November 2011 Newsletter

November 2011 Newsletter

News & Commentaries by Ron Robins


Judyth Piazza Interviews Ron Robins On Sustainable-Green Country Bonds & Green Jobs, – [COMMENTARY] In a time when there is so much concern about sovereign bonds (bonds-debt issued by countries), I discuss exciting new research that compares and ranks them from a green-environmental-social perspective. The interview is about 15 minutes long. The first two minutes are ads. The discussion of the bonds is midway through the interview, so please be patient. November 27, 2011,SOP Radio, USA.

Climate Bond Standard Created To Assure Integrity Of Green Claims For Investors, Governments. – [COMMENTARY] “The Standard is a screening tool for investors and governments to support investment in delivering a Low Carbon Economy. Bonds complying with the Standard will be certified as ‘Climate Bonds′— a mark that assures their contribution to the delivery of a Low Carbon Economy… The finalized text was approved by the Climate Bond Standards Board, a group of institutional investors and leading environmental NGOs consisting of the California State Teachers′ Retirement System(CalSTRS); the Natural Resources Defense Council; the California State Treasurers′ Office; the Investor Group on Climate Change (IGCC); the Carbon Disclosure Project; and the Ceres Investor Network on Climate Risk (INCR).”

With such backing, this is a great step forward and could encourage significant growth and interest in green bonds!
Climate Bond Standard launch backed by investors and NGOs; Goal to Assure Integrity of Green Claims for Investors, Governments, by Sean Kidney, November 24, 2011, Climate Bonds Initiative, UK.

US Millionaires Significantly Lower Their Expectations For Socially Responsible-Green Investment Gains In 2012, Says Survey.– [COMMENTARY] “According to a study from PNC Wealth Management, only one in ten millionaires are optimistic about the U.S. economy … the lowest since the survey started in 2006, and even below the 2008-2009 crisis levels. Fully 9% [are] invested in gold. When asked where they see the biggest growth for stocks in 2012, most said technology (54%), energy/utilities (49%), health-care (44%) and financial stocks (19%). They are followed by socially responsible investments (11%) [down from 21% in 2011], manufacturing (11%) and transportation (7%). Retail ranked dead last, at 7%.”

I have been following this survey since its inception. After reading this review of the 2011 survey, I suspect there is an important dynamic at play here. I believe the reason for such a lowering of expectations for socially responsible-green investments has to do with their belief that the perceived hard times will push oil prices lower and thus interest in alternative energy lower as well. Also, companies might downshift ESG as a priority to save money.

Personally, I never believe in short-term forecasts, but for the long-term I strongly suspect that oil prices will go much higher, and that corporate ESG activities to continue strong as they frequently relate to reducing costs and improving stock prices.
How to Invest Like a Millionaire in 2012, by Robert Frank, November 21, 2011, The Wall Street Journal, USA.

UK Survey Finds Only 5% Invest Ethically & 63% Don’t Know What An Ethical Investment Is. – [COMMENTARY] “Ethical investments are growing investments, but awareness amongst consumers is still surprisingly low, according to new research commissioned by Emerald Knight… While 16 per cent of British people would only ever invest for personal profits, only 30 per cent think that you can have both profits and principles when it comes to a socially responsible approach to investment.” In developed countries everywhere, there is still the wrong perception that profits have to be sacrificed to invest ethically.
Low ethical investment awareness, despite recent growth, by Millie Dyson, November 21, 2011,, UK.

More Women In Management Improves Corporate CSR & Profitability.– [COMMENTARY] “A new study conducted by researchers at Catalyst and Harvard Business School (HBS) suggests that what′s good for women is good for business and also for society as a whole. According to Gender and Corporate Social Responsibility: It′s a Matter of Sustainability, companies with more women at the top may be better practitioners of corporate social responsibility (CSR). Prior Catalyst research has shown that such companies also financially outperform, on average, those with fewer women in senior leadership roles.”

There are one or more US mutual funds that only invests in companies with high ratios of women in management! Ethical investors might want to incorporate gender ratios when they are reviewing the managements of the companies they invest in.
New Catalyst Study Links More Women Leaders to Greater Corporate Social Responsibility, press release, November 16, 2011, Catalyst, USA.

New Sustainable Corporate Bond Fund Launched By Bank Sarasin, Switzerland. – [COMMENTARY]“Bank Sarasin is this week to begin marketing its first sustainable corporate bond fund, amid growing institutional interest in sustainable fixed income and real estate offerings. The Swiss private bank has had ’a good response’ to a mixed corporate and sovereign bond fund it offers, where the investible universe is subject to Sarasin’s sustainability screening.”

A new investing paradigm is beginning with the launching of sustainable corporate bond funds. With so much interest in sustainability by investors worldwide, such funds could become sought after. Congratulations to Bank Sarasin for being in the vanguard of this new bond vehicle.
Sarasin launches sustainable corporate bond fund, by Mark Nicholls, November 14, 2011, Environmental Finance, UK.

