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Shareholder Values

"Forty-five percent of U.S. households prefer an environmental, social and governance (ESG) approach to investing… Among those between the ages of 30 and 39, this increases to 64%, and for those younger than 30, it is 67%."
-- Cerulli Associates
    October 2018

"The vast majority of Canadian investors are interested in responsible investments (RI) that incorporate environmental, social and governance (ESG) issues, and they would be more likely to choose responsible investments if their financial advisor suggested suitable RI options for them."
-- Responsible
    Association (RIA)
    June 2017

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


Ethical Investing News/Commentaries: Nov. 2010


Commentaries by Ron Robins

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Ethical Funds Performed Better than Non-Ethical Funds In Downturn Says Study. - [COMMENTARY] "the results indicated that the ethical funds are different from the non ethical funds with regards to the performance and put in evidence that the ethical funds governed the financial crisis triggered by subprime in a better way than the non ethical funds. Consequently we argue that it is important that the interests of the financial community are addressed to the development and promotion of ethically oriented finance and of its instruments." This is one more study indicating that ethical funds performed better than non-ethical funds during the downturn.
The Ethical and Non Ethical Mutual Funds Comparison, by Rosa Adamo, Angela Coscarelli, Domenica Federico and Antonella Notte, American Journal of Economics and Business Administration, Volume 2, Issue 4, USA.

Trucost Finds 40% Lower Carbon Intensity & Outperformance In US SRI Funds. - [COMMENTARY] "The Responsible funds analyzed are on average 40% less carbon intensive than the Traditional funds... all eight Responsible funds in this study outperformed their Median Peer Group [Traditional funds] over a one-year period. Seven of eight outperformed their Median Peer Group over a three-year period, while five of eight outperformed over a five-year period.”

To me, these results are not unexpected, since SRI-ethical funds do not usually contain carbon intensive heavy manufacturing or mining companies. SRI-ethical funds are frequently heavily weighted with technology, financials, health, drugs, etc. Nonetheless, it is great to see such performance.
Carbon footprints, performance and risk of US equity mutual funds, November 29, 2010, Trucost, UK. (Registration required, which is free, to view study.)

Fossil Fuels Gets 12 Times More Subsidies Than Clean Energy Worldwide. - [COMMENTARY] "Energy from fossil fuel gets 12 times more in subsidies worldwide than sustainable energy, says a new report from the USC Marshall School of Business." This is something that I have often criticised: the diabolical public financial subsidies that fossil fuels and nuclear for that matter, receive. My belief is that all these subsidies should be eliminated and then clean energy will be on a more level playing field.
Clean energy gets fewer subsidies, less investment than fossil fuels, report says, by Tiffany Hsu, November 30, 2010, LA Times, USA.

81.5% Of Investors Surveyed Plan To Increase Investments In Climate Change, EDHEC-Risk Institute. - [COMMENTARY] "90% of respondents considered environmental protection an investment theme, and the same percentage planned to do more green investing in the future with climate change being the most popular green theme for 81.5% of respondents. Environmental themes such as water management, anti-pollution measures and improvement of processes were also concerns for many respondents, the survey found." These are the highest interest levels of any survey I have seen to-date.
Green investing still misunderstood, by Jaishree Kalia, November 30, 2010, Global Pensions, UK.

J.P. Morgan & Rockefeller Foundation Report Says Impact Investing Is A Distinct Asset Class. - [COMMENTARY] "Report estimates an investment opportunity between $400 billion and $1 trillion with profit potential between $183 billion and $667 billion over the next decade in five sectors – affordable urban housing, rural access to clean water, maternal health, primary education, and microfinance – serving global populations earning less than $3,000 annually."

According to the reports definition, impact investing are investments, "made in private markets by providing debt or equity to mission-driven businesses." Socially responsible-ethical investing generally refers to investing in public companies with diverse products and services and favours companies that have high or higher environmental, social and governance (ESG) policies.
Impact Investing Emerges as a Distinct Asset Class, press release, November 29, 2010, J.P. Morgan, Rockefeller Foundation, and Global Impact Investing Network, USA.

US Investor Group File Shareholder Resolutions At Accenture, IBM, Pepsi and Pfizer, To Review Policies & Oversight Of Political Expenditures Through Trade Associations. - [COMMENTARY] "The investors said that despite good corporate governance records, the four companies were compliant to political lobbying by the Chamber of Commerce against issues such as healthcare reform and climate change. US SRI investors and the country′s Chamber of Commerce have locked horns over numerous issues in recent years including climate change, engagement, proxy access and say-on-pay." It seems the stated aims of these companies could be at odds with those of the Chamber of Commerce. These companies, and many others for that matter, need to come clean with their politics.
US investors target Accenture, IBM, Pepsi and Pfizer over politics of US Chamber of Commerce, November 29, 2010, Responsible Investor, UK.

