October 2010 Newsletter

October 2010 Newsletter

News & Commentaries by Ron Robins


US Companies Vague On Political Expenditures. [COMMENTARY]“A new study finds that while nearly 80 percent of S&P 500 companies have disclosed direct political campaign spending policies, 86 percent have no disclosed policies regarding indirect political expenditures. Additionally, only 20 percent of corporations disclose how much is actually spent and which organizations or causes receive the funds.”

I believe that all corporate political expenses should be banned. At the very least, they should be pre-approved by shareholders and all such donations explicitly listed for public view.
Study Finds 86% of S&P 500 Companies Have Not Disclosed Indirect Political Expenditure Policies, Only 20% Disclose Spending, press release, October 14, 2010, IRRC Institute & Sustainable Investments Institute, USA.

Companies With High ESG Scores Suffered Less In Downturn, Says State Street Global Advisors (SSgA) Study.[COMMENTARY]“SSgA found that, generally speaking, high -scoring ESG corporates did, in fact, suffer less during the down markets… “ (Page 5). This is a very interesting read on the evolution, importance and future of ESG. I recommend it to all ethical investors.
Sustainable Investing: Positioning for Long-Term Success, October 2010, State Street Global Advisors, USA.

Sustainability Fund Holdings Have Similar Sustainability Risks To Conventional Funds, Says Study Reported In UK’S Financial Times. [COMMENTARY]“A recent, but as yet unpublished, study by the University of Zurich measured the sustainability of large sustainable funds with the help of the RepRisk-Index (RRI), and compared their RRI scores with those of regular equity funds… Felix Remmers, author of the study, [says] ’The
shares that are in so-called best-in-class-sustainability funds overlap to a large extent with the ones we find in regular equity funds. Hence it is no surprise that these specialised
funds are statistically not more sustainable than their regular colleagues.’”

This is not surprising to me either. It is to be expected that over time all funds will gravitate to include ’best-in-class’ companies. Nonetheless, I am sure some readers will be surprised by this data. If one can afford it, an individually tailored portfolio that truly reflects ones personal values might be preferable. That way, you at least enjoy some real ’ownership’ of your holdings and are not subject to some fund holdings that might be contrary to your values.
Credibility of sustainable funds in doubt, by Charlotte Jacquemart, March 24, 2010, Financial Times, UK.

Canada’s Northwest & Ethical Funds Targets 50 Companies For Dialogue On ESG Issues. [COMMENTARY]“Northwest & Ethical Investments L.P. (NEI), through its ESG Services Team, plans to engage in dialogue with over 50 Canadian and international corporations in 2011 to advance environmental, social, and governance issues, reduce portfolio risk and increase shareholder value. The role of stock exchanges in bringing stability and credibility to the capital markets is an important focus in this year’s engagement work.” Congratulations to these firms for this initiative. It is in everyone’s interest that they succeed.
Ethical Funds Releases 2011 Focus List, press release, October 20, 2010, Northwest & Ethical Investments L.P., Canada.

NEWSWEEK’s 2010 Green (Company) Rankings. [COMMENTARY]“NEWSWEEK’s 2010 Green Rankings is a data-driven assessment of the largest companies in the U.S. and in the world. Our goal was to cut through the green chatter and quantify the actual environmental footprints, policies, and reputations of these big businesses.” A quick look at their findings does not reveal anything extraordinary. Nonetheless, it is useful for ethical investors to peruse.
NEWSWEEK’s 2010 Green Rankings, October 2010, NEWSWEEK, USA.

2010 Clean Capitalism Report On Canada’sS&P/TSX 60 Companies. [COMMENTARY]“The report includes an analysis of the ESG status of S&P/TSX 60 companies, benchmark rankings, and best practice highlights. The intention of the report is to provide companies, regulators and investors with data and analysis to help drive sustainability performance for leading companies in Canada. Data was collected on 13 indicators in 4 categories, Environmental, Social, Governance and Transparency.” The people behind producing this report always do a commendable job. It is worthwhile reading for all ethical investors.
2010 Clean Capitalism Report, by Sucheta Rajagopal, October 27, 2010, SRI Monitor, Canada.

Study Finds European Company CSR Reports Better Than Those Of US Companies. [COMMENTARY]“In a first-of-its-kind research project, the Sethi CSR Monitor© has analyzed reports by 514 companies selected from a worldwide database of 1,300 companies. ’Our analysis shows a wide range of differences in the content and quality of these reports,’ says Professor S. Prakash Sethi, the principal researcher and founder of the analytical tool, the Sethi CSR Monitor.” The reports’ analysis looks interesting–but at $700 is not for everyone.
Critical Look at How Companies Report on Corporate Social Responsibility and Sustainability, press release, October 18, 2010, Sethi International Center for Corporate Accountability, Inc.,USA.