Islamic Finance Assets Projected To Double To $1.8 Tn By 2016, Says Deutsche Bank. – [COMMENTARY]“The global debt crisis may help Islamic finance nearly double to $1.8 trillion in assets by 2016 as stagnant corporate lending pushes institutions to seek alternative financing to traditional methods, according to a report by Deutsche Bank. The bank forecasts that there is over $2 trillion of deleveraging in the United States and Europe, creating a financing glut for both struggling countries and countries in developed markets.”

I have remarked many times that Islamic finance, once it can overcome market suspicions of it being linked to terror groups, particularly, is a real contender to conventional finance. Furthermore, many of its tenets, i.e. bonds and derivatives that must be asset-based and use of ethical-spiritual screens, etc., might well be integrated into many conventional finance products too in the years ahead.
Islamic finance may double in assets by 2016-D.Bank, by Shaheen Pasha, November 15, 2011, Dubai, UAE.

China CSR Study Demonstrates Need To Understand How CSR Data Is Gathered & Interpreted. – [COMMENTARY] “Believe it or not, if there was no information on the CSR activities of a company, they scored that firm zero! And if their search of negative reportsuncovered anything, then the company ended up with a negative score.”

As I have said many times, when reading CSR/SRI rankings, it’s important to know the biases, methodology and financial backers of the pertinent study. This article makes it very clear as to how investors can be duped by such rankings.
China CSR Report: A New Low in Statistical Analysis, by Stan Abrams, November 9, 2011, Business Insider, USA.

Corporate Accountability Of Political Expenditures Improving In The US, Says The Investor Responsibility Research Center (IRRC) Institute.– [COMMENTARY] “Corporate accountability and disclosure of political expenditures is on the upswing, with the boards of 31 percent of S&P 500 companies now explicitly overseeing such spending, compared to 23 percent in 2010. However, this increased oversight and transparency does not necessarily translate into less spending, as companies with board oversight of political expenditures spent about 30 percent more in 2010 than those without such explicit policies.”

Personally, I’m dubious of any spending by corporations on political activities. The fact that only 31% of US corporate boards actually control such spending appears terribly negligent to me, as it is to probably most ethical investors.
New Study Finds Oversight and Disclosure of Corporate Political Spending Increasing, but Such Measures Do Not Necessarily Limit Spending, press release, November 10, 2011, IRRC Institute, USA.

HP, Dell & Nokia Lead New, Revised, Greenpeace Electronics’ Companies Rankings. – [COMMENTARY] “You also won’t find easy comparisons to previous editions of the report. ’That this really is a new day,’ Casey Harrell, an analyst and campaigner at Greenpeace, explained in an interview. ’We’ve added enough criteria that it’s not completely apples-to-apples to compare with previous versions of the report.’” This article provides a good overview of what Greenpeace has done in revising its just released rankings. Some of the findings might be surprising–but worthwhile for ethical investors to consider.
HP Leads Greenpeace’s Relaunched Green Electronics Rankings, by Matthew Wheeland, November 9, 2011, GreenBiz, USA.

82% Of Fund Managers Believe ESG Issues Important When Choosing New Investments, Says Clear Path Analysis. – [COMMENTARY] “82% of fund managers now believe that ESG issues are an important consideration when choosing new investments, however 43% remain unclear about the links between ESG and profits in the short to medium term. This is despite evidence from Allianz Global Investors which indicates that this type of investing can provide returns of up to 1.6% over traditional equities.” It should not be long before ESG considerations are built-in to all investment analysis, not only for stocks, but for all forms of debt as well.
Awareness of environmental and social governance among investors prompts fund managers to consider new investments, press release, November 8, 2011, Clear Path Analysis, UK.

High Sustainability Firms Outperform Financially & In Stock Prices, Says Harvard Study. – [COMMENTARY] “Using a matched sample of 180 companies, we find that corporations that voluntarily adopted environmental and social policies many years ago … termed as High Sustainability companies … exhibit fundamentally different characteristics from a matched sample of firms that adopted almost none of these policies … termed as Low Sustainability companies… we provide evidence that High Sustainability companies significantly outperform their counterparts over the long-term, both in terms of stock market and accounting performance.”

This might be a landmark study and have powerful positive ramifications for companies and investors alike! Ethical investors can again take heart that theirs is not only the ethical path–but possibly one of the most profitable paths too.
The Impact of a Corporate Culture of Sustainability on Corporate Behavior and Performance, by Robert Eccles and George Serafeim of the Harvard Business School and Ioannis Ioannou, London Business School, November 4, 2011. USA/UK.

LOHAS (Lifestyles Of Health And Sustainability) Markets To Grow From $200 Bn To $420 Bn In 3 Years. – [COMMENTARY] “18% of U.S. general population adults (43 million) are classified as LOHAS consumers. LOHAS consumers have strong attitudes regarding personal and planetary health, which are widely reflected in their behavior. They are heavy users of healthy and ’green’ products and exude a strong influence over others.” This is encouraging news for many ethical investors, who themselves are likely LOHAS consumers.
LOHAS Consumers… Beyond Healthy Food & Beverage Choices, November 2011,, USA.

Corporate Reputation Equity Index Fund Launched.– [COMMENTARY “RepuStars Variety Corporate Reputation Index Launches November 1… by Steel City Re, a pioneer in developing tools linking reputation, risk, and enterprise value. The RepuStars Variety Corporate Reputation Index tracks up to 57 company stