Ethical Investing News/Commentaries
Commentaries by Ron
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’Saints’ & ’Sinners’ Investing. Sinners Win?
"Money Observer′s latest analysis of the performance
of the Saints and Sinners of the FTSE 100 index
reveals that, once again, it′s the bad guys that
have romped home. Over the past year, the Saints –
or the FTSE 100 members that are also included in
the FTSE4Good index of corporate social
responsibility – turned £100 into £93.35 in terms of
share price returns (excluding dividends). However
Money Observer′s Sindex – which is made up of FTSE
100 members that don′t qualify for the FTSE4Good (30
companies in total) – still lost money but the £100
became £98.12, 5 per cent better than the Saints."
This article describes
what’s in each index. One significant reason the
Saints index falls down is because of its heavy
weighting in banks... "The Saints, on the other
hand, have been severely handicapped by the banks
and insurance companies. Royal Bank of Scotland and
Lloyds Banking Group have lagged the Footsie by 96
per cent, Barclays by more than 60 per cent and HSBC
by around 30 per cent."
In reading this article I believe the Saints
index should be reconstructed according to ESG
criteria. The results might well turn around their
findings and the Saints index might win handsomely.
The profits of sin, by Heather Connon, May 30,
2012, MoneyObserver, UK.
CSR Really Important Say Corporate Executives.
"Nearly 200 senior-level corporate real estate and
workplace executives at Fortune 1000 companies
worldwide participated in the Industry Leaders
Opinion Poll. Four out of five respondents
categorize corporate social responsibility as urgent
to extremely urgent. Many of the respondents have
direct day-to-day impact in the area and often help
inform the so-called ’Triple Bottom Line’ along
which many publicly traded companies report
performance results today."
Yes, company executives at the world’s largest
companies now realize that for optimal financial
results, quality CSR practices pay well.
Fortune 1000 Leaders Reveal Key Issues to CoreNet
Global, May 31, 2012, CityBiz, USA.
Ethical Investing Does Better In The UK &
Europe Than In the USA, Says Study.
"Thus in the US & Global context a passive ethical
index investor has to pay a price for being ethical.
In the UK & EU context, they pay no such price."
This study is unusual in its design and seems
controversial in its findings. Unfortunately, except
for a few people, it’s not available before April 14,
of ethical equity investing in the UK: active,
passive and criteria, Ph.D thesis by
Nitin Deshmukh, Middlesex
New Report Says That Religious Institutions
Can Influence Corporate Policies With Their Share
"Religious institutions can influence corporate
behaviour by being active in the ownership of their
shares, according to new research carried out by the
International Interfaith Investment Group 3iG, along
with ESADE Business School in Spain and Vlerick
Leuven Gent Management School in Belgium...
Religious institutions are widely considered to be
the pioneers of responsible investment, and make up
the third largest demographic of investors
If religious institutions became proactive with
their stock ownership the world would become a
better place and ethical investments would benefit
Believers in the Boardroom, press release, May
30, 2012, Vlerick Leuven Gent Management
School, ESADE Business School in Spain, and the
Investment Group 3iG, Spain.
Major SRI Organizations Supporting Natural
Capital Declaration In Advance Of Rio+20.
"With three weeks to go before its launch at Rio+20,
the Natural Capital Declaration is now being
supported by Eurosif (the European Sustainable
Investment Forum) and SIF Japan (Social Investment
Forum Japan). The Natural Capital Declaration is a
commitment by financial institutions to work towards
developing a methodology to integrate natural
capital considerations into financial products and
Continuing, "It has 24 endorsers so far, in
Australia, Brazil, China, Ecuador, Italy, Mexico,
the Netherlands, New Zealand, Paraguay, the British
Isles and the US. Although the NCD can only be
signed by the CEOs of financial institutions,
Eurosif and SIF Japan join a growing number of other
organisations that are also expressing their support
for the NCD, including US SIF and UKSIF."
Natural capital considerations--for instance,
natural resources depletion and amortization
costs--aren’t generally factored into product costs.
