July 2010 Newsletter

July 2010 Newsletter

News & Commentaries by Ron Robins


Intel, Weyerhaeuser & Merck Tops In Green Governance Rankings, Says Governance and Environmental Management Strength (GEMS). [COMMENTARY]“The GEMS Rating gives companies a score on a 100-point scale, based on their ability to anticipate and manage environmental issues that offer risks and opportunities to their operations. The GEMS Rating assesses companies depending on the presence or absence of 49 indicators in five categories: governance, policy, infrastructure and systems, performance results and transparency and accessibility.” See the top ten companies in the link below.
Intel Comes Out on Top in Green Governance Rankings, July 21, 2010, GreenBiz, USA.

Environmental & Social Shareholder Resolutions Make Big Gains So Far In 2010. [COMMENTARY]“The season was marked by record-breaking investor approval for corporate policies that protect LGBT rights, more reporting on sustainability in general and the environment in particular, and increased disclosure of political spending. Results are now available on nearly all the 387 shareholder proposals Si2 is tracking, including votes on the 166 resolutions that came to votes in the first six months of the year.” This is another item of good news. Many companies need to be held to task for their actions more than ever before.
Social and Environmental Proposals in 2010–mid year review, by Heidi Walsh, July 22, 2010, Sustainable Investments Institute, USA. (Courtesy ofResponsible Investor, UK.)

Netherlands Study Examines Why Both SRI & ’Sin’ Stocks Outperform. [COMMENTARY]“A segmentation of the socially responsible investing (SRI) movement by values-versus-profit orientation solves the puzzling evidence that both socially responsible and controversial [sin] stocks produce superior returns.” This is a fascinating new study discussing ethical -socially responsible investing from an insightful perspective.
A Tale of Values-Driven and Profit-Seeking Social Investors, by Jeroen Derwall, Kees Koedijk, and Jenke Ter Horst, July 13, 2010, School of Economics and Management, Tilburg University, The Netherlands.

New Study Finds SRI Funds Slightly Outperform On A Risk-Adjusted Basis. [COMMENTARY]“[The study] found that while SRI funds tended to slightly underperform their non-SRI peers (-17 bps per year), they tended to slightly outperform on a risk-adjusted basis (+1 bps year), results that were neither statistically nor economically significant.” Study period was 19 years. It is a useful addition to the already significant body of research on this topic.
Exploring the Cost of Investing in Socially Responsible Mutual Funds: An Empirical Study, by David M. Blanchett, July 21, 2010, The Journal of Investing, USA.

US Congressional Budget Office Report Highly Critical Of Benefits From Ethanol Tax Break. [COMMENTARY]“In its calm and measured way, the Congressional Budget Office (CBO) just delivered a blistering assessment of the environmental value of corn-based ethanol.” When this subsidy was first announced I, like many others, proclaimed it as a way to buy farm votes and was a terribly expensive method to help the environment. Now it seems the CBO agrees.
Ethanol gets skewered by recent CBO assessment, by Tom Philpott, July 16, 2010, GRIST, USA.

Over 90% Of Institutional Investors Want Green Investments. [COMMENTARY]“Green private equity is on the agenda of virtually all institutional investors, with more than 90 per cent wanting exposure to the sector, according to a new survey. Over 90% of institutional investors claim they want to have exposure to ’green’ investments… The challenge for green private equity and venture capital managers is to accelerate the current levels of interest and future expectations into actual commitments into their funds sooner rather than later.” This another good sign for ethical investors and for the planet.
Institutional Investors Increasingly Looking at Green Private Equity and Venture Capital, According to New Survey, July 20, 2010, press release by New Energy World Network & AltAssets, UK.

Hong Kong’s Hang Seng Launches Sustainability Indexes. [COMMENTARY]“Hang Seng Indexes has become the latest to launch a series of sustainability indices, covering Hong Kong and Chinese companies. The aims of the index series is to ’further raise awareness about corporate sustainability’ as well as to meet international demand for socially responsible investment in Chinese companies.”

It will not be long before corporate social responsibility (CSR) reporting becomes mandatory in some form in most countries around the world. See my recent article,A Call for Mandatory Corporate Social Responsibility Reporting,
Hang Seng Indexes Announces Constituents of the Hang Seng Corporate Sustainability Indexes, press release, July 15, 2010, Hang Seng Indexes, Hong Kong.

