E-newsletter of Investing for the Soul September 29, 2011
Top ethical investing news for September 2011
Links may only be valid a limited time Commentaries by Ron Robins
Twitter allows me to cover more--and breaking news--to help you do better!
Sustainable Companies Are More Profitable According To CDP.
- [COMMENTARY] "Consider
this: Global 500 companies that have demonstrated leadership in carbon
disclosure or performance yielded twice the average return as the index
as a whole between January 2005 and May 2011. ’It suggests a strong
correlation between higher financial returns and good carbon disclosure
and good carbon performance,’ said Paul Simpson, chief executive officer
of the Carbon Disclosure Project (CDP)." The information that
reduction of carbon use might help corporate profits continues to mount.
It is also good news for ethical investors.
Almost 30% Of US DC Pension Plans Could Offer SRI Options Within 3
Years. - [COMMENTARY]
"As many as 29% of defined contribution plans could offer
socially responsible investment options in the next two to three years,
based on the results of a survey of DC plans by Mercer and the U.S. SIF
Foundation. Of the 421 plan executives who responded to the survey, 14%
offer at least one SRI option and 15% of those that don’t are
considering or planning to add one to their investment lineup..."
This is good news for those with US DC pension plans.
Sino Forest, Auditors & Investment Firms, Sued By Two Of Canada’s
Largest Ethical Fund Managers. -
[COMMENTARY] "Two big institutions are taking aim at
Bay Street′s largest firms with a $5.8-billion proposed class action
lawsuit that alleges Sino-Forest Corp. and several of its key advisors
profited from misrepresentations about the company′s financial
condition. Northwest & Ethical Investment LP, which manages Ethical
Funds, and Comité Syndical National de Retraite Bâtirente Inc., a
Quebec-based labour-sponsored retirement plan, are suing Sino-Forest,
its auditors and investment bankers on behalf of investors who purchased
the company′s securities between Aug. 17, 2004 and June 2, 2011."
This is a big deal in Canada. Ethics in financial dealings do matter!
New Canadian Blog Puts A Positive Spin On The Social-Economic Benefits Of Mining Industry. - [COMMENTARY] "Today, this economically important sector is under constant attack by a well-funded and ’web savvy’ environmental movement – which seems to dominate the Internet with their ’green’ propaganda. Partly because of this, the mining sector′s social license to operate is being questioned in many jurisdictions around the world. Republic of Mining will provide a much-needed industry perspective to a global audience that may have difficulty finding information on the many social and economic benefits, technical advances, environmental successes and current challenges of this complex sector."
Those are fighting words! Nonetheless, this blog could be a useful site
for ethical investors interested in the mining industry, though of
course, it is written by someone who undoubtedly favours the industry.
But many SR-ethical funds and indexes do now have mining companies in
Is An ’Efficient’ SRI Index Superior? - [COMMENTARY] "Typical SRI indices respect such screenings and then simply weight the acceptable stocks by market cap, or alternatively by sustainability scores. They thus ignore the risk/return properties of stocks and in particular the correlations. Consequently, they do not necessarily reflect the performance available from a well-diversified portfolio of SRI-compliant stocks."
Continuing, "Efficient SRI indices on the other hand, apply an
optimal weighting scheme to the screened universe. They thus constitute
a relevant proxy for the performance that is achievable through a sole
focus on improving diversification within an SRI universe. In that
sense they constitute a useful yardstick for active SRI funds from which
investors would at least expect improved diversification, if not
additional value added through stock picking." This appears to be an
interesting concept. I’d be curios to know what SR-ethical fund managers
think of this.
US Consumers Demanding Higher CSR Standards Of Companies Even In Weak Economy. - [COMMENTARY] "These findings are reported in a Future Perspectives white paper entitled, ’Risk & Responsibility: Marketing CSR in a Time of Economic Turmoil.’ The results show that economic hardship dramatically increases risk aversion, and risk averse consumers are 50 percent more likely to agree that companies have a duty to be socially responsible and support the communities in which they operate."
