October 2007 Newsletter

October 2007 Newsletter

News & Commentaries by Ron Robins


The Greenest Car Companies. [COMMENTARY] If, you are a green or ethical investor looking for the best automobile stocks that are good to invest in, see this review of what car companies are offering and plan to offer in terms of green technologies.
Car makers … who′s the greenest? October 3, 2007, ClimateChangeCorp.com, UK.

Biofuels ’Emit More Greenhouse Gases than Fossil Fuels’. [COMMENTARY] A Nobel prize-winning chemist and his team have found that biofuels may emit up to 70% more greenhouse gases than fossil fuels! Evidence continues to mount that promoting biofuels at public expense was a bad, bad idea. Not only are billions of tax payers dollars going to support its production, but it is driving up food prices and ending-up causing more damage to the environment than fossil fuels. One wonders why this report never made it into mainstream American media.
Rethinking Renewables: Biofuels ’Emit More Greenhouse Gases than Fossil Fuels’, September 26, 2007, Spiegel Online International, Germany.

Top Ten Canadian Cleantech Companies According To Corporate Knights. [COMMENTARY] Well done Corporate Knights for this outstanding report on Canada’s cleantech (green technology) companies. Well worth reading by anyone looking for green stocks that are good to invest in. Please note though, that this is not a financial report and does not make stock recommendations. However, it does provide excellent material for you to have a valuable discussion with your investment advisor concerning cleantech companies.
First Annual Corporate Knights Ranking of Canadian Cleantech, 2007, Corporate Knights, Canada.

US Shareholders Overwhelmingly Say No To Reductions In Shareholder Rights. [COMMENTARY] The US Securities & Exchange Commission’s (SEC) proposal to reduce shareholder voting privileges has been met by a massive outpouring of resistance by socially responsible and religious shareholders.

Big Banks Ethical Lapses. [COMMENTARY] The fact that the big three US banks – Citigroup, Bank of America and JPMorgan Chase will create a special $75-100 billion fund to purchase bonds and other instruments that are having difficulty finding buyers, is in effect collusion to support certain asset prices. In any other industry, such collusion could be the subject of massive fines! Yet here it is sanctioned by the US government. What they are doing is trying to avert massive write-downs in securities they own by artificially creating a market with higher than market prices! Enron created webs of artificial companies that traded energy products to each other at ever higher prices. As each entity booked higher profits, Enron’s profits shone. The same thing seems to be going on among the banks. Ethically, it is reprehensible. It covers-up banks’ bad bets in a massive way, letting bank executives’ off-the-hook, and promotes what economists call, ’moral hazard’–the latter meaning it will encourage market players to take on even bigger out-sized bets with the knowledge that if anything goes wrong, that they will be bailed out. Truly, ethics is at an all-time low in our financial markets and in the US Treasury Department!
Banks to Start Fund to Protect Credit Market, by Vikas Bajaj, October 15, 2007, The New York Times, USA. (You may need to create a free New YorK Times subscription account.)

Australian Study Supports Sustainable Investing For Funds. [COMMENTARY] The report by the Russell Investment Group said that after reviewing over 40 empirical studies that, “’There is no necessary performance penalty from pursuing a sustainable approach; and there is unlikely to be a performance premium from pursuing a sustainable investing approach when account is taken of appropriate risk and style effects.” Of course most of these studies have been done in a period when the concern for global climate change, green and ethical investing, was not as acute as it is now. With much more investor attention now being paid to sustainable, ethical stocks and bonds, I believe the returns on such assets have the potential to do even better than what these prior studies indicated. Always get help with investing from a professional advisor though.
No more sustainable investment roadblocks: Russell, by Chris Nicholls, October 11, 2007, Financial Standard, Australia.

Are Ethical Investors & Funds Making The Same Mistake As In 2001? [COMMENTARY] This commentary makes the argument that just as ethical investors and ethical funds over-invested in tech stocks in the late 1990s, and then saw them implode, the same over-investment has probably taken place by them investing in financials! Now with many financial organizations taking multi-billion dollar hits on bad financial plays, and with their stocks under-performing many other sectors, ethical investors and funds could see much poorer performance when compared to non-screened funds. Personally, I suspect that as the mortgage crises deepens and derivative losses mount in the USA and elsewhere, financial institutions are likely to suffer extraordinary losses in the years ahead.
Ethical Corporation: Governance – Credit crunch: US social investors repeat past mistakes, by Jon Entine, October 5, 2007, Ethical Corporation, UK.

Mounting Extreme Climate Events & Losses Charted By IPCC. [COMMENTARY] Everyone is aware of this report by the UN’s International Panel on Climate Change (IPCC). However, to visually see the growth of extreme climatic events and their costs multiplying over the decades, and adjusted for price inflation, is stunning! Go down about half-way on this page – following the link provide here – to see the graph.
UN Chronicle | Financing the Response to Climate Change, UN Chronicle, UN.

Innovest Breaks New Ground With Study Relating Company’s Carbon Beta And
Equity Performance. [COMMENTARY]
“The study evaluates the relationship among climate change, companies′ ability to manage the associated risks and opportunities, and their financial performance….The ’Carbon Beta(c) premium’ for leading companies appears to be growing larger over time, as regulatory regimes tighten around the world.” This is a fascinating background study to the whole issue of a company’s carbon emissions, how they deal with them, and relationship to financial performance. Congratulations to Matthew Kiernan and his team at Innovest!
Carbon Beta & Equity Performance: An Empirical Analysis, October 2007, Innovest Strategic Advisors, Canada.

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