Thus, we have the situation today where the earth’s
natural resources are mostly used-up without cost.
Water use is a prime example in the developed world
where water is comparatively free for
companies to use. And who pays for the pollution of the
air? Somehow these costs have to be factored into
The real question is how these costs can be
factored into the costs of goods and services. Many
argue for all encompassing public management of
resources, others--libertarians for instance--that
if all ground resources were privately owned, then
private owners wouldn’t allow their resources to be
given freely and therefore such resources would be
better managed. We all know that these questions must
be dealt with if humanity is to survive.
Furthermore, we know that ethical investors will be
in the forefront of many of the solutions that will be
Eurosif and SIF Japan express support for Natural
Capital Declaration, press release, May 28,
2012, Natural Capital Declaration, UNEP,
European CEOs Take Aim At Shareholder Advisory
"European CEOs are so angered by the rise of
opposition to gold-plated executive payouts that
they have taken the unusual step of pushing for more
red tape, calling for regulation of the advisory
groups who advise fund managers on how to vote on
issues such as executive pay." This is not
a surprising tactic when many individuals in
senior management believe they have the God given
right to exemplary compensation packages.
European CEOs push back against investor activism,
by Tom Bergin, May 25, 2012, Reuters, UK.
Businesses Say Sustainability Vital To Long
Term Growth, But Many Say It Pressures Margins &
Profits Short Term.
"The vast majority of businesses say that
sustainability is vital to their future growth, but
almost half say that margins are currently lower on
sustainable products and services, according to new
research by Accenture. The survey of 250 senior
executives in eight leading mature and emerging
economies reveals that 44 percent think
sustainability is critical to their business and 78
percent say it is vital to their future growth."
There are interesting insights for ethical
investors in this survey. One that stands-out for me
is that though companies realize consumers are
reluctant to pay more for green products and
services--companies usually charge more for them
Businesses Say Sustainability is Vital to Long Term
Growth, but Can Weaken Margins and Increase Short
Term Costs, Accenture Study Finds, press
release, May 22, 2012, Accenture, UK.
70% Of Global CEOs Would Take Action On Global
"Seven out of ten CEOs in a global PwC business poll
say they would take more ambitious action on issues
related to the Millennium Development Goals
including issues of energy, water and sustainable
development if progress is made at Rio+20." Note
the ’if’ here. What business wants is a global level
playing field and certainty of enforcement. Then
they’ll have the confidence to take the measures
they need and seek, knowing that competitors cannot
take environmental and social shortcuts to undercut
Seven in 10 CEOs Would Take Action on Global
Sustainability Challenges, by Michelle Remo, May
24, 2012, InAudit, Switzerland.
New STOXX ESG Indices.
"The new blue-chip indices complement the existing
STOXX Global ESG Leaders Index family. STOXX has
also become a signatory to the United Nations
Principles for Responsible Investment (PRI) as a
professional service partner. The PRI is a global
initiative which supports the integration of
environmental, social and governance (ESG) issues
into investment decision-making and ownership
practices." The growth in the number of ESG
related stock indices is indicative of growing
awareness that companies embracing ESG--and their
related stocks--perform better.
STOXX launches ESG leaders blue-chip indices,
May 24, 2012, The Asset, UK.
US Stockholders Filing Over 30% More Political
& Lobbying Disclosure Proxies in 2012 over 2011.
"The transparency push, playing out at shareholders
meetings from coast to coast this spring, has
received cheers from campaign finance reformers and
some corporate governance experts. It has drawn
ridicule from critics such as the U.S. Chamber of
Commerce, who see the effort as an attempt by
liberal groups to squelch the voice of the business
I find it difficult to believe how anyone could
be opposed to such a fundamental right as
shareholders knowing where the funds of the
companies they invest in are being spent! Yes, it’s
about time for complete transparency on this issue.
More shareholders call on companies to disclose
their political spending, by Tom Hamburger and
Brady Dennis, May 21, 2012, Washington Post, USA.