New Islamic SR/Ethical Stock Index Planned. - [COMMENTARY] "The Organization of the Islamic Conference based in Jeddah hired Standard & Poor′s to start an index of about 50 of the most-traded stocks in the first quarter of 2011, Huseyin Erkan, the Istanbul Stock Exchange′s chief executive officer and coordinator of the initiative, said on Nov. 8. The index, which will track listed equities that comply with Islam′s ban on alcohol, gaming and tobacco, aims to target exchange-traded funds, he said."

When available, this index could be of great interest to many ethical investors. Assets of Islamic equity funds were $52.3 billion last May, says Ernst & Young.
Muslim-Majority Nations Plan Stock Index to Spur Trade: Islamic Finance, by Haris Anwar, November 25, 2010, Bloomberg, UAE.

Harvard Releases Overview & Manual On Integrated Reporting (Combining Financial & CSR Reports). - [COMMENTARY] Worthwhile reading for anyone in management and, or in, CSR.
The Landscape of Integrated Reporting: Reflections and Next Steps, (PDF) November 2010, Harvard Business School, USA.

Islamic Financial Assets To Reach $1.5 Trillion By 2012. - [COMMENTARY] "The Islamic finance assets base is likely to reach $1.5 trillion by 2012 with bright future growth prospects, according to a senior expert at the Islamic Development Bank." For those not familiar with Islamic finance, it has aspects to it that some ethical investors find appealing. See my article, The Rise of Islamic Finance.
Islamic finance sector to touch $1.5tn by 2012, says Al-Aboodi, by Mahmood Rafique, November 25, 2010, Arab News, Saudi Arabia.

Chinese Company CSR Reports Found Lacking. - [COMMENTARY] "China’s Social Resources Institute (SRI) has criticized the country’s Corporate Social Responsibility (CSR) reports, saying they lack credibility, in a new study released by SRI and Global Sustainable Leaders Forum on Wednesday." I believe that very few people would have expected that Chinese corporate CSR reports would be in the top tier of reporters. However, it does seem that there is a strong initiative there to improve their CSR reports.
Study: China’s CSR reports need improvement, by Pang Qi, November 25, 2010, Global Times, China.

Malaysia’s Stock Exchange To Launch SRI Index. - [COMMENTARY] "Bursa Malaysia [Malaysia’s stock exchange] is working towards establishing an environmental, social and governance (ESG) index to influence public-listed companies to adopt sustainability practices in their business operations. The proposed ESG index is also expected to attract socially responsible investment (SRI) funds into the country."

Incidentally, Malaysia is also a world leader in Islamic finance. SR/ethical investing has huge support there, right up to, and including, their prime minister.
New index proposed, Azatun Shari, November 24, 2010, thestar online, Malaysia.

2010 Moskowitz Prize Winner Shows Companies With Environmental Concerns Pay More For Debt. - [COMMENTARY] "An academic paper that shows that environmental concerns such as litigation and regulation mean that exposed companies are paying up to 64 basis points (0.64%) more for their debt, has won the 2010 Moskowitz Prize, the only global award recognizing outstanding quantitative research in the field of socially responsible investing (SRI). The paper by Rob Bauer, the former head of research at ABP, the Dutch pension fund, and Daniel Hann, a PhD student, both of Maastricht University′s European Centre for Corporate Engagement (ECCE), studied the environmental profile and debt costs of 582 US public corporations between 1995 and 2006."

This is a significant paper. It informs companies to be proactive in regard to environmental concerns--or pay much higher rates for their debt! Congratulations to Rob Bauer.
Former ABP research head wins Moskowitz Prize with paper showing bond costs of enviro concerns, by Hugh Wheelan, November 23, 2010, Responsible Investor, UK. Also, see study information at: Corporate Environmental Management and Credit Risk, by Rob Bauer and Daniel Hann, Maastricht University, June 30, 2010, Netherlands.

Socially Responsible/Ethical Investors Favouring Bonds. - [COMMENTARY] "A surge of interest in fixed income within the SRI space has divided industry experts. While latest figures show investors increasingly looking to bonds for SRI portfolios, some specialists play down the significance of this move." It seems that ethical investors are little different to conventional investors in this regard. As most people know, they have also been favouring bonds.
Could fixed income be the future of SRI investing? By Atholl Simpson, November 23, 2010, CityWire, UK.

