the top three on the list.
The Most Reputable Tech Companies In 2016, by Monica Wang, August 18, 2016, Forbes, USA.

You Don't Have to Sacrifice Returns for Sustainability. "The performance of socially responsible funds has been in line with conventional funds' over time, writes Morningstar's Jon Hale."

[COMMENTARY] Using Morningstar owns database Jon Hale concludes that ESG oriented funds have performed similarly over the long haul to regular funds. This eliminates the argument that by limiting the universe of stocks that an ESG fund will do less well than the general fund universe.
You Don't Have to Sacrifice Returns for Sustainability, by Jon Hale, August 18, 2016, Morningstar, USA.

The Carbon Clean 200. "The Clean200 is intended as the clean energy inverse of the Carbon Underground 200TM. Where the Carbon Underground 200TM (which evolved from the seminal Carbon Tracker Initiative report, Unburnable Carbon: Are the World’s Financial Markets Carrying a Carbon Bubble?), ranks the largest publicly listed companies by the carbon intensity of their coal, oil, and gas reserves...

The Clean200 ranks the largest publicly listed companies by their total clean energy revenues, with a few additional screens to help ensure the companies are indeed building the infrastructure and services needed for what Lester Brown and many others have called 'The Great Energy Transition' in a just and equitable way."

[COMMENTARY] Congratulations to Corporate Knights and As You Sow for creating this new useful innovative index! The link below provides not only a link to the index but to a great article describing it too.
The Carbon Clean 200, by Andy Behar, Michael Yow and Toby A.A. Heaps, August 15, 2016, Corporate Knights, Canada.

LEED for vertical farms? Defining high-tech sustainable food. "Amid a wave of in-field technology, food data analytics and experimental urban agriculture, the particularly futuristic field of vertical farming is attracting entrants including industrial incumbents such as Fujitsu and upstarts such as AeroFarms, City Farm and Green Sense."

[COMMENTARY] With the amount of farmland shrinking and depletion and erosion of good soil, vertical farming might grow into a huge business. Such farming could be located in urban areas, reducing the need for food transportation over large distances thereby reducing costs while likely improving quality. Definitely an industry to watch for ethical-SR investors.
LEED for vertical farms? Defining high-tech sustainable food, by Lauren Hepler, August 15, 2016, GreenBiz, USA.

SEC Urged to Strengthen ESG Reporting Requirements. "Ceres organizes an investor coalition calling for regulations to strengthen corporate climate reporting, while US SIF and ICCR issue a joint press release urging mandatory sustainability reporting."

[COMMENTARY] It's important that ethical-SRI oriented organizations pressure the SEC to adopt more meaningful ESG disclosure since the SEC is getting huge pressure against expansion of ESG reporting from such entities as the US Chamber of Commerce!
SEC Urged to Strengthen ESG Reporting Requirements, by Robert Kropp, August 12, 2016, Social Funds, USA.

ESG is part of fiduciary duty, says new code of practice from UK Pensions Regulator – Responsible Investor. "'Trustees of UK pension funds should consider environmental, social and governance (ESG) factors when making investment decisions, where such factors are 'financially significant', according to a new code of practice published by The Pensions Regulator, which sets out standards for trustee boards of defined-contribution (DC) scheme."

[COMMENTARY] This is a huge development. Fund fiduciaries around the world will take notice of this. As a result we'll likely see similar regulatory moves in numerous countries. It's about time this happened. The stocks of companies excelling in ESG will continue to benefit from such moves.
ESG is part of fiduciary duty, says new code of practice from UK Pensions Regulator – Responsible Investor, by Laurie Havelock, August 2, 2016, UKSIF, UK.

