E-newsletter of Investing for the Soul May 30, 2014
Top ethical investing news for May 2014
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!
(A controversial headline!) Is it Time to Drop the ‘ES′ from ESG? "By using the most comprehensive data set available, gathered from its in-house advisory Equity Ownership Services, Hermes found while investing in companies with good—and improving—governance made good returns, selecting companies based on an environmental or social basis had a negligible or even negative effect."
[COMMENTARY] This survey’s 5-year
time frame is too short to answer the questions posed. In particular,
many governance decisions are focused on short-term actions to
specifically increase a company’s share price. For instance, the
management of the more profitable S&P 500 companies have and are
spending huge sums buying back their own stock to raise earnings per
share so as to increase their stock price. Is this a good long-term use
of company profits? Or, would spending on long-term cost-effective
sustainability and social issues be a more profitable use of funds? I
question both the findings and the methodology of this Hermes study.
Worldwide study shows religious investors can ally faith and finance. "Religious investors, in economic terms the third largest group to invest on the world′s stock markets, can post high placement profits and remain faithful to their religious creed. This is the message of the third biennial world report on religious investors, the only report of its kind."
[COMMENTARY] These periodic reports
by 3iG and spearheaded by its Secretary General, Katinka C. van
Cranenburgh, are a must read for those involved in managing funds for
religious organizations. They illustrate how all religious organizations
can manage their foundation and endowment funds, etc., in a way that not
only meets with their religious convictions--but also can provide as
good or superior returns by investing in conformity with their religious
ideals. If most religious orders did this, they can remake the
investment landscape into one that has elements of true spiritual
values, is much more ethical, sustainable and long-term focused. See
Companies becoming more sensitive to sustainable investment concerns – survey. "US companies are becoming more receptive to the environmental, social and governance (ESG) concerns of shareholders, according to a new survey of socially responsible investing (SRI) experts. Nine out of the 11 experts quizzed in a new study from Monitor Global Outlook, a research service of the Christian Science Monitor, say that companies have been more sensitive to ESG issues this year than in the previous five years."
[COMMENTARY] Despite the small
sample size of this survey, but taken together with many other surveys
there’s little doubt that US companies are increasingly interested in
ESG parameters. But they still lag European companies in this regard.
Corporateregister.com publishes the winning entrants for its 2014 corporate responsibility (CR) reports awards. "As CR reporting continues to develop the CRRA [CR Reporting Awards] serves to identify the ‘best′ reports, those our community of global CR stakeholders judges to be most effective. Different regions and sectors develop their own specific reporting approaches and despite the application of global frameworks, there′s always the danger of reporting becoming fragmented. The CRRAs encourage our global online audience to evaluate, compare and contrast a wide range of reports, and we hope this helps develop and support a sense of cohesion and shared direction in CR reporting."
[COMMENTARY] The best CR report this
year goes to Coca-Cola Enterprises Inc., followed by BMW AG,
Co-operative Group Limited and H & M Hennes & Mauritz AB.
Corporateregister has nine different award categories including: first
time report, best-integrated report and best for carbon disclosure. If
you aren’t already registered with corporateregister, you’ll need to
register with them--which is free--before downloading the full report.
It’s a great service for anyone doing CR report research.
The expert view: top corporate sustainability leaders of 2014. "What companies are leading the way on sustainability? Unilever, Patagonia, Interface and Marks & Spencer are leading the pack, according to the 2014 Sustainability Leaders Report, which is based on a survey of 887 stakeholders from business, government, NGOs and academia across 87 countries."
[COMMENTARY] As the years pass, what
is viewed as sustainable also changes. In the present climate "advocacy
and action aimed at systems change" by companies receives the most
favourable approval by those in the sustainability field. Ethical
investors might want to review this article.
The 10 companies with the best corporate cultures. "Rakesh Khurana, a professor of leadership development at Harvard Business School, told me [Mark Hulbert] that ’large-scale statistical studies have failed to find any direct causal link between CEOs and firm performance.’ He said that a corporation′s internal culture ’exerts a far greater longer-term influence on the company′s success.’”