80% Of UK Investment Advisors Offer Green Investments. [COMMENTARY]“Over 80% of financial advisers offer green and ethical investments, a survey for National Ethical Investment Week shows. But it says concerns remain over the performance of green and ethical funds. This is despite an October 2009 survey that found 90% of wealth managers reported their responsible investment portfolios performed the same.” Good news continues for the growth of ethical investing in the UK. Again, though, I wonder how much is due to a real desire to invest ethically and according to ones values compared to just investing in what is considered to be the next ’big thing.’
80% of advisers offer green investments, by Samuel Dale, October 18, 2010, Mortgage Strategy, UK.

European SRI Retail Funds Grow 41% In One Year, Says Vigeo. [COMMENTARY]“The number of SRI retail funds increased to 879 from 683, while assets under management
rose 41 per cent to …76bn ($107bn) from …53bn in the 12 months to June this year, according to an annual fund review by Vigeo, a corporate social responsibility ratings agency, and Morningstar.”

This is phenomenal growth. I cannot help but wonder how many investors buying sustainability oriented funds are buying only because they believe it is the next ’big’ thing, or are really buying also out of ethical considerations for the planet’s welfare? This needs to be studied to understand if socially responsible-ethical investing is really gaining ground or not.
SRI funds popular in Europe, by Ruth Sullivan, October 17, 2010, Financial Times, UK.

Boston College Releases 2010 CSR Index Ranking. [COMMENTARY]“For the last three years the Boston College Center and Reputation Institute have created a ranking of the top 50 companies in the United States that the public distinguishes for corporate social responsibility… Top companies are Johnson & Johnson, The Walt Disney Company and Kraft Foods Inc.” This is a ’reputational’ index and therefore many ethical investors may quarrel with the findings from their perspective.
Corporate Reputation and Social Responsibility Rankings, October 13, 2010, Boston College Center for Corporate Responsibility, USA.

European Responsible Investment Doubles To …5 Trillion (About $7 Trillion) In Two Years. [COMMENTARY]“The size of the European sustainable and responsible investment market has almost doubled in the last two years, despite the financial crisis, according to the latest survey of the market by the European Sustainable Investment Forum (Eurosif). Its 2010 European SRI study … the benchmark survey of institutional investors on the topic … estimates that total SRI assets shot up to …5 trillion as of December 31, 2009, a significant jump from …2.7 trillion on December 31, 2007 … a growth of 87%, or a
compound annual growth rate of 37%.”

This is tremendous growth and indicates a major shift in investor attitudes towards green-ethical investing.
European RI market doubles to …5 trillion in 2 years, despite crisis: Eurosif survey, by Hugh Wheelan, October 13, 2010, Responsible Investor, UK.

Honda, Toyota & Hyundai Are Cleanest Automakers Says Union Of Concerned Scientists. [COMMENTARY]“For the fifth consecutive time, Honda earned the title of Greenest Automaker for its efforts of maintain low smog and greenhouse gas emissions levels in its fleet.Ford, GM and Chrysler were ranked the lowest.
Honda Continues Five-Time Winning Streak as Greenest Automaker, October 8, 2010, GreenBiz, USA.

Carbon Disclosure Project (CDP) Reports On FTSE 350 Companies. HSBC, Reckitt Benckiser, RBS, Scottish & Southern and Tesco Among Climate Change Leaders. [COMMENTARY]“According to its latest report, the number of companies in the FTSE 350 responding to the CDP rose to 69% (243 companies) in 2010, from 67% (236) in 2009. This was ’impressive given the context of the economic downturn and uncertainty about the future direction of global climate policy.’”

The CDP performs admirable work and reports on carbon emissions of companies worldwide. It produces very useful information for ethical investors.
Carbon Disclosure Project unveils FTSE 350 climate leaders, by Daniel Brooksbank, October 8, 2010, Responsible Investor, UK.

California Requiring Companies To Disclose Supply Chain Policies. [COMMENTARY]“SB 657 requires major retail sellers and manufacturers doing business in California to disclose their voluntary efforts to eradicate slavery and human trafficking from its direct supply chain for tangible goods offered for sale.” Well done California! Should this become prevalent, it should help ethical investors in their search for the most ethical and socially responsible companies.
Gov. Schwarzenegger Signs Legislation to Combat Human Trafficking, press release, September 30, 2010, Office of the Governor, California, USA.

Recent Commentaries by Ron Robins on Alrroya.com

Investing Ethically? September 30, 2010.

Manipulated Markets Can Cause Ruin, October 9, 2010.

Unethical Investing By Charities, October 21, 2010.

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