Canadian SR-Ethical Funds Outperform
"One of the continuing perceptions held by many
advisors is that socially responsible investment
funds underperform the market. These advisors
believe that, by screening out certain companies or
industries, investment opportunities are
reduced and therefore risk is increased. The result
– lower returns than funds invested in a
conventional way... The Social Investment
Organization recently did an in-depth analysis of
returns for socially responsible investment (SRI)
funds in Canada across major asset classes. Using
the most recent performance numbers provided by
Fundata 1 (to March 31, 2012) a portrait is emerging
of a strongly performing industry with outperforming
funds in every major fund category."
Over the long term I’m convinced that such
outperformance will become even more pronounced, not
only in Canada but for SR-ethical funds globally.
Socially Responsible Investment Funds Perform
Strongly, by Doug Watt, May 18, 2012, SRI
$1 Trillion SRI Coalition Tell Shale Energy
Companies To Clean Up Their Act.
"The coalition, led by Boston Common Asset
Management, the Investor Environmental Health
Network and the Interfaith Center on Corporate
Responsibility, includes companies such as Dexia
Asset Management, Domini Social Investments and Pax
World Funds. In a statement released Wednesday, the
socially responsible investing (SRI) asset managers
said they wanted energy companies to adopt 12 best
practices regarding risk management and reporting
that members of the coalition drew up last
US shale energy extraction is becoming a huge
issue, both for its promise of dramatically reducing
energy imports, but also for its potential to cause
serious environmental and health problems. Somehow
the ’excitement’ has to turn from carbon-based
energy to renewable energy!
SRI Investor Coalition Tells Shale Energy Companies
to Clean Up Their Act, by Gil Weinreich, May 17,
2012, Advisor One, USA.
New Type Of Sustainable Global ETF Launched.
"This is brilliant. AdvisorShares is launching next
week a new exchange-traded fund that will support
sustainability themes globally. A portion of the
assets will support a charitable foundation
co-founded by Philippe Cousteau, grandson of the
famous explorer Jacques." This is an interesting
new concept for ethical investors. It will be well
A global ETF to support sustainable development,
by Thomas Kostigen, May 18, 2012, MarketWatch, USA.
Calls To End Corporate Secrecy In US Shell
"A group of 41 businesses and nonprofits sent a
letter to every member of Congress pressing them to
pass legislation that would reveal the beneficial
owners of shell companies. ’Investigations continue
to reveal that American and foreign terrorists,
narco-traffickers, arms dealers, corrupt foreign
officials, tax evaders, individuals targeted for
financial sanctions and other criminals easily and
regularly set up U.S. shell companies, without
providing any information about who owns or controls
such companies,’ the letter says." What is being
called for here I believe sounds more than
Nonprofits, Businesses Call For End To Corporate
Secrecy, by Samuel Rubenfeld, May 16, 2012, WSJ
Morgan Stanley Embraces Impact Investing.
"Morgan Stanley, a global financial services firm
with 1500 offices around the world, just announced
they were offering a new set of investment options
for clients interested in the triple bottom line.
The ’Investing with Impact Platform’ is the first,
to my knowledge, impact investment portfolio option
for investors offered by one of the ’too big to
fail’ banks that received a bailout from the U.S.
This is important news as it demonstrates that
large mainstream US financial institutions are
beginning to recognize the importance of investing
in companies that specifically incorporate ESG into
their core activities.
Impact Investing Goes Mainstream–Morgan Stanley
Jumps on Board, by Scott Cooney, May 15, 2012,
Triple Pundit, USA.
New Human Rights Based ETF Planned.
"The iShares Human Rights Index Fund takes a
different approach to the category of SRI funds. The
underlying index aims to exclude companies that
provide material support for controversial regimes
or governments that are subject to widespread
sanctions based on human rights violations. At this
time, governments in three countries—Sudan, Iran and
Burma—meet those standards, according to MSCI, which
created the index for BlackRock in November 2011."
