E-newsletter of Investing for the Soul                               April, 29 2016


Ron Robins, Editor. E-mail /289-271-0873            Latest news at: http://investingforthesoul.com/

Top ethical investing news for April 2016

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ESG Materiality Without (Comparable) Metrics? Back to the future of financial reporting? "What if a firm could pick and choose which element(s) of its financials on which it would report? What if each firm could define its reporting categories on its own (think of choosing one or more contemporary non-GAAP financial reporting categories, e.g. pro forma, operating earnings, EBITDA, cash earnings, or some combination, any combination, or something else)?

Indeed, what if a firm′s Board could define which financial data points were material? What if a Board could determine when it should release information? How would publics (investors and others) judge a firm′s value, potential, strength/weakness, and how would comparisons be made?"

[COMMENTARY] The situation cited above was once the reality of financial reporting that investors had to deal with before the 1930s. We would think it ridiculous that such information and reporting were not standardized as we have it today. Yet, ESG/materiality reporting is now in much the same state as financial reporting all those decades ago. This article is a great read and the author makes a good case for establishing ESG/materiality standards.
ESG Materiality Without (Comparable) Metrics? Back to the future of financial reporting? By Dr. James Hawley, April 12, 2016, TruValue Labs, USA.

Millennials set to drive major growth in Canadian RI. "82% of millennials surveyed believe that RI will become more important in the next five years, with two-thirds of saying it is important for their advisors to be knowledgeable about RI issues and trends."

[COMMENTARY] Deb Abbey, CEO of Canada’s Responsible Investment Association (RIA), reports on an impressive and important new Canadian study on the present and potential future investing actions of millennials, boomers, and Gen Xers. The studies’ findings show that millennials are extremely interested in RI! Even if you’re not Canadian, the reports’ findings are really worth reading.
Millennials set to drive major growth in Canadian RI, by Deb Abbey, April 14, 2016, Investment Executive, Canada.

G&A Institute and Bloomberg LP Partner to Examine Bloomberg ESG Disclosure Scores For S&P 500 Companies Reporting VS Not Reporting on Sustainability. "Results Show Companies Not Publishing Sustainability Reports Are Disadvantaged by Lower Average Bloomberg ESG Disclosure Scores."

[COMMENTARY] Those companies not reporting on their environmental and social activities are most penalized. Non-reporting companies must realize that not improving internally on ESG matters and not reporting their performance on those metrics will be increasingly penalized -- from relatively poor stock performance to credit costs.
G&A Institute and Bloomberg LP Partner to Examine Bloomberg ESG Disclosure Scores For S&P 500 Companies Reporting VS Not Reporting on Sustainability, press release, April 26, 2016, Bloomberg LP/Governance & Accountability Institute, Inc., USA.

66% of Quebecers would allocate a portion of investments to responsible investing. "While only 46% of Quebecers have heard of responsible investing (RI), 66% said they′d be willing to allocate a portion of their investments to it when told about this option. Responsible investing may have topped the $2 billion mark at Desjardins, but Quebecers′ interest in RI suggests this kind of investing could grow by leaps and bounds in the coming years."

[COMMENTARY] Quebec is a trendsetter in many areas of social development. It could also lead Canadian investors in their adoption of SR-ethical investing!
66% of Quebecers would allocate a portion of investments to responsible investing, press release, April 22, 2016, Desjardins Group, Canada.

(US) DOL Bulletin Hampers Social Impact Investing. "The bulletin implies that the act of voting or otherwise addressing long-term environmental, social and governance (ESG) risks are unrelated to the provision of benefits.

’We believe the bulletin is out of date,’ said Meg Voorhes, director of research with (US SIF), an organization dedicated to advancing sustainable, responsible and impact investing across all asset classes.’"

[COMMENTARY] Surely, how companies perform on ESG measures has very real consequences for their future profitability. Yes, this DOL bulletin is truly out-of-date!
DOL Bulletin Hampers Social Impact Investing, by Juliette Fairley, April 7, 2016, AdvisorNews, USA.

Ethiquette® new, independent, Canadian university-based responsible investment website. "Ethiquette®... developed and managed by the Responsible Consumption Observatory (RCO) of UQÀM′s School of Management Sciences (ESG UQÀM) and Ellio.... A crossroads for dialogue and the sharing of information by responsible investment stakeholders in Québec and Canada (organizations, NPOs, media and government), Ethiquette aims first and foremost to help individual investors as they venture into the realm of responsible investment."

[COMMENTARY] Ethiquette® is a terrific new site for Canadians and others seeking knowledge about responsible investing (RI). It offers information on RI products, strategies, resources and more...
® Canada.

Veres: (US) Professional Advisors Already Winners with Fiduciary Rule. "The Department of Labor′s announcement of its long-awaited, long-debated fiduciary rule for retirement plan advice will be remembered as a milestone in the history of the industry. To put it simply, professional financial planners and advisors have achieved a victory, and the Wall Street and independent broker-dealer service models have been dealt a blow."

[COMMENTARY] This is a terrific step forward for average American investors. It now says that brokers have real fiduciary responsibility to their clients and are not simply salespeople!
Veres: Professional Advisors Already Winners with Fiduciary Rule, by Bob Veres, April 8, 2016, Nasdaq, USA.

PRI says now is the time to act on ESG in credit ratings. "Investors across our signatory network are being asked to support a call for credit rating agencies to incorporate ESG into their credit analysis in a more systematic and transparent way. In May last year our survey received responses from 99 investors who showed strong support for an initiative on credit ratings, with 78% wanting to see ESG more explicitly in ratings."

[COMMENTARY] This is a timely call for all involved in ethical investing to get behind PRI’s call to encourage credit rating agencies to integrate ESG factors into their credit ratings!
PRI says now is the time to act on ESG in credit ratings, press release, April 6, 2016, UNPRI, UK.

Controlled Companies Underperform, Boards Less Diverse New Study Finds. "The study finds that controlled companies generally underperformed non-controlled firms over all periods reviewed in terms of total shareholder returns, revenue growth, and return on equity."

[COMMENTARY] Controlled firms refer to companies controlled by a major stockholder. The study suggests that diversity of boards and ownership provides better governance and lower CEO pay, among many other findings.
Controlled Companies Underperform, Boards Less Diverse New Study Finds, press release, March 29, 2016, Investor Responsibility Research Center Institute (IRRCi)/Institutional Shareholder Services Inc. (ISS), USA.

Rolex, Disney, Google Top World′s Largest Survey of Corporate Reputations. "The RepTrak® System measures the general public′s perception of the world′s top companies on the seven key rational dimensions of reputation: products and services, innovation, workplace, governance, citizenship, leadership and performance."

[COMMENTARY] Many ethical investors might query some of the top names on this list. However, it’s all about perception and perception influences markets -- and stock prices. This is always a noteworthy list to peruse.
Rolex, Disney, Google Top World′s Largest Survey of Corporate Reputations, Catalyst Investors, March 22, 2016, USA.

90% of (global) retail investors have trust in financial services: Survey. "Investors expect higher levels of transparency than ever before, holding their investment managers to the highest ethical standards, and are laser-focused on returns, according to a recent study from CFA Institute, the global association of investment management professionals."

[COMMENTARY] As it’s the CFA Institute who compiled the survey it is useful reading for all in the investment industry. Compared to other surveys of trust in the investment/financial industry, this one paints a relatively rosy picture. (For CFA’s actual report, click here.)
90% of retail investors have trust in financial services: Survey, March 29, 2016, Moneycontrol, India.

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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 © 2016 Ron Robins. All rights reserved.