America's 50 Most Trustworthy Financial Companies. "To develop this list for Forbes, MSCI MSCI +% ESG Research reviews the accounting and governance behaviors of nearly 700 publicly-traded North American financial companies with market caps of $250 million or greater, for the year ending December 2015. In assessing each company, factors including high-risk events, revenue and expense recognition methods, SEC actions, and bankruptcy risk are all considered as indicators of a company’s credibility. Companies on this list also scored above a 5 out of 10 against criteria established by MSCI ESG to track governance considerations."

[COMMENTARY] Most of America's largest financial institutions don't make the list. That's not surprising considering how much most of them have had to pay in fines for unethical financial practices. This is a good list for ethical investors to review who want to invest in financial companies.
America's 50 Most Trustworthy Financial Companies, by Kathryn Dill, August 2, 2016, Forbes, USA.

In Pleas to SEC, Businesses Slam Sustainability Disclosures. "In a letter sent to the agency on July 20, the U.S. Chamber of Commerce's Center for Capital Markets Competitiveness harshly criticized the push for ESG disclosures, arguing that requiring more of this information from companies would exceed the materiality standards for disclosure set by federal securities laws.

'The objective of many calling for new public company ESG disclosures is primarily to obtain some social impact or achieve a political goal,' the chamber wrote. 'These goals, if met, would in many cases contribute to an environment that makes it more difficult for businesses to innovate, compete and grow...'

The former [U.S.] Treasury chiefs said that climate change is a material risk under the Securities and Exchange Act, but that most companies disclose information about this risk 'poorly, if at all.'"

[COMMENTARY] Companies need to be truthful about climate and environmental risks to their businesses and show how they're mitigating them if they are to earn the trust of investors. Otherwise, it'll likely backfire on them as investor interest in their stocks declines together with their stock prices.
In Pleas to SEC, Businesses Slam Sustainability Disclosures, by Rebekah Mintzer, July 25, 2016, Corporate Counsel, USA.

Alternatives managers split on the benefits of ESG, finds Unigestion. "The survey suggests ESG is growing in importance for hedge funds with 53 per cent of managers saying they currently have ‘no interest’ compared with 60 per cent who 12 months ago said they were ‘reluctant’ to consider ESG as part of their strategies. In addition, some 30 per cent of hedge fund managers surveyed are now actively incorporating ESG into their strategies."

[COMMENTARY] Here is more evidence of the mainstreaming of ESG in the financial community.
Alternatives managers split on the benefits of ESG, finds Unigestion, July 25, 2016, Hedgeweek, USA.

Japan pension fund to try socially responsible stock picking. "Japan's Government Pension Investment Fund will make room in its huge portfolio for domestic companies picked for their environmental, social and governance merits, a move that could lend momentum here to this kind of investing... The GPIF ranks as one of the biggest investors in Japanese equities, with a portfolio worth around 30 trillion yen [appr. US$283 billion)."

[COMMENTARY] More great news for ethical investors with continuing large funds entering the ESG investment space.
Japan pension fund to try socially responsible stock picking, July 22, 2016, Nikkei Asian Review, Japan.

2016 Sustainable Stock Exchange report released. "Euronext Amsterdam tops ranking of 45 global exchanges measured on overall sustainability disclosure...

The study, Measuring sustainability Disclosure: Ranking the World’s Stock Exchanges 2016, finds that of 4469 large companies analysed, only 47 per cent disclosed GHGs, arguably the most closely tracked sustainability indicator. Furthermore, over the 2010-2014 period, the number of large companies that disclosed GHGs nudged up just 12 points from 33 per cent to 47 per cent despite a number of high-profile policy initiatives aimed at sustainability disclosure in the last few years."

[COMMENTARY] Congratulations to Aviva Plc and Corporate Knights for producing this report. It's needed to determine the extent of corporate sustainability reporting by the world's stock exchanges and to see who among them stands out.
2016 Sustainable Stock Exchange report released, July 19, 2016,
Aviva Plc and Corporate Knights, UK/Canada.

