Ethical Investing News/Commentaries
Commentaries by Ron
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The SEC Isn′t Enforcing
Climate Risk Disclosures By Fossil Fuel Companies.
"Peabody Energy is not the only fossil fuel company
to fail to disclose climate change risks.
ExxonMobil, the largest oil and gas company in the
U.S., is being investigated by both California and
New York for not disclosing climate risks to
investors and the public. So, what does it say about
certain economic elites who are hugely invested in
fossil fuels are restraining the SEC. However, their
power is waning! I expect the SEC to be much more
forceful on corporate disclosure of climate change
impacts in the years to come.
The SEC Isn′t Enforcing Climate Risk Disclosures By
Fossil Fuel Companies, by Gina-Marie Cheeseman,
January 28, 2016, TriplePundit, USA.
RepRisk Special Report: Most
Controversial Companies (MCC) 2015.
"How a company
manages environmental, social, and governance (ESG)
issues is now seen as directly linked to its
operational excellence and social license to
operate. ESG risks – such as environmental
degradation, human rights abuses, and corruption –
can also translate into compliance, reputational,
and financial risks."
their top companies for ESG risk are: Uber
Technologies Inc., Takata Corp., HSBC Private Bank
(Suisse), Sony Corp., Volkswagen AG., and GM. It’s
interesting to read their analysis of how they view
the issues related to these, and many other,
RepRisk Special Report: Most Controversial Companies
(MCC) 2015, January 2016, RepRisk, Switzerland.
Investors still sceptical
some 64%, of institutional investors polled by
Natixis Global Asset Management in its annual survey
said environmental, social and corporate governance
measures offered by fund managers were ’primarily a
findings in this Nataxis survey run almost counter
to other surveys of investors. Actually, when I read
this article I wondered how thoroughly those
institutional investors were
aware of the research that predominantly finds
utilizing ESG criteria generally improves returns?
The survey -- and the tone of the article -- left me
believing that most of those surveyed
were still a somewhat about ESG.
Investors still sceptical about ESG, by Andrew
Pearce, January 26, 2016, Financial News, UK.
Socially Responsible Firms
Tend to Pay Less Taxes.
"If you cynics
figured the do-gooders pay less in taxes, you′re
right, according to a study published in the
January/February issue of the American Accounting
Association journal, The Accounting Review.
The study finds that a higher CSR corresponds to
lower taxes paid. In a sample of US companies with
an effective tax rate averaging 26 percent, the
do-gooders ranking in the top fifth of CSR paid an
average of 1.7 percentage points below other
companies – and, ultimately, about 6 percent less
when factoring in other differences in tax rates."
is a puzzling finding. Even the authors of the study
were at a loss as to the reasons why this is
happening. If anyone has some good theory or insight
into this, please let me know.
Socially Responsible Firms Tend to Pay Less Taxes,
by Terry Sheridan, January 25, 2016, Accountingweb,
Warming up to ESG funds in
"According to The
Vanguard Group, only 9% of all [US]
defined-contribution retirement plans offered a
socially responsible domestic equity fund in 2014."
I have another interpretation -- other than that
mentioned in the article -- as to why US DC plans
offer few SR-ethical offerings. Since they have plan
participants ’over a barrel’ -- in that plan
participants have to put their annual contributions
and possibly those of their employers into what’s
presently being offered -- so maybe many DC plans
figure why bother creating extra expenses for new
fund offerings? Am I too cynical?
Warming up to ESG funds in 401(k)s, editorial,
January 24, 2016, Investment News, USA.
2016 Global 100 Most
Sustainable Corporations in the World Ranking.
"European companies continued to dominate the
ranking, comprising 53 per cent of the total. North
American companies made up 27 per cent of the
remainder, followed by a combined 20 per cent from
Asia, Africa and Australia."
annual ranking by Corporate Knights is worthwhile
reading for all SR-ethical investors.
2016 Global 100 Most Sustainable Corporations in the
World Ranking, January 21, 2016, Corporate
Corporate Risk Disclosures
Dominated by Non-Specific "Boilerplate" and Fail to
Provide Investors with a Clear Risk Picture, New
Study Finds. "The findings are contained
in a new study, The Corporate Risk Factor Disclosure
Landscape, published today by the Investor
Responsibility Research Center Institute (IRRCi).
Ernst & Young LLP (EY) was the primary research
entity and contributor to this report. The study
examines the risk disclosures of 50 large companies,
including the five largest publicly traded companies
in ten different industries with an aggregate market
capitalization of approximately $8 trillion."
study comes at an opportune time as ESG factors are
increasingly integrated into mainstream investment
analysis. Analysts and funds will demand greater
corporate disclosure of risks and companies that
don’t respond appropriately will likely be punished
with lower stock prices. So we’re going to have much
more transparency of risk by companies in the
Corporate Risk Disclosures Dominated by Non-Specific
"Boilerplate" and Fail to Provide Investors with a
Clear Risk Picture, New Study Finds, press
release, January 21, 2016, Investor Responsibility
Research Center Institute (IRRCi)/Ernst & Young LLP
Morningstar ethical rating
could cost funds billions. "High quality
global journalism requires investment. Please share
this article with others using the link below, do
not cut & paste the article.
