July 2009 Newsletter

Books Back Issues Subscribe/Unsubscribe

News & Commentaries

Links may only be valid a limited timeCommentaries by Ron Robins

US Mutual Funds Begin Disclosing The Carbon Footprint Of Their Holdings. [COMMENTARY]"You want a car that gets good gas mileage and you want energy efficient appliances (or at least I hope you do). But do you want a low-carbon investment portfolio? The Green Century Balanced Fund is betting that you do. The Boston-based mutual fund says it is the first U.S.-based fund to disclose its carbon footprint, which is 66% less than the carbon intensity of the S&P 500 Index." This is the next frontier for companies and funds: disclosing their carbon footprints. For many ethical investors the best funds and stocks that are good to invest in will be those with the lowest carbon emissions. This is an interesting article and written by a pioneer in the socially responsible/ethical investing field.
Is There High Interest in a Low-Carbon Mutual Fund? By Marc Gunther, July 23, 2009, GreenBiz article via Reuters, USA.

Responsible Investments (RI) To Be 15% Of Global Assets By 2015: Robeco/Booz & Company Study. [COMMENTARY]"We expect the RI market to become mainstream within asset management by 2015, reaching between 15%-20% of total global Assets Under Management (USD 26.5 trillion) and a total revenue of approximately USD 53 billion." This study again affirms investing in ethical stocks and bonds will grow substantially over the long-term. It cites the impact of global warming and both corporate and government responses to it as significant factors for the mainstreaming of RI.
Responsible Investing: a paradigm shift, from niche to mainstream, July 2009, Robeco/Booz & Company, USA.

A Billion Euros Came Back Into SRI Funds In May. [COMMENTARY] "Over a billion euros (…1,068.3m) shifted back into European SRI funds during May as equity markets rose, according to the latest available figures compiled for Responsible Investor by Lipper Feri, the investment data group. Bond funds were among the biggest sellers representing three of the top five asset gatherers during the month. SRI funds or ‘RI Screened′ as they are labelled by Feri are those that have undergone an ‘extra financial′ ESG screen in their stock selection process." As investors come back into the markets they are showing a preference for ethical stocks and bonds. It seems the recent turbulence and unethical conduct in the financial markets is now having an effect on investor behaviour.
A billion euros shifts back into SRI funds as markets rise, by Hugh Wheelan, July 28, 2009, Responsible Investor, UK.

First European Sharia Compliant Money Market Fund Launched. [COMMENTARY] "Bank of London and the Middle East (BLME) is launching the Sharia′a Dollar Income fund, which it describes as Europe′s first sharia-compliant money-market portfolio, writes Nick Rice. Domiciled in Luxembourg as an unregulated Sicav-Sif for sophisticated investors, the
vehicle already has $50m (…31m, …35m) in assets and requires a minimum investment of $500,000."
Sharia compliant investments share many of the same features as ethical investments. It will be fascinating to see if sharia compliant money market funds gain ground in the developed world.
New funds: July 27, by Nick Rice, ft.com, UK. (Subscription to ft.com, which is free for a limited service, might be required.)

Indian Ethical Indices Outperforming Conventional Benchmarks. [COMMENTARY] "Even as socially responsible investing (SRI) is yet to find its feet in India, indices that screen stocks based on ethical and environmental concerns have been outperforming their benchmark peers… For example, while the Nifty has delivered 73 per cent returns since March 9 when markets started showing an uptrend, the S&P ESG (environmental, social
and corporate governance practices) India index has returned 105 per cent. Similarly, the CNX Nifty Shariah and the CNX 500 Shariah have posted returns of 76 per cent and 81 per cent, respectively."
One does not normally associate ethical investing with developing world economies. However, their performance in India is likely to encourage many more investors there and elsewhere to invest in them.
Ethical indices outdo benchmarks, by Vandana/Mumbai, July 24, 2009,Business Standard, India.

