January 2011 Newsletter

January 2011 Newsletter

News & Commentaries by Ron Robins


Sustainalytics Report Links Sustainability Performance To Shareholder Value. – [COMMENTARY] “A new study by Sustainalytics highlights links between sustainability performance and shareholder value. The report, ’Sustainability and Materiality in the Natural Resources Sector’ looked at environmental and social practices in the forestry, mining and oil and gas sectors and found positive correlation to competitiveness in each sector.” This type of research is vitally needed. Congratulations to Sustainalytics!
Sustainability Key Competitive Driver in Natural Resources Sector, press release, January 27, 2011, Sustainalytics, Switzerland.

’Say On Pay’ Rules For Companies Now Official US SEC Policy. – [COMMENTARY] “The Securities and Exchange Commission today adopted rules concerning shareholder approval of executive compensation and “golden parachute” compensation arrangements as
required under the Dodd-Frank Wall Street Reform and Consumer Protection Act.”
At last they are official.
SEC Adopts Rules for Say-on-Pay and Golden Parachute Compensation as Required Under Dodd-Frank Act, press release, January 25, 2011, Securities & Exchange Commission (SEC), USA.

Nine US Companies To Be Challenged On Hydraulic Fracking. – [COMMENTARY] “Shareholders file resolutions with Cabot Oil & Gas, ExxonMobil, Chevron, and other energy companies to spur more responsible ’fracking’ practices.” The process of fracking to recover oil needs much more study, especially concerning how it affects fresh water supplies.
Investors challenge nine oil and gas companies on hydraulic fracturing practices, press release, January 21, 2011, Ceres, USA.

WWF Canada Reports On Carbon Risk In Canadian Institutional Portfolios. – [COMMENTARY] “WWF-Canada released a ground-breaking report highlighting climate change as a new risk for institutional investors…The study found that the S&P/TSX Index has the third-largest carbon footprint among major global indices, measured by carbon emissions per USD 1 million sales. Only the Indian and Emerging Markets global indices have larger footprints..”

It is Canada’s resource sector that primarily accounts for the high carbon counts. The report is important reading for anyone investing in Canadian stocks. It also provides a carbon footprint analysis for various Canadian funds.
WWF-Canada Report Shows High Cost of Carbon to Investors, January 19, 2011, WWF, Mercer & Trucost, Canada.

Michigan Court Ruling Aids Development Of Islamic Finance In USA. – [COMMENTARY] “Lawyers said a U.S. court decision to dismiss a case alleging AIG’s (AIG.N) sharia-
compliant businesses promoted religious doctrine, will boost confidence in the industry and lift sales of Islamic products in the longer term.”
Islamic finance has met with many obstacles in the US. Slowly though, the legal challenges to it there are being resolved.
US legal win to boost Islamic finance -lawyers, by Shaheen Pasha, January 18, 2011, Reuters, Dubai.

Shareholder Proxy Access Improves Firm’s Value, Harvard Study. – [COMMENTARY] “We use the SEC′s October 4, 2010 announcement that it would significantly delay implementation of its August 2010 proxy access rule as a natural experiment. Because firms with substantial institutional ownership would have been most affected by the SEC′s now-delayed changes, we use the share and composition of institutional investors to sort firms into those more and less affected by the October 4 news. Firms that would have been most affected by proxy access, as measured by institutional ownership, lost value on that day.”

Continuing, “The value drop was 55 basis points for a 10 percentage point change in activist institution ownership. These results suggest that financial markets placed a
positive value on shareholder access, as implemented in the SEC′s August 2010 Rule.”
Ethical investors take note!
Does Shareholder Proxy Access Improve Firm Value? Evidence from the Business Roundtable Challenge, by Bo Becker, Daniel Bergstresser, and Guhan Subramanian, November 22, 2010, Harvard Business School, USA.

Report Evaluates Climate Change Reporting By Small US Companies. – [COMMENTARY] “Pax World Management LLC… and Clean Air-Cool Planet (CA-CP)… released a new report, ’Risk and Opportunity in a Low-Carbon Business Climate: Small & Mid-Caps and Climate Change.’ The report notes that reporting on any of several types of climate-related risk is generally inadequate among smaller companies, and that what reporting is done is generally limited to only regulatory risk, while ignoring other potential risks (e.g. physical, business interruption or supply chain, etc.).”

This report discusses the climate change reporting in a number of different US industry sectors and specific companies.
Risk and Opportunity in a Low-Carbon Business Climate: Small & Mid-Caps and Climate Change, January 5, 2011, Pax World Management LLC and Clean Air-Cool, USA.

Greenpeace Publishes Survey Of Greenest Electronics Manufacturers. – [COMMENTARY] “In seven categories of electronics, Asus led with two products at the top of the heap, as well as the highest-scoring product surveyed, the Asus VW-247H-HF monitor. Among the other categories, Asus also led with the greenest notebook computer, while HP can boast the greenest desktop and Acer landed the greenest netbook computer. Samsung’s Blue Earth mobile phone led that category, Sony Ericsson made the greenest smartphone, and Sharp took the top spot in the television category.”

This is Greenpeace’s third annual survey. Of course electronics is an area where many toxic materials are used.
Asus Sits Atop Green IT Product Survey from Greenpeace, by Matthew Wheeland, January 7, 2011, Greener Computing, USA. Also see theCES Sustainability Report, January 5, 2011.

Latest Commentaries by Ron Robins on Alrroya.com

Can US Bankers and Politicians be Truthful? January 6, 2011.

Investors Rush to Cash In on Climate Change, January 12, 2011.

Invest Ethically for ‘All Good′ Returns, January 21, 2011.

A Global Central Bank and Currency? January 27, 2011.

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