’Too-Big-To-Fail’ Banks Excluded From US Socially Responsible Mutual Fund. [COMMENTARY]“Last week Appleseed Fund began tarring ’too-big-to-fail’ banks with the same brush as pornographers, weapons-makers and others… ’Given the failure of regulators to prevent the credit crisis and the subsequent failure of legislators to break up the massive and interconnected banks that helped create the crisis, it’s incumbent on depositors and investors to vote with their wallets,’ co-portfolio manager Adam Strauss said.”

Controversial, but this is a stand I agree with. American and European big bank management attitudes and practices have not changed, and pretty much the same executives involved in causing this mess are still in place. Well done Appleseed!
Socially responsible mutual fund cuts out ’too-big-to-fail’ banks, by Becky Yerak, July 14, 2010, The Chicago Tribune, USA.

Hong Kong Giving Investors Two Days To Change Their Minds On Some New Investments. [COMMENTARY]“Beginning in January of 2011, the HKMA has mandated that banks allow first-time investors and those over the age of 65 a two-day period in which to think about the investment they′ve just gotten into. Lenders will be looked at in regard to the selling of unlisted securities, futures products and structured deposits but not listed stocks, futures and warrants.” Do you think this will catch-on? I guess they had to leave out listed securities.
Banks cringe at thought of ethical behavior, July 14, 2010, The Dark Side, Hong Kong.

Western European CEOs Do Not Believe Decline In Biodiversity A Problem For Business Growth. [COMMENTARY]“More than 50% of a sample of chief executive officers (CEOs) in Latin America (167 companies surveyed) and 45% (40 companies surveyed) in Africa believe a decline in biodiversity … such as plant and animal habitats … is a challenge to business growth, against less than 20% of peers in western Europe (442 companies surveyed), according to the findings of The Economics of Ecosystems and Biodiversity (TEEB) report released yesterday.” I suspect the numbers might be similar for North American CEOs too. There is a lot of education yet to take place. The increasing focus on environmental, social and governance (ESG) issues should help.
TEEB report: corporations out of step with consumers on biodiversity loss, by Hugh Wheelan, July 14, 2010, Responsible Investor, UK.

Fund Focuses On Shareholder Activism. [COMMENTARY]“Australian Ethical Investment (AEI) has launched an index fund that seeks to engage with companies about their policies on climate change and improve their disclosure. The Climate Advocacy Fund (CAF) invests in Australia’s largest companies by economic footprint, which is measured by sales, cash flow, book value and dividends.”

This is a new concept for ethical investors to consider. I remain on the sidelines as to whether this will work or not. It will be interesting to see what the fund actually does and the results it achieves.
Australian Ethical launches climate index fund, by Wouter Klijn, July 8, 2010, Investor Daily, Australia.

New UK Guide For Charity Trustees. Of Interest To Charity Trustees Globally. [COMMENTARY]“Jointly launched by the EIRIS Foundation and Charity Finance Directors’ Group (CFDG), the free guide provides practical advice and presents case studies of charities that have adopted a responsible investment approach to help other charities to align their principles with their investment practices.”

Though the UK has a relatively smaller ethical investing footprint than the US, it seems to account for a disproportionate amount of leading edge ethical investment research, studies and news. This guide is typical of the quality of material coming from the UK. As I indicated too, it is worthwhile reading for anyone, anywhere who is engaged in managing charity funds.
New guidance to help more charity trustees invest responsibly, EIRIS Foundation and Charity Finance Directors’ Group (CFDG), UK.

Global Cleantech Venture Capital Investment Up 63% In First Half Of 2010. [COMMENTARY]“Clean technology venture investment worldwide has soared by 65% in the first half of 2010 compared with the same period last year. According to preliminary
results by the Cleantech Group, in collaboration with financial service provider Deloitte, cleantech venture investments came to more than $2bn (…1.6bn) across 140 companies in North America, Europe, China and India in the second quarter.”
The ongoing BP oil disaster is fuel for cleantech.
Global cleantech investment soars by 63% in first half, by Nina R…hrbein, July 5, 2010, IPE, UK.

Recent Commentaries by Ron Robins on Alrroya.com

Sin or Ethical Investing: Which Pays Best? July 13, 2010.

Can Ethical Investing Produce Higher Returns? July 19, 2010.

GDP is a Bad Statistic. Alternatives Coming, July 28, 2010.

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