This is interesting research and adds further support
as to why companies need to lead in CSR and why investors should favour
such companies--especially since research suggests they are likely to
have superior financial performance relative to their peers.
Two-Thirds Of UK Public Say Charities Should Invest Ethically.
- [COMMENTARY] "Two-thirds of
the public believe it is ’important’ or ’very important’ that charities
invest ethically, according to research from the social lender Charity
Bank. The bank polled 2,087 randomly selected adults in August this
year." See my thoughts on this subject at
Unethical Investing By Charities.
By Shunning US Megabanks, US Ethical Fund Shows Good Returns. - [COMMENTARY] "Last summer, the ’socially responsible’ Appleseed fund began barring the stocks of too-big-to-fail banks, on ethical grounds. For shareholders, it’s been a blessing... The Appleseed Fund is up 1.7% so far this year -- while the Standard & Poor’s 500 Index ($INX +0.57%) is down nearly 5.4%. The fund has had a terrific record since launching in late 2006: It’s up 40%, while the S&P is barely level, even including dividends. And that’s even though Appleseed can’t invest in those wonderfully profitable and defensive ’sin’ stocks, like distillers and cigarette makers."
Congratulations to Adam and Joshua Straus, the managers of Appleseed. I
have believed for years that most ethical investors and funds investing
in megabanks with unfathomable derivative positions; balance sheets with
assets not reflecting true (lower) market values; and vastly overrated
capital adequacy ratios--are asking for trouble. Note their now plunging
Replacing Coal With Natural Gas Won’t Slow Climate Change, Says Study. - [COMMENTARY] "The use of natural gas rather than coal to meet the world’s energy needs might reduce emissions but would have little effect on climate change, new research has found. The study, to be published in Climate Change Letters in October, highlights the complicated way in which burning fossil fuels affects the environment."
Since it is generally thought that natural gas is
better than coal for managing climate change, this study might promote
considerable controversy. Ethical investors and environmentalists
particularly, might want to take note of this study.
GMI Launches New ESG Research Platform.
- [COMMENTARY] "GMI Analyst brings
together the content and tools of the Corporate Library,
GovernanceMetrics International and Audit Integrity, which merged at the
end of last year. The new platform, which covers 20,000
companies globally, focuses on two separate ratings: an ESG rating,
which measures long-term corporate sustainability, and a risk rating,
which identifies companies that, in the short term, may face risks such
as litigation or regulatory action." The growing availability of
increasingly sophisticated ESG analytical tools can only help ESG
analysis become more popular and hence improve stockholder returns for
investors in companies who demonstrate superior ESG performance.
CA Cheuvreux, Bank of America Securities - Merrill Lynch & HSBC, Are
The 2011 Leading SRI & Sustainability Brokerage Firms, Says Survey.
- [COMMENTARY] "Thomson
Reuters and UKSIF, the sustainable investment and finance association,
announced the results of the ninth annual Thomson Reuters Extel/UKSIF
Socially Responsible Investing & Sustainability Survey at an event held
at the Thomson Reuters Building in Canary Wharf, London. The 2011 Survey
represents the views of over 400 investment professionals from 23
countries, making it the most extensive assessment of socially
responsible investing (SRI) in the European investment community."
Each year after this announcement I lament that we in North America do
not have such a survey.
SRI-Ethical Fund Investors Primarily Want Profits, Suggests Study. - [COMMENTARY] "The results of the study show that perceived financial quality of the SRI mutual fund is the most important predictor of customer satisfaction. However, perceived social, ethical, and environmental (SEE) quality is also positively related to satisfaction for the SRI mutual fund."
I sense that the motivation of many first time sustainable investment
investors is primarily financial, whereas for the ’older’ SRI-ethical
investor their deeply rooted personal values were equally valued.
Pertinently, this study says that the factors associated with customer
satisfaction might change over time and so need regular monitoring.
