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Shareholder Values

"Forty-five percent of U.S. households prefer an environmental, social and governance (ESG) approach to investing… Among those between the ages of 30 and 39, this increases to 64%, and for those younger than 30, it is 67%."
-- Cerulli Associates
    October 2018

"The vast majority of Canadian investors are interested in responsible investments (RI) that incorporate environmental, social and governance (ESG) issues, and they would be more likely to choose responsible investments if their financial advisor suggested suitable RI options for them."
-- Responsible
    Association (RIA)
    June 2017

"70% of people [in UK] want to invest ethically but the financial services industry is failing to respond." Referencing research by Abundance.
-- Acquisition
(UK) June 2015


Ethical Investing News/Commentaries
March 2017


Commentaries by Ron Robins

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President Trump & Congress get a letter: One thousand companies and investors have signed the Business Backs Low-Carbon USA statement. "We want the US economy to be energy efficient and powered by low-carbon energy. Cost-effective and innovative solutions can help us achieve these objectives. Failure to build a low-carbon economy puts American prosperity at risk. But the right action now will create jobs and boost US competitiveness. We pledge to do our part, in our own operations and beyond, to realize the Paris Agreement′s commitment of a global economy that limits global temperature rise to well below 2 degrees Celsius."

[COMMENTARY] Clearly, a good number of American companies support a low-carbon economy. Despite President Trump’s present anti-climate rhetoric, a broad-based business case for low-carbon initiatives might eventually reduce the President’s antipathy towards it.
Business Backs Low-Carbon USA, press release, March 2017.

More Catholic capital flows toward impact investing. "Pope Francis may be only the world′s third-greatest leader (behind Theo Epstein and Jack Ma, according to Fortune), but his 2014 endorsement of impact investing was still a big deal. Last year, the Vatican doubled down at a second conference to explore how the church and faith-based institutions can ’harness the power of impact capital to attain and sustain their social mission.’"

[COMMENTARY] Religious leaders of almost all faiths are increasingly promoting the importance of private capital in assisting in their faith’s social, economic, and environmental goals. This account of Catholics’ increasing impact investing investments demonstrates what is happening today.
More Catholic capital flows toward impact investing, by Marina Leytes, Impactalpha, USA.

Clearing the Deck For ESG Integration. "Advisors are rapidly running out of excuses to avoid, environmental, social and governance investing (ESG)... A recent survey by State Street, voluminously titled The Investing Enlightenment: How Principle and Pragmatism Can Create Sustainable Value through ESG, casts light on the increasing client demand of ESG investments and financial viability of integrating ESG factors into active investment strategies.

It questioned almost 600 institutional investors and 750 individual investors about incorporating ESG factors into investing and business decisions. In doing so, it also identified a single major sticking point preventing widespread acceptance of ESG analytics — ’a lack of transparent, standardized and quality data.’"

[COMMENTARY] This article is a great, brief read on the results of an important and extensive study by Robert Eccles (Chairman, Arabesque Partners) and Mirtha Kastrapeli (Head of Sustainable Investment Research, State Street). There are some surprising statistics in their study for the responsible-ethical investment industry to digest!
Clearing the Deck For ESG Integration, by David H. Lenok, March 27, 2017, Wealth Management, USA.

Global RI assets surpass US$22.89 trillion, a 25% increase from 2014. "The largest responsible investment strategy globally is negative/exclusionary screening (US$15.02 trillion), followed by ESG integration (US$10.37 trillion) and corporate engagement/shareholder action (US$8.37 trillion). Negative screening is the largest strategy in Europe, while ESG integration leads in the United States, Canada, Australia/New Zealand and Asia ex Japan.

Japan′s primary RI strategy is corporate engagement and shareholder action. The fastest growing strategy, although also the smallest in absolute dollar terms, was impact/community investing."

[COMMENTARY] The continuing rapid growth of RI assets is great news. It’s interesting to see that globally negative/exclusionary screening comprises 65.62% of these assets! I suspect that ESG integration and engagement/shareholder actions will rise as a proportion of RI assets in the years ahead.
Global RI assets surpass US$22.89 trillion, a 25% increase from 2014, press release, March 27, 2017, The Global Sustainable Investment Alliance.

ESG-oriented millennials may have too-high hopes. "Citing the 2016 Schroders Global Investors Survey, Waterman told attendees at the ALFI European Asset Management Conference that investors aged 35 and under expected an average of 10.2% per year in returns, compared to a global stock market performance of 3.75% at the time of the survey...

Waterman noted a general trend toward ’short-termism’ as investors planned to hold their investments for an average of just 3.2 years. Among all respondents, just 18% said they would hold their investment for more than five years. Zero in on millennials, and the statistic shrinks to just 8%, while 41% said they would invest for under a year."

