September 2008 Newsletter
News & Commentaries by Ron Robins
Merrill Lynch Research Finds Outperformance Using Values Based Investing Approach. – [COMMENTARY]“In a recently conducted quantitative analysis performed by Merrill Lynch Research, companies that ranked high in responsible economic, environmental, social and corporate governance issues demonstrated lower volatility globally and provided higher dividend yields in the U.S. than those with lower scores.” This is proving my thesis that we can expect higher values to be recognized in the stocks of companies with higher ethics. With the atrocious ethics displayed on Wall Street, investing in ethical stocks and bonds will in the future be at the core of mainstream investing. View the video on this link. Mr. Rasco is to make a presentation on October 10 to the New York Society of Financial Analysts about these findings.
Higher Dividends and Lower Volatility in Values Based Investing, commentary by Jose Rasco, Merrill Lynch, USA.
Study Says US Political Views Affect Firms’ Corporate Social Responsibility (CSR). – [COMMENTARY]“Companies with a high CSR rating tend to be located in Democratic states, while companies with a low CSR rating tend to be located in Republican states… Amir Rubin of Simon Fraser University analyzed the 2004 presidential election results of communities in which corporate headquarters are located.”
Political views affect firms’ corporate social responsibility, September 17, 2008, Source: Wiley, published in PHYSORG.com, USA.
Whole Foods, Toyota, GM, and Honda Capture the Largest Share of Eco Bloggers. – [COMMENTARY]“Based on the analysis of 40 million blog posts collected during the past six months, in six major industries, four brands—Toyota, General Motors, Honda and Whole Foods—garnered the greatest volume of positive conversation among online bloggers regarding environmental sustainability, according to the J.D. Power and Associates 2008 Environmental Sustainability Report… “ Surveying blogs represents an interesting new development in marketing research. It could prove a useful method in finding ethical stocks that are good to invest in.
Whole Foods, Toyota, GM, and Honda Capture the Largest Share of Eco Bloggers, September 26, 2008, Business Week article on lohas.online, USA.
UK Government’s The Carbon Trust Issues Report On How Climate Change Could Create Or Destroy Company Value. – [COMMENTARY]Ethical investors looking for stocks that are good to invest in, need to be aware of how climate change can have a major bearing on investment returns. This extraordinary report covers the effects of climate change ’on sixindustry sectors: Aluminium, Automotive, Beer, Building insulation, Consumer electronics and Oil & Gas.’ To obtain the report, register, which is free, at the Carbon Trust website in the link below, then download the PDF 4166 KB report.
Climate change … a business revolution? September 22, 2008, The Carbon Trust, UK.
KLD’s Environmental Ratings Promoted Improved Environmental Behaviour Among Companies With Low Scores. – [COMMENTARY]KLD is one of the top US socially responsible ratings’ organizations.This is the first study to show that socially responsible ratings can impact corporate behaviour. It indicates the clout that socially responsible ratings’ organizations can have on corporate behaviour and performance. This kind of research is important for the SRI industry and for all ethical investors.
Social reponsibility: Do outside ratings affect companies? By Harvey Schachter, September 22, 2008, The Globe & Mail, Canada.
PricewaterhouseCoopers’ Carbon Disclosure Project Report Shows More Companies Taking Climate Change Seriously. – [COMMENTARY]“The Carbon Disclosure Project (CDP), to which PwC [PricewaterhouseCoopers] has been appointed global adviser and report writer for the next three years, has published the results of the Global500 and S&P500 companies that disclosed their activities… It also shows how companies compare against their industry peer group and who is leading the field” Incidentally, a recentstudy by the Swiss bank, Pictet, showed that “a socially responsible global equities portfolio would have carbon emissions 40% below those of a portfolio indexed to the MSCI global equities index.”
Carbon Disclosure Project Report, September 2008, PricewaterhouseCoopers, UK.
UK’s The Sunday Times Publishes Its Best Green Companies. – [COMMENTARY]“The 50 companies listed in this report are all pioneers — enterprising, enlightened and fizzing with new ideas. They vary from Greencare H2O, a business employing just 50 people distributing watercoolers, to the banking giant HBOS, which has a staff of 74,000.” The newspaper claims to have excellent selection criteria. It also surveyed the employees of the companies being reviewed! Positive reports like this continue to demonstrate to companies the advantages of using corporate social responsibility.
Best (UK) Green Companies Rankings, by Richard Caseby, September 22, 2008, The Sunday Times, UK.
Interbrand Publishes Its Best Global Brands List. Says Managing Sustainability Issues A Key To Brand Success. – [COMMENTARY]The top ten companies — Coca-Cola, IBM, Microsoft, GE, Nokia, Toyota, Intel, McDonalds, Disney and Google — all spent more time than average in dealing with sustainability issues. Environmentally conscious major corporations do seem to win out in the branding game.