Foundations Slowly Come Around to Responsible Investing. "A new study released jointly by the Council on Foundations and Commonfund Institute found that a third of U.S. private, public and community foundations have implemented or are actively considering mission-related investing practices in managing their endowed assets... However, impediments to adoption remain. Concern over returns was the single most commonly reported barrier, with 23% of foundations considering it a significant one and 48% a moderate one."

[COMMENTARY] It seems many foundations are still under the impression that they might have to sacrifice returns for mission-related investments. It's clear they need to familiarize themselves with what current research says: that returns from responsible investment portfolios are comparable to or often better than more 'conventional' ones.
Foundations Slowly Come Around to Responsible Investing, by Michael S. Fischer, July 18, 2016, ThinkAdvisor, USA.

ESG Ratings: Four Myths And A Truth. "Recent criticisms of ESG ratings reflect an outdated and inaccurate notion of the ingredients and value of an ESG rating... Today, applying analytical tools and modeling techniques to wider datasets beyond corporate disclosure has significantly improved the rigour, consistency, and relevance of ESG information to the investment process. "

[COMMENTARY] MSCI's Linda-Eling Lee has written a good article on the state of ESG rating systems today. Recommended reading for all investors.
ESG Ratings: Four Myths And A Truth, by
Linda-Eling Lee, July 13, 2016, Benefits and Pensions Monitor, Canada.

The Fastest-Growing Cause for Shareholders Is Sustainability. "In fact, the largest number of shareholder resolutions filed by investors — the method through which activists work — now concern social and environmental issues. This is a recent phenomenon, according to my research; the number of these resolutions has increased dramatically over the past five years. Political spending, climate change, diversity, and human rights are now some of the most frequent resolutions that investors file."

[COMMENTARY] George Serafeim (of Harvard) has written an insightful article about ESG shareholder resolutions. Worth reading by all ethical investors.
The Fastest-Growing Cause for Shareholders Is Sustainability, by
George Serafeim, Jakurski Family Associate Professor of Business Administration at Harvard Business, July 12, 2016, Harvard Business Review, USA.

Does SRI Deliver? "According to a WealthManagement.com survey of 780 advisors across all business channels, while only 35 percent of advisors said they were 'very familiar' with SRI funds, 66 percent said they have offered one to clients, mostly due to client requests. Nearly six in 10 advisors expect it to become a bigger part of their practice in the next five years."

[COMMENTARY] Finally, most advisors are getting the message that they need to be much more understanding of their clients' personal values and utilize that knowledge in assisting them in selecting appropriate SR-ethical securities and funds. Another important article for advisors to read.
Does SRI Deliver? By Diana Britton, July 5, 2016, WealthManagement Magazine, USA.

Unintended Biases in ESG Index Funds. "ESG index strategies can be effective tools for values-based investing, but they may introduce some additional bets that investors may not intend to make."

[COMMENTARY] Morningstar have written a great article examining the biases in the holdings of various ESG index funds. (Incidentally, the same issues are present in ESG ETF funds too.) Investors holding these funds should definitely read this article.
Unintended Biases in ESG Index Funds, by Alex Bryan, July 6, 2016, Morningstar, USA.

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Disclaimer: This website does not make investment recommendations. Nothing in this site should be interpreted as a recommendation or solicitation to buy/sell any securities or investments. Investing for the Soul is a source of general information and resources for spiritual investing, ethical investing, and socially responsible investing (SRI). Investors should consider their actions thoroughly and consult their financial advisers and other professionals, prior to taking any investment action. This website does not necessarily agree with the opinions expressed in articles on its pages or offered on the web pages to which it might be linked. Such opinions are the responsibility of the writers themselves. Furthermore, this site does not offer or provide any warranties, representations, guarantees, implied or otherwise, as to the accuracy, legality, copyright compliance, timeliness or usefulness of the information, materials or services on this, or other sites, to which it is linked. Also, Mr. Ron Robins is not an investment advisor, nor is he licensed with any professional investment related body, and thus is not able to, nor does he make, any investment recommendations.

 

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