New: Dow Jones Sustainability World Enlarged Index Launches Next Week. - [COMMENTARY] ".. a new Dow Jones Sustainability World Enlarged Index, in partnership with sustainability investment boutique SAM, in response to increasing investor demand for a broader sustainability benchmark. The new index, which will be officially launched next week, will track the performance of the top most sustainable 20 per cent of the largest 2,500 companies in the Dow Jones Global Total Stock Market Index." Sustainability indices keep growing.
Dow Jones creates new broader sustainability index, November 22, 2010, Newnet, UK.

Gold Company, IAMGOLD Corp., Wins CSR Award. - [COMMENTARY] "IAMGOLD was recognized for having established over 28 community and NGO partnerships companywide, in Suriname, Botswana, Burkina Faso, Ecuador, Canada and French Guiana... The Conference is convened to celebrate and showcase excellence in the area of Social, Economic and Environmental sustainability. The driving force behind the Conference is Algonquin College with strong support from four Ontario academic institutions: Carleton University, La Cite Collegiale, the University of Ottawa and the University of Waterloo as well as Red River College in Manitoba."

Considering the universities and colleges backing this award, it is significant that a gold mining company won it. Barrick Gold Corp., the world’s largest gold producer, also, in recent days, appears to be getting very proactive in its CSR activities too. Perhaps the extractive industries are starting to get the CSR message?
IAMGOLD Recognized for Its Corporate Social Responsibility, press release, November 17, 2010, EarthTimes, UK.

Global Cleantech Investment At $1.6 Billion In 3Q10, Down 25% From 2Q10. - [COMMENTARY] "While the $1.6 billion in cleantech venture investment in 3Q10 was down 25% from last quarter, it brings the investment through the first three quarters of 2010 to $5.8 billion - a number that already exceeds the total cleantech venture investment in all of 2009." Apparently, solar investments account for about half of the total.
Q3 Investment Monitor Report Released, November 19, 2010, Cleantech, USA/UK.

Tatas, Reliance, Infosys & ITC Top BT Sustainable Development Index (India). - [COMMENTARY] "Developed in partnership with global public opinion company GlobeScan, the BT SD Index findings are based on a survey of 253 senior, academic, corporate, government, media and NGO leaders from all over India and measure perception about business performance on sustainable development indicators and not actual performance." Ethical investors in emerging markets might like to review the BT Sustainable Development (SD) Index. It assesses the business performance in India companies in 2009-10.
Tatas, Reliance, Infosys and ITC top BT Sustainable Development Index, November 20, 2010, The Financial Express, India.

Investors Representing $15 Trillion In Assets Call For US Action On Climate Change. - [COMMENTARY] "Citing potential climate-related GDP losses of up to 20 percent by 2050 and the economic benefits of shifting to low-carbon and resource-efficient economies, investors released a major statement today calling for national and international policies that will spur private investment into low-carbon technologies. The statement was signed by 259 investors from North America, Europe, Asia, Australia, Latin America and Africa with collective assets totaling more than $15 trillion." This is clearly a message aimed at convincing the newly elected Republicans that big US and global firms support more action on climate change.
Investors Representing More Than $15 Trillion Call for U.S., International Action on Climate Change, press release, Ceres, November 16, 2010, USA.

Australian/New Zealand Demand For Responsible Investment Products Doubles In One Year. - [COMMENTARY] "In a time when many are still reeling from the effects of the global financial crisis, the consumer demand for responsible investment products has almost doubled with ethical advisor portfolios growing an extraordinary 50% from AU $972 million to AU $1.46 billion after a decrease of 21% in the 2009." Despite its critics, responsible-ethical investing is growing around the planet.
Australia & New Zealand 2010 Responsible Investment Benchmark Report, Responsible Investment Association Australasia (RIAA), November 15, 2010, Australia.

New Study Says That SRI Performs Best In Less Volatile Markets. - [COMMENTARY] "We find a positive relationship between the idiosyncratic risk (i.e. unsystematic risk) and return during low and medium volatility states. However, this positive relationship tends to disappear during high volatility states. In addition, our analysis suggests that idiosyncratic risk has no forecasting power over SRI future returns. Overall, our findings imply that SRI investors are rewarded for bearing the additional SRI specific risk (idiosyncratic risk) when the market is less volatile. This reward, however, becomes uncertain during periods of high market volatility."