Green Cred is Essential to Brand Strength: Report, by James Murray, BusinessGreen, September 22, 2008, UK. Actual report:Best Global Brands, Interbrand, September 22, 2008, UK.
Greenpeace Publishes Its 2008 Guide To The Greenest Electronics Companies. – [COMMENTARY]The top three are: Nokia, Samsung and Fujitsu Siemens. Some on the list are considered to be among ethical stocks that are good to invest in. Check with your advisor though.
Guide to greener electronics, September 2008, Greenpeace, USA.
UK Ethical Funds Start Campaign To Get Shell & BP To Scale Back Oil Sands Development. – [COMMENTARY]“Co-operative Asset Management, a leader in the U.K.’s fast-growing ethical funds sector, revealed plans on Sunday to campaign against oilsands and other “unconventionals” as a too-risky investment given the financial and ecological drawbacks, as well as looming anti-climate change regulations that would drive up costs even farther.” This is going to be a very interesting fight! The second article below reveals F&C and others getting involved in this effort as well.
U.K. ethical investment fund wary of oilsands push, by Richard Boswell, September 14, 2008, Canwest News Service, Canada. Also,Investors press for disclosure of tar sands’ climate risk, by Terry Macalister, September 15, 2008,The Guardian, UK.
Plenty Magazine Lists 20 Businesses That It Says Will Change The World. – [COMMENTARY] “Plenty′s second annual list honoring (in no particular order) 20 dynamic individuals and 20 pioneering companies that are bettering the planet, plus 10 innovative ideas that will revolutionize how we live.” Such lists are always useful to get new ideas for stocks that are good to invest in. However, it is important to understand how they are put together and what biases they may have. So remember, just because a company’s name appears on a list like this it does not always make it a great investment. But sometimes it just might be.
Plenty Magazine recognizes 20 businesses, 20 people, and 10 ideas that will change our world, September 4, 2008, LOHAS online, USA.
Sustainable Business Publishes Its Top 20 Global Sustainable Stocks. – [COMMENTARY]The list includes Canon, Electrolux, Green Mountain Coffee, Vestas Wind Systems and Whole Foods Market. This is their seventh year publishing the list. I think it’s great that lists like this get published. But you always have to really examine the criteria to see if it works for you. Also, the companies in this list may be great from a sustainability perspective, but one needs the advice of a professional advisor to determine if they make sense financially.
Global Top Twenty Sustainable Businesses Announced, by Chris Milton, August 26, 2008, The Inspired Economist, USA.
Eurosif Forecasts Near Doubling Of Wealthy Europeans Investment In Sustainable Investing By 2012. – [COMMENTARY]“Nearly three-quarters of respondents have seen an increase in interest in sustainable investing in the last 12 months, according to the Eurosif survey, which also forecasts more than …1,000bn (…805bn, $1,473bn) of rich people′s money will be in sustainable investments by 2012. This represents a near doubling of the absolute levels in 2007, and a proportionate increase from 8 per cent to 12 per cent of
rich people′s wealth.” Together with the Merrill Lynch World Wealth Report published in June, it confirms the trend of the world’s wealthy into sustainable investing. We continue to see great and growing interest in green-ethical investing.
New era for sustainable investing, by Sophia Grene, August 31, 2008, Financial Times, UK.
Report Says Norwegian Government To Ask Top Companies To Report & Standardize Reporting Of Issues Related To Environment, Labour & Human Rights. – [COMMENTARY]Norway may well become the first nation to do this. I continue to promote the whole idea of mandatory standardization, auditing, and reporting of environmental, social, and governance issues (ESG). Many, many things have to be worked-out before this can be accomplished. Most companies hate the idea of complying with such new regulations. However, I maintain that for investors to really understand the longer term risks associated with companies – such as from climate change or labour policies – these risks must become transparent to investors!
Norway′s biggest investors outline plans to go direct to companies for ESG data, by Hugh Wheelan, August 28, 2008, Responsible Investor,UK.
Xcel, Biggest US Builder Of Coal Powered Power Plants Ordered To Disclose To Investors Global Warming Risks. – [COMMENTARY]“The agreement Wednesday between [New York’s] attorney general, Andrew M. Cuomo, and the company, Xcel Energy of Minneapolis, is the first of its kind in the country. It could open a broad new front in efforts by environmental groups to pressure the energy industry into reducing emissions of the greenhouse gases that contribute to global warming.”
There is a powerful reason why this is happening. Major greenhouse gas emitters could be liable to lawsuits by investors and others by not disclosing climate change risks posed by their activities. Furthermore, with potential costly restrictions on carbon production possible, investors must be warned about these risks too. Here we see an example of the importance and the advantages of using corporate social responsibility proactively.
Xcel to Disclose Global Warming Risks, by Nicholas Confessore, August 28, 2008, The New York Times, USA.