[COMMENTARY] Despite all the good things being said about millennials interest in ESG-focused investing, their expectations on investment returns and holding periods are troubling.
ESG-oriented millennials may have too-high hopes, by Leo Almazora, March 24, 2017, Wealth Professional, Canada.

Think tank questions PRI signatories’ ESG capacity. "Dedicated ESG specialists are rare at institutions signed up to the Principles for Responsible Investment (PRI), in particular at asset owners, according to analysis carried out by climate and energy think tank E3G... E3G said this meant that over 500 PRI signatories directly employed one or no ESG staff. There are more than 1,700 signatories to the PRI."

[COMMENTARY] Many people, myself included, wonder how many of the PRI dignitaries take ESG seriously and how much is for PR purposes. Now E3G has provided some insight into that. It’s clear that a large number of those institutions who signed the PRI aren’t too serious about implementing ESG.
Think tank questions PRI signatories’ ESG capacity, by Susanna Rust, March 21, 2017, IPE, UK.

ESG factors can indicate overall stock risk, says AQR. "In AQR Capital Management′s new paper – ’Assessing Risk through Environmental, Social and Governance Exposures’ – the firm said it found a strong positive relationship between companies′ ESG exposures and the statistical risk of their equity."

[COMMENTARY] In surveys where investment managers are asked about why they use ESG criteria, they frequently say to manage future risk. Now, AQR provides confirmation of that belief. With research appearing almost daily supporting the application of ESG in investment decisions, it seems that investors everywhere should be applying it. (To read the actual study, click here.)
ESG factors can indicate overall stock risk, says AQR, by Rachel Fixsen, March 20, 2017, IPE, UK.

Webinar--Mission-Aligned Investing: What New Positive Deviance Research Can Tell Us About What Moves Institutional Investors to Action. "Presenter Abigail Abrash Walton, Ph.D, will share: Research findings related to mission-aligned investing, leadership, and the decision-making process to divest from fossil fuels by philanthropic organizations with assets under management from $5 million to $1 billion; what factors supported decision makers in moving to mission-aligned investing while simultaneously exercising their fiduciary duty to steward institutional assets; how the divestment decision affected the decision makers personally and their organizations."

[COMMENTARY] The information presented in this webinar -- now online to view anytime -- is useful information for anyone interested in mission-aligned investing.
Webinar: Mission-Aligned Investing: What New Positive Deviance Research Can Tell Us About What Moves Institutional Investors to Action, March 2017, Intentional Endowments Network, USA.

Are Sustainable Funds More Expensive? "Funds with an ESG mandate tend to be a bit more expensive than other funds, but the differences are not large. There are reasonable explanations for this pattern. Most ESG funds are not very large, so they are not able to benefit from the economies of scale found in funds with huge asset bases; as ESG funds gather more assets, more of them should be able to lower costs for shareholders.

Also, funds with an ESG or impact mandate usually have extra costs for shareholder advocacy and similar activities that aim to move companies in a positive direction... There are plenty of cheap ESG options for investors who seek them out, including a growing number of sustainable index funds and exchange-traded funds."

[COMMENTARY] There’s been little in-depth objective analysis comparing the costs of buying and holding ESG funds versus those of conventional funds. Morningstar has done a great service here in delving into them. This is an important article for all investors to review.
Are Sustainable Funds More Expensive? By David Kathman, March 17, 2017, Morningstar, USA.

‘Climate is King′ Says BlackRock; Companies Must Now Address Risk. "The world′s largest asset manager is stepping up pressure on companies to address how climate risk will affect its portfolios. In a recent post on its website, BlackRock said it believes climate risk is a “systemic issue” and that corporations should be compelled to develop disclosure standards."

[COMMENTARY] Such remarks from the world’s largest asset manager are bound to influence corporate climate change policies globally. Furthermore, Blackrock is backing-up its remarks with actions as it seeks to discuss these issues with the companies it invests in.
‘Climate is King′ Says BlackRock; Companies Must Now Address Risk, by Jan Lee, March 16, 2017, TriplePundit, USA.

ESG growing in importance, ERM survey reveals. "Over 95% of investors believe their company portfolios contain untapped environmental, social and corporate governance (ESG) opportunities, according to a recent survey by London-headquartered global environmental consultancy ERM." 

[COMMENTARY] The article reviews the results of a survey that show extraordinarily positive views among private equity managers regarding the importance of integrating ESG in investment decisions.
ESG growing in importance, ERM survey reveals, March 15, 2017, Environmental-Analyst, UK.

Ethisphere Announces 124 Companies to Make the 2017 World′s Most Ethical Companies List. "Ethisphere′s notion that the financial value and ethics are inexorably tied together has been explained through an analysis of how the stock price of publicly-traded 2017 honorees compare to the S&P 500 over the last two years. The analysis demonstrates a 6.4% premium Ethisphere refers to as an ‘ethics premium.′"

[COMMENTARY] I like Ethisphere’s work. Their list is always worth a review.
Ethisphere Announces 124 Companies to Make the 2017 World′s Most Ethical Companies List, press release, March 13, 2017, Ethisphere, USA.