This is an interesting piece of research from a new perspective--that of how SRI performs in markets of differing volatility.
Yes, Indeed, Idiosyncratic Risk Matters to Socially Responsible Investments! By Huimin Li, Adrian (Wai-kong) Cheung, and Eduardo Roca, November 6, 2010, Griffith University, Australia.

Carbon Disclosure Project Releases Results Of Questionnaire On Water Use At 137 Companies. - [COMMENTARY] "The CDP, which is backed by 137 institutional investors representing $16trn (€11.7bn) of assets, sent out its inaugural water questionnaire to 302 of the world′s 500 largest companies in the FTSE Global Equity Index Series."

’Water is the new oil’ is a common phrase these days. Its scarcity in coming years is going to lead to enormous changes for societies--and for innumerable companies. This is a first rate report on the subject.
“Water the new carbon” as CDP′s Water Disclosure Project releases first results, by Daniel Brooksbank, November 11, 2010, Responsible Investor, UK. See the actual report.

TBLI Conference Names Sustainalytics As Best ESG Research House. - [COMMENTARY] "Sustainalytics, also known as Jantzi-Sustainalytics in North America because of its connection to Canadian SRI pioneer Michael Jantzi, was named Best ESG Research House at the TBLI Conference Europe 2010 in London this week." Congratulations to Sustainalytics and especially to Michal Jantzi and friends at Jantzi-Sustainalytics.
Sustainalytics named Best ESG Research House, by Doug Watt, November 12, 2010, SRI Monitor, Canada.

8% Of UK Savers Have Green & Ethical Investments; 37% More Want To Do So Soon. - [COMMENTARY] "Penny Shepherd MBE, UKSIF Chief Executive, said: ’Recent environmental and economic crises have made people think more carefully about the long term impacts of their financial decisions. After a decade that almost ended in global financial meltdown, attitudes are changing from greed is good to green is good – less Gekko more Eco. The 2010s are well set to become the decade of financial responsibility, as more people consider how they can make a difference with their money.’"

The UKSIF just ended a very successful promotional week in the UK for ethical investing. Well done to all involved. The US, Canada and other countries should promote such a week too!
From greed is good to green is good: 2010s set to become decades of financial responsibility, press release, November 10, 2010, UKSIF, UK.

US SRI Assets Top $3 Trillion, Almost 1 In Every 8 Dollars Under Management. - [COMMENTARY] "SRI Assets Up 13 Percent in Current Economic Downturn, While Overall Assets Increased Less Than 1 Percent... sustainable and socially responsible investing (SRI) in the United States is continuing to grow at a faster pace than the total universe of investment assets under professional management, according to the new 2010 edition of the Social Investment Forum Foundation′s Report on Socially Responsible Investing Trends in the United States."

This is exciting news. The data that I particularly like to compare from period to period are that of retail SRI mutual funds, as to me they best indicate how the average investor invests in relation to ethical/socially responsible investing.

In 2007, there were $171.7 billion in total net retail SRI fund assets in 173 different funds, which rose in 2010 to $316.1 billion in total assets in 250 different funds. In 2007 SRI retail funds represented just under 2% of total US retail fund assets. It appears that they are now probably over 3%. This is really good news.
Report: Socially Responsible Investing Assets in US Top $3 Trillion; Nearly 1 Out of Every 8 Dollars Under Professional Management, press release, November 9, 2010, Social Investment Form, USA.

73% Of UK Public Want British Banks To Have Ethical Lending Policies. - [COMMENTARY] "73% of the British public think that banks should have ethical lending policies in place to prevent them from investing in, or lending to, companies involved in controversial areas such as arms manufacturing, or companies with poor records on the environment and human rights, according to new research released today." The interest in ethical finance and investing appears to be an unstoppable trend, not only in the UK, but around the world. However, this contrasts, I believe quite sharply, with the lack of teeth in new financial regulations that have appeared in the US, EU, or in Basel 3, etc.
Public want banks to lend ethically, survey finds, press release, November 8, 2010, EIRIS, UK.

UK Ethical Investing Shows Biggest Annual Increase In Past Decade. - [COMMENTARY] "The amount of money saved or invested ethically by consumers has shown its biggest annual increase in a decade according to a new report released today (6 November) by Co-operative Financial Services (CFS). Total money invested ethically rose 34 per cent to £19.2bn, from £14.3bn in the previous 12 months. In comparison, total deposits and investments grew 15 per cent over the same period." Again the UK shows itself as a leader in ethical investing.
Ethical savings and investments up a third, press release, November 8, 2010, Co-operative Financial Services, UK.