[COMMENTARY] It’s fascinating that
prestigious studies fail to show a statistical link between the CEO and
the firm’s financial performance. So why are CEO’s are paid so much? The
top ten companies are from GMI Ratings, and include Progressive Corp.,
Range Resources and American Electric Power, LinkedIn and Whole Foods.
Stanford to Purge $18 Billion Endowment of Coal Stock. "Stanford University announced Tuesday that it would divest its $18.7 billion endowment of stock in coal-mining companies, becoming the first major university to lend support to a nationwide campaign to purge endowments and pension funds of fossil fuel investments."
[COMMENTARY] The ’fossil free’
college and university divestment campaign has just got its first big
success in getting Stanford on board. Congrats to Fossil Free Stanford,
Stanford’s local group affiliated with the Fossil Free Campaign. Quite
likely many more colleges and universities will follow Stanford’s lead.
Most ethical investors will cheer this development.
U.S. firms lagging on sustainability issues, report says. "U.S. publicly traded firms are making some progress on sustainability issues, however the speed and scale of those changes are insufficient, according to a new report from Ceres and Sustainalytics."
and Sustainalytics provide great insight into the state of
sustainability in US companies. Their survey provides a bit of a
roadmap about where US companies have to go. This article by Doug Watt
is a good overview of the survey’s findings.
Framework emerges to build the business case for natural capital. "After months of consultation with stakeholders, the Natural Capital Coalition has published the first draft of a suggested framework to help businesses account for the value of natural resources such as water, soil, forests and even clean air in strategic decision-making."
[COMMENTARY] The work by the Natural Capital Coalition will hopefully enable businesses to better assess, account for, and make, more efficient use of their natural capital. However, for society at large, it does not address one of the most important problems today in economics and for human sustainability: the non-valuation of natural resources in the selling prices of goods and services. To me, this has been an horrendous oversight globally and if we don’t start accounting for it soon our worst climate change fears could come true.
The relatively ’free’ use of most natural resources has vastly distorted
our consumptive habits while greatly degrading and depleting our vital
natural resources and habitat. Unfortunately, it’s the great difficulty
of how to value and who should value natural resources that remains the
GMI Ratings′ Study Finds That Only Ten Percent of S&P 500 Companies Disclose Specific Sustainability Targets in Executive Compensation Plans. "Energy and utility companies lead the way in tying sustainability metrics to executive compensation, while telecommunications, technology and cyclical consumer goods and services companies trail behind."
[COMMENTARY] Actually, compared to
just a few years ago this is good progress. No-doubt the numbers will
continue to increase. As sustainability targets become common for
executives, it’ll mean greater interest by them in sustainability and a
by product of that will be more sustainably oriented companies--and
better investment choices for ethical investors.
Fossil Free Indexes Releases "The Carbon Underground" Ranking the World’s Top 200 Public Fossil Fuel Companies. "Report identifies the top public coal, oil and gas companies globally based on potential climate impact of their reserves. Research shows growing reserves and embedded emissions. Updated list supports fossil fuel divestment movement and new ESG index products."
[COMMENTARY] For ethical investors
it might be useful to know who are the largest fossil fuel companies as
well as those with the least fossil fuel exposure, if only to get an
idea of the relationship between them. But this report also mentions it
will aid the fossil fuel divestment movement and promote new types of
ESG indices as well. It’ll be interesting to see how this report is
received and used.
Why TNC and JPMorgan Chase are investing $1 billion in nature. "’The number is intentionally big because we think the marketplace is big,’ said Bill Ginn, chief conservation officer at The Nature Conservancy. ’We want investors to say, I have an environmental component in my portfolio because that′s a smart place to invest these days... That means they have to make money in order to be willing to put their capital at risk here.’"
[COMMENTARY] This is a fascinating
and timely concept. Just as impact investing is beginning to reap
returns for investors from social projects, so the idea here is to
produce returns on environmental projects--from fisheries to water
projects. Initially, the funders of these projects will be wealthy
investors and institutions. However, eventually, I’m sure that small
investors will be able to participate. I’m going to really watch this!
New editorial: How Ethics Benefits Corporate Profits, by Ron Robins.
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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 © 2014 Ron Robins. All rights reserved.