E-newsletter of Investing for the Soul January 30, 2016
Top ethical investing news for January 2016
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!
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 the SEC?"
[COMMENTARY] Probably 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.
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."
[COMMENTARY] Among 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, companies.
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."
[COMMENTARY] This 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.
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."
[COMMENTARY] This annual ranking by
Corporate Knights is worthwhile reading for all SR-ethical investors.
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."
[COMMENTARY] This 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 future.
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."
[COMMENTARY] Sustainalytics 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’
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 companies better.’”
[COMMENTARY] Non SR-ethical
investment advisors should understand they can do even better for
themselves and their clients when they know the personal values of each
Europe Leads Sustainable Investing. "San 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."
[COMMENTARY] This 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 individual investors.
Investment Managers Raising ESG Offerings To Meet Demand, Study Says. "Over 75 percent of investment managers are increasing their use of environmental, social and governance products and impact investing to meet customer demand, according to a survey released this week by Tiburon Strategic Advisors."
[COMMENTARY] The 75% figure is the
highest I’ve seen among such surveys. Seeing that it was reported by a
reputable advisors magazine, it has some credibility.
Investors still sceptical about ESG. "Almost two-thirds, 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 PR tool’."
[COMMENTARY] The 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 little ignorant about ESG.
50 Best (US) Workplaces for Diversity. "Fortune and Great Place to Work partnered with Essence and People en Español to survey companies that make inclusiveness a top priority. Rankings were determined by employee feedback and the representation of racial and ethnic minorities and women."
[COMMENTARY] Among public companies,
the top three are: Camden Property Trust (which was ranked #1 over all);
Ultimate Software (#4); and Workday (#6). This is a must see list for
those ethical investors who rate diversity highly when selecting
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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.