Should it be launched, it will be most
interesting to see how this fund fares. One probable
premise of the fund is that companies engaged with
such regimes might see relatively lower stock
prices. Hence, by avoiding such companies, this fund
could benefit. Perhaps though, the main reason this
fund could succeed is that from an ethical
perspective it simply avoids such problem companies.
IShares files to launch human rights ETF, by
Virginia Munger Kahn, May 11, 2012, FA News, USA.
Businesses Say They Are Better At Delivering
Change Than Charities.
"More than 90 per cent of businesses said they were
equally or better equipped than charities to deliver
social change, according to a snapshot survey." This is an interesting perspective. Are the
businesses just being pompous or are they simply
With the growth of CSR there could be some
substance behind this claim.
Most businesses in a survey say they are better
equipped than charities to deliver social change,
by Chloe Stothart, May 10, 2012, Third Sector, UK.
Prior To London Olympics, Religious & Ethical
Investors Ask Corporations To Step Up
Anti-Trafficking & Slavery Efforts.
"Christian Brothers Investment Services (CBIS), a
leader in socially responsible investing, and a
coalition of U.S. and U.K. investors and NGOs have
united to call on corporations to strengthen their
focus against human trafficking and modern slavery
in advance of the 2012 Summer Olympic Games taking
place in London from July 27 to August 12. The
initiative focuses on the London tourism industry
and key sponsors of the Olympic Games that may be at
a higher risk for on-premise child and labor
trafficking and that have the potential to help
raise public awareness of these crimes."
At first glance, it might be difficult to link
human trafficking and slavery to the Olympics.
Nonetheless, there’s never not a good time to raise
In Advance of London Olympics, U.S. and U.K.
Investors Ask Corporations to Step Up
Anti-Trafficking and Slavery Efforts, press
release, May 8, 2012, Christian Brothers Investment
Services (CBIS), Interfaith Center on Corporate
Responsibility (ICCR), The Ecumenical Council for
Corporate Responsibility (ECCR), and Fair Pensions,
EIRIS Reports On The Most Sustainable
"This research paper provides a global snapshot of
corporate sustainability performance on the 2063
companies from the FTSE All World Developed (AWD)
Index. It presents the 10 current sustainability
leaders as well as insight on the sustainability
performance of 50 of the world′s largest companies
(by market cap). Our analysis reveals some
surprising differences in the extent to which
leading companies are prioritising and responding to
EIRIS is one to the most respected organizations
in the ESG-ethical analyst space. This is worth the read
for any SR-ethical investor.
UK and continental European companies are
outstripping their US and Asian counterparts,
according to a EIRIS’ latest report, &
EIRIS Sustainability Report, April 2012, EIRIS,
May 1, 2012, UK.
2012 Sustainability Leaders Survey. Rankings &
How They’re Assessed.
"The 2012 Sustainability Leaders Survey... asked
respondents in February to name up to three specific
companies that they consider to be leaders in
integrating sustainability into their business
strategy. Unilever, which launched its Sustainable
Living Plan in late 2010, was mentioned most
frequently for the second year in a row, while
Interface was the next most frequently mentioned,
followed by GE, Patagonia, and Walmart... A number
of criticisms are routinely levelled at the poll."
This is a good review of what’s required to
understand the various methodologies of these polls.
What puts companies on top of the Sustainability
Leadership list? By Eric Whan, May 4, 2012,
MSCI, Barclays Launching ‘ESG′ Bond Indexes.
"The so-called Environmental, Social ’ Governance (ESG)
fixed-income indexes, which will be co-branded,
cater to asset managers and owners who need to
integrate ESG mandates into their fixed-income
investments, the companies said in a joint press
release. The indexes could eventually be used to
benchmark ETFs." This is good news. We have many
SR-ethical equity investing raters, but few on the
MSCI, Barclays Plan ‘ESG′ Bond Indexes, by
Cinthia Murphy, May 4, 2012, IndexUniverse.com, USA.
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