Interesting Changes In Dow Jones Sustainability Indexes: HP, Microsoft & Coca Cola Out; Kinross Gold & Newcrest Mining Ltd., In. - [COMMENTARY] Are mining companies improving their sustainability efforts? Dow Jones Sustainability Indexes-SAM.
US Food Retailers See Mostly Gains In Organic & Local Foods. - [COMMENTARY] "Food retailers see opportunity in organic food. In 2010, the organic industry overall grew by about 8 percent to $28 billion. That drove 66.2 percent of retailers to add natural and organic items to their shelves. Almost 65 percent said sales of those items increased in the prior 12 months, according to the report. Most of that growth was in the West and Northeast, which saw organic sales growth of 80 percent and 72.2 percent, respectively. In the Midwest, 19 percent of retailers reported organic sales declines.”
Continuing, "Locally sourced food, on the other hand, is popular with
consumers across the board. More than 90 percent of consumers buy local
food at least ’occasionally,’ 9 percent do so ’whenever possible’ and 9
percent ’never’ do, according to FMI’s consumer-focused report, ’U.S.
Grocery Shopper Trends 2011.’" Given the economic environment, this
data bodes well for firms catering to these trends.
UK Ethical Investment Association Presents Awards For Best Practices.
- [COMMENTARY] "The Ethical
Investment Association (EIA) has presented transparency awards to
Ecclesiastical Investment Management, Henderson Global Investors,
Jupiter Asset Management and Rathbone Unit Trust Management."
Congratulations to the award winners.
Insurers Unprepared For Climate Risk.
- [COMMENTARY] "The vast majority of
insurers are unprepared to handle climate risks even though they
acknowledge the impact of climate change on extreme weather events,
according to a report by investor coalition Ceres...
Solar Power Soon To be Grid Competitive In Parts Of Europe.
- [COMMENTARY] "Solar
photovoltaic (PV) power generation will be grid competitive in parts of
Europe as early as 2013, and across key European markets by the end of
the decade, according to an industry association report – making the
technology more attractive to investors." Great news, and to be
expected as carbon energy sources grow more costly while renewable
energy scales up becoming ever less costly.
$2.4 Tn Invested In Green Companies & Technology Between 2007 & 2011, Says GreenTransitionScorboard. - [COMMENTARY] "The Green Transition Scoreboard® (GTS) is a time-based, global tracking of [the] private financial system for sectors investing in green markets. Ethical Markets Media began reporting on the GTS in 2009, tracking private investments and firm commitments in the Green Economy since 2007. This update of the GTS finds that over $2.4 trillion has been invested in the green economy, up from the $2 trillion reported in February 2011."
This data is impressive, especially when
considering the financial duress of recent years! Well done Hazel
Henderson, President of Ethical Markets Media and creator of the GTS.
UK Government’s £3bn Green Investment Bank Advisory Group Includes
Lord Stern & Penny Shepherd (UKSIF).
- [COMMENTARY] "Lord Stern of
Brentford, author of the landmark Stern Review on the economics of
climate change, chairman of the influential Grantham Research Institute
on Climate Change, and holder of previous posts at the World Bank and
the European Bank for Reconstruction and Development, is probably the
most high-profile member of the group, which will hold its first meeting
on 6 September." Penny Shepherd is the Chief Executive of the UK
Sustainable Investment and Finance Association. It is great to see her
on the board.
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Disclaimer: Neither The Soul Investor nor Ron Robins make investment recommendations. Nothing in this newsletter should be interpreted as a recommendation or solicitation to buy/sell any securities or investments. The Soul Investor 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 professional advisers prior to taking any investment action. The Soul Investor does not necessarily agree with the opinions expressed in articles in its newsletter or offered on the web pages to which it might be linked. Such opinions are the responsibility of the writers themselves. Furthermore, The Soul Investor 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 in this e-newsletter, or other sites, to which it might be 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.
The Soul Investor is a publication of Investing for the Soul, a registered business name in Ontario, Canada. Copyright © 2011 Ron Robins. All rights reserved.