Asset managers fear losing
billions of dollars as a result of a Morningstar
initiative that will enable investors to compare the
ethical ratings of thousands of funds tracked by the
data provider. Morningstar will release the
environmental, social and governance scores of a
large proportion of the 200,000 funds it tracks for
the first time before the end of March."
has the contract to supply Morningstar with ESG
ratings on some 4,500 companies, who will in turn
apply those ratings to fund holdings. Since most
investors are now interested in sustainability, a
funds ESG rating could become a big deal for all
fund managers -- forcing them to improve their ESG
scores! This is wonderful news for ethical
investors and for those of us desiring the greatest
use possible of ESG criteria in funds’ management.
Morningstar ethical rating could cost funds
billions, by Attracta Mooney, January 17, 2016,
Financial Times, UK.
2015 seeing $41.8bn green
bonds issued – that′s the biggest ever!
"Achieving scale hasn′t been the only reason to
celebrate the green bond market at the year-end; the
real success is the geographical spread of green
bonds across the world. Green bond markets are
popping up all across the world, in Brazil, China,
Estonia, Mexico and India… just to name a few!"
most SR-ethical investors want to have green bonds
in their portfolio -- some might even have some now.
Opportunities for investing in green bonds will likely increase markedly in
the years ahead. It’s great to see the Climate Bonds
Initiative playing such an active role in assisting
and promoting their development.
2015 seeing $41.8bn green bonds issued – that′s the
biggest ever! January 2016, Climate Bonds
Tiny materials, big
questions: How green is nanotechnology?
"Working at the nanoscale — which can mean the
near-atomic scale, with substances a million times
shorter than the length of an ant, a thousand times
thinner than human hair — brings the ability to
create new materials that can perform tasks in ways
that otherwise might not be possible.
But it also brings new concerns and challenges
related to understanding environmental and human
health impacts, because at the nanoscale, substances
often take on chemical, biological and physical
properties they otherwise might not have and behave
in ways they might not at conventional sizes."
blame short-termism for most of the problems in the
markets today. However, short-termism may also cause
potentially large-scale human health and environment
difficulties with new technologies -- such as GMOs,
nanoparticles, etc. It seems few people want to
apply the ’precautionary principle’ when it comes to
the potential for profit. SR-ethical investors
should especially read this article.
Tiny materials, big questions: How green is
nanotechnology? By Elizabeth Grossman, January
14, 2016, GreenBiz, USA.
Ethical investing: making
money, making a difference. "’We
surveyed about 1,100 investors last year from coast
to coast [in Canada], and 92% said that it was
important for them to invest in products that are
consistent with their own personal values,’ says
Chris Nickerson, senior vice president, sales and
distribution, NEI Investments. ’And 71% of Canadians
want their investments to help change or make
SR-ethical investment advisors should understand
they can do even better for themselves and their
clients when they know the personal values of
Ethical investing: making money, making a
difference, by Donald Horne, January 12, 2016,
Wealth Professional, Canada.
"According to TRACE′s 2014 Global Enforcement
Report, there were 211 investigations involving
foreign bribery being conducted in 27 countries by
the end of that year. These cases are being
investigated by countries that even five years ago
were considered to be anemic enforcers, including
China, Slovakia and Argentina. And while the U.S.
leads the world in total enforcement actions
overall, in 2014 more enforcement actions were
brought outside than within the United States."
interesting that the increasing interest of
countries everywhere to rid themselves of corruption
parallels the rise of ESG and ethical investing.
They go together. This is a further promising sign
for SR-ethical investors that the world is moving
towards their ideals and can only help their
financial returns too.
Corruption interruption, by Alexandra Wrage,
January 8, 2016, Corporate Knights magazine, Canada.
Europe Leads Sustainable Investing.
Lie, director of manager research, Benelux with
Morningstar′s EMEA fund research team said in the
firm′s latest bi-monthly magazine that $13.6
trillion was invested in sustainable assets in
Europe compared to $6.6 trillion in the US. Lie said
that a total of $21.4 trillion was invested globally
in ESG (environmental, social and governance) assets
in 2014, 60% more than in 2012."
article further discusses how institutional
investors a far ahead of individuals in using ESG
criteria in selecting investments. However, in all
surveys of individual investors a significant
proportion of them want to invest with ESG/ethical
criteria in mind. Thus, again, I suggest it’s the
advisors not doing their job of ’knowing their
client’ is where the real bottleneck lies for
Europe Leads Sustainable Investing, January 5,
2016, Markets Media, USA.
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