Why and How Investors Use ESG Information: Evidence from a Global Survey. "Survey data from more than 400 senior investment professionals provides insights into why and how investors use environmental, social, and governance (ESG) information as well as the challenges in using this information. This study also documents what investors believe will be important ESG styles in the future...

The primary reason survey respondents consider ESG information in investment decisions is because they consider it financially material to investment performance. ESG information is perceived to provide information primarily about risk rather than a company′s competitive positioning."

[COMMENTARY] A study concerning ESG co-authored by Harvard’s George Serafeim is always an important read. The co-author Amir Amel-Zadeh of Oxford University’s Saïd Business School has impressive credentials as well.
Why and How Investors Use ESG Information: Evidence from a Global Survey, by Amir Amel-Zadeh and George Serafeim, March 13, 2017, Harvard Business School Working Knowledge, USA.

The World′s Leading Companies on Human Rights. "One clear leader, as mentioned throughout the study, was Marks and Spencer (M&S). The U.K. retail giant...  Ranking slightly behind M&S were H&M and Adidas."

[COMMENTARY] This article details important research for everyone particularly interested in the ’S’ of ESG in many of the world’s largest companies. The study cited in the article was compiled by Aviva Investors, the Human Rights Resource Center (BHRRC), and various non-profits and European governments.
The World′s Leading Companies on Human Rights, by Leon Kaye, March 13, 2017, TriplePundit, USA.

How ’Responsible’ Are Europe’s Mega-Managers Investing $22.4 Trillion? "Research conducted by ShareAction, a non-profit group in the U.K. that campaigns for responsible investment, ranks the 40 mega-managers who, between them, invest over €21 trillion ($22.4 trillion) ... The top five performers (scoring out of a possible 90 points) are: Schroder Investment Management (82), Robeco Group (81), Aviva Investors (80), Amundi (77.5), and Standard Life Investments (76.5).

[COMMENTARY] It’s informative for all of us in the ethical investment world to see how managers are ranked using criteria related to responsible investment. Now, where are similar rankings for North American or Asian managers?
How ’Responsible’ Are Europe’s Mega-Managers Investing $22.4 Trillion? By Dina Medland, March 12, 2017, Forbes, USA.

Is the finance sector really equipped to assess climate risks? "10 years after the sub-prime mortgage crisis that triggered a global financial crash, analysts are still largely ignoring long-term financial risks, such as those from climate change, the energy transition and disruptive low carbon technologies...

Although most asset owners analyzed in the report, such as pension funds and insurers, have long-term liabilities of 20 years or more, those managing these assets are far more short-term in their thinking, turning over these portfolios every 21 months on average."

[COMMENTARY] As many of you will agree, a short-term focus concerning portfolio performance may not be compatible with long-term liability management. Although the financial community is starting to embrace ESG, ESG is mostly about long-term performance and so requires a different mindset.
Is the finance sector really equipped to assess climate risks? By Michael Holder, March 9, 2017, GreenBiz, USA.

Responsible Investing Growing in Importance Driven by Ethical Principals, Institutional Investor Demands, and Business Opportunities, Says New Survey from CAIA and Adveq. "More than three quarters (77%) of respondents to the survey agree Responsible Investing1 is more important than it was three years ago, while 78 percent anticipate it will be more important three years from now. Adoption of industry standards (71%), pressure from institutional investors (67%), and positive investment return outcomes (64%) will be the largest drivers of greater adoption of Responsible Investing and ESG approaches, according to survey respondents."

[COMMENTARY] Again, we see more good news regarding the adoption of ESG in the investment industry. However, mentioned in this survey by 69% of respondents, was again the need for "standardized comparable data." When this is finally available ESG will finally take its place at the helm of investment analysis.
Responsible Investing Growing in Importance Driven by Ethical Principals, Institutional Investor Demands, and Business Opportunities, Says New Survey from CAIA and Adveq, press release, March 9, 2017, The CAIA Association and Adveq, USA.

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Disclaimer: This website does not make investment recommendations. Nothing in this site should be interpreted as a recommendation or solicitation to buy/sell any securities or investments. Investing for the Soul is a source of general information and resources for ethical investing and socially responsible investing (SRI). Investors should consider their actions thoroughly and consult their financial advisers and other professionals, prior to taking any investment action. This website does not necessarily agree with the opinions expressed in articles on its pages or offered on the web pages to which it might be linked. Such opinions are the responsibility of the writers themselves. Furthermore, this site 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 on this, or other sites, to which it is 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.


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