50 Investor Groups, Social Investment Forum (SIF) Urge SEC To Require Environmental, Social & Governance (ESG) Disclosure. [COMMENTARY] "The organizations are asking the SEC to require companies to report: (1) annually on a
cohesive set of sustainability indicators in accordance with the most up-to-date reporting
framework of the Global Reporting Initiative (GRI); and (2) on other material ESG matters as they come to light."
Congratulations to the SIF for organizing this response to the SEC. On where I stand, see my editorial,We Need Mandatory Corporate Social Responsibility (CSR) Reporting.
For SIF press release, click:More than 50 Investor Groups, Social Investment Forum Urge SEC to Require Environmental, Social & Governance (ESG) Disclosure, July 21, 2009, Social Investment Forum, USA.

New UK Corporate Responsibility Index Launched. [COMMENTARY] "SocialFunds.com — In London yesterday, the Corporate Responsibility Index was launched by Business in the Community (BITC), a U.K. consortium of 700 companies devoted to improving their
positive impact on society. The index, which is the first of its kind, benchmarks the corporate social responsibility (CSR) performance of companies. This year’s index includes 122 companies that volunteered to be assessed."
The fact that companies are volunteering to be included shows that more and more companies see the advantages of using corporate social responsibility.
UK Index Rates Corporate Social Responsibility Performance, by William Baue, July 20, 2009, See data atCorporate Responsibility (CR) Index, BITC, UK.

Global Reporting Initiative–A Standardized CSR Report–Makes Gains, But Used In Only 13% Of S&P 500 Companies & 22% Of FTSE 100 UK Companies. [COMMENTARY] "With 46 percent growth over 2007 numbers, the GRI reported today that a record 1,002 companies issued sustainability reports based on the organization’s G3 Guidelines in 2008. Because there is no requirement to inform the GRI that a report has been issued in accordance with its guidelines, the number of GRI-compliant reports in 2008 is likely higher than the reported figure, but still represents a minuscule portion of the world’s corporations… " More government induced standardization and CSR reporting requirements are needed. Again, see my editorial,We Need Mandatory Corporate Social Responsibility (CSR) Reporting.
Despite Record Growth, Only a Tiny Fraction of Firms Report on Sustainability, July 16, 2009, GreenBiz, Netherlands.

UN’s PRI: 25% Rise In Members Incorporating Responsible Investing (RI) Elements In Fund Manager Contracts. [COMMENTARY] "The PRI said it had surveyed almost 300 global pension funds (asset owners) and fund manager signatories, and that 63% of the asset owners … which include some of the world′s biggest retirement plans … now made RI elements a part of manager hire stipulations, up from 38% in 2008." This is continuing great news for responsible (ethical) investing. It demonstrates that a higher consciousness is beginning to permeate the investment industry.
PRI: 25% rise in members incorporating RI elements in fund manager contracts, PE guide launched, by Hugh Wheelan, July 16, 2009, UK.

United Nations Environmental Program (UNEP) Financial Initiative Issues New Report On Legal & Fiduciary Responsibilities Of Integrating Environmental, Social, & Governance (ESG) Factors Into Asset Management. [COMMENTARY] This is a landmark report and makes a convincing case for asset managers and investors to incorporate ESG factors into their decision making process. Over time, this report should prove helpful to boosting the fortunes of ethical stocks and bonds.
Fiduciary responsibility: legal and practical aspects of integrating environmental, social and governance issues into institutional investment, July 2009, UNEP Finance Initiative, Switzerland.

SEC Considers Making Mandatory Company Reporting On How Climate Change Is Likely to Affect Them. [COMMENTARY]"The SEC is taking on climate change. Regulators there are considering requiring companies to disclose the effects of climate change on
their financial health, according to ClimateWire… At issue here is whether the SEC should force companies to discuss how climate change is increasing risk through physical damage, financial loss and legal liability."
Should the SEC agree to make companies disclose such information, we might see some very big and welcome changes in company rankings in the S&P 500! Be prepared.
SEC studies…climate change? By Kim Peterson, July 13, 2009, MSN Money, USA.