CSR Budgets To Continue & Expand At Large Companies. - [COMMENTARY] "The survey, conducted by GlobeScan on behalf of BSR, shows that 84 percent of the respondents, which include nearly 400 respondents from the majority of 250 global BSR member companies are optimistic about the ongoing expansion of CSR efforts among the business world... Addressing climate change remains a top priority among survey respondents, with 63 percent saying it was a high priority. Workers’ rights and human rights were the next two priorities, and 62 and 59 percent, respectively." Such reports and surveys continue to point to businesses enhancing their CSR activities. That is good for the companies, for ethical investors and for the world, generally.
Corporate Commitment to Sustainability Strong Despite Economy, November 3, 2010, GreenBiz, USA.

Most Chinese Companies Uninvolved In CSR. - [COMMENTARY] "More than 70 percent of China’s top corporations do not engage in corporate social responsibility, according to a recent report by the Chinese Academy of Social Sciences (CAS)... There were 300 companies that participated in the evaluation, and only China Ocean Shipping Group Company (COSCO) scored 80 points, putting it into the ’excellent’ category." I suppose this is not unexpected. However, I suspect that the Chinese do want to do better in regard to CSR given the recent bad publicity of worker suicides at some of their factories.
70% of China’s top companies shirk corporate responsibility, By Zhang Qian, November 5, 2010, People’s Daily Online, China.

Correlation Of Global/Australian SRI Funds Studied. - [COMMENTARY] "Clearly, it still pays for Australian investors to diversify internationally since the correlations are still less than 1. However, it pays less to diversify to such markets as Japan, Norway and Denmark while diversification benefits can be obtained from the other markets. Importantly, our results suggested that diversification to other SRI markets is less effective during periods of market distress."

Though this study is written from an Australian perspective, there are useful insights for ethical investors in how different SRI funds perform/correlated in different global markets.
Investigation of Socially Responsible Investment Markets (SRI) Using Dynamic Conditional Correlation (DCC) Method: Implications for Diversification, by Gurudeo AnandTularam, Eduardo Roca and Victor S. H. Wong, November 4, 2010, Journal of Mathematics and Statistics, USA.

New US SEC Proxy Vote Rule Not For 2011. CalSTERS Threatens Legal Action. - [COMMENTARY] "The US Securities & Exchange Commission has said it does not expect proxy access (the ability to nominate company directors for a shareholder vote) to be available to investors for the 2011 AGM season, following a legal challenge from the US Chamber of Commerce and Business Roundtable. The legal action taken at the end of September by the Chamber of Commerce has prompted California State Teachers′ Retirement System (CalSTRS), the $131.8bn scheme – the second largest in the US – to threaten its own legal riposte against what it called a ’roll back’ on shareholder rights... "

Continuing, "In August, the SEC approved rules to give shareholders who own 3% of a company′s stock for at least three years the right to have their board nominee included in companies′ proxy materials."

It seems to me that the Chamber of Commerce fears too many corporate boards and board members will be threatened with the new SEC ruling. After all, shareholders may actually want to replace some board members and boards! The new SEC ruling allows the opportunity to get more corporate boards truly focused on environmental, social and governance (ESG) matters. I hope that the pressure from CalSTERS and others moves the SEC to implement the rule soon!
SEC says proxy vote rule won′t make 2011 AGM season, CalSTRS threatens legal action, by Hugh Wheelan, November 5, 2010, Responsible Investor, UK.

Quant Funds Adopting ESG/SRI Criteria. - [COMMENTARY] "New funds are springing up that blend quantitative investing, using financial data and computer models, with socially responsible investing, a method of picking stocks based on a company’s environmental, social and governance practices, known as ESG." The results of these new funds will be fascinating to watch. If successful, they could become a new branch of the SRI/ESG/ethical fund universe.
Quants and Do-Gooders Unite, by Carolyn Cui, November 2, 2010, Wall Street Journal, USA.

Dow Jones Islamic Market Indexes Named Best Islamic Indexes In Islamic Finance News (IFN) Poll, 4th Year Running. - [COMMENTARY] "The Best Service Providers award poll is conducted annually by the Malaysia-based weekly e-newsletter Islamic Finance News. For this 2010 edition, more than 1,900 votes from Islamic finance institutions, issuers, investors and government bodies from around the world determined the leaders in 13 categories." Congratulations to Dow Jones Indexes in this emerging ethically investing related sector.
Dow Jones Indexes Named Best Islamic Index Provider In IFN Award Poll, press release, November 1, 2010, TheStreet.com, 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 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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