Companies Rated ’High’ On CSR Measures Often Rated Differently By Consumers. [COMMENTARY]"The results of a recent corporate responsibility study … the Corporate Citizenship Study (CCS) … have experts befuddled. The CCS asked consumers to rank several corporations′ level of corporate social responsibility, or CSR (a corporation′s transparency in its practice and reporting of environmental, financial, and other policies). The results of the CSS were unexpected: consumers ranked several corporations (including Microsoft and General Mills) over other companies (including Pepsi, Coca Cola, Apple, and McDonald′s) deemed more socially responsible by the CRO 100 (a CSR policing agency that annually ranks corporations in its “Best Corporate Citizens” list)."

It seems that in the eyes of the consumer, brand recognition often trumps a company’s corporate social responsibility credentials. Nonetheless, for companies, the advantage of using corporate social responsibility can, over time, add to the bottom line in many ways.
Do Consumers Know What They’re Doing? Recent Study Baffles Corporate Responsibility Experts, July 14, 2009, Triplepundit, USA.

Ethical Investing Grows In Africa. [COMMENTARY]"Databank Financial Services on Friday added to its annals of investment banking, an equity fund named ARK Fund, which seeks to integrate ethical and environmental concerns into its investment decisions. Databank is therefore the first to introduce ethical fund in Ghana, which aims at investing the fund′s proceeds in companies, which make only positive contributions to the world and thus exclude investment in specific activities or industries that are not in harmony with investors′ moral, religious and value orientations." It is wonderful to see that ethical investing is growing even among some of the poorer countries in this world.
Databank introduces first ethical investment fund in Ghana, July 11, 2009, Ghana Business News, Ghana.

ShareOwners.org. New Site For US Stockholders To Organize And Fight For Financial Industry Changes Benefiting Shareowners. [COMMENTARY] "ShareOwners.org is working to help promote market fairness for investors like you and me. This is our chance to have
a real voice by working together."
I have just become aware of this site and I think it might be something that many US ethical investors might want to participate in.
ShareOwners.org, USA.

US SRI Firms Write To SEC Slamming Chamber Of Commerce Voting Report As Fatally Flawed. [COMMENTARY]"US SRI firms and advisors have attacked as ’fatally flawed’ a recent report published by the US Chamber of Commerce that claims that shareholder proposals at corporate AGMs show no clear evidence of short- or long-term improvements in operating or stock market performance of target firms and could be placing trustees in breach of their fiduciary duty under ERISA guidelines… At a Responsible Investor conference on ESG in New York last week, Adam Kanzer, managing director and general counsel of Domini Social Investments, said the research methodology was not rigorous and claimed it showed significant political bias in its data selection."
US SRI houses write to SEC to slam Chamber of Commerce voting report as fatally flawed, by Hugh Wheelan, July 2, 2009, Responsible Investor, UK.

First U.S. Islamic ETF Launched. [COMMENTARY]"The first U.S. exchange traded fund to comply with Islamic law began trading today on the New York Stock Exchange under the ticker symbol JVS. Javelin Exchange Traded Funds launched the fund to match the performance of the Dow Jones Islamic Market Titans 100 Index, which is composed of 100 companies located in 23 countries outside the U.S." This is exciting news as it means that ETF products are now being launched based on the new Islamic/Shariah indices crafted by the major index providers. Undoubtedly, investor demand for these products is likely to grow in the years ahead, in part due to the ethical characteristics and values evidenced by the underlying investments.
First U.S.-Based Islamic ETF Launches Today, by Lee Conrad, July 1, 2009, onwallstreet, USA.

New Editorial

Blogs for Ethical Investors, by Ron Robins, July 19, 2009.

Leave a Reply

Your email address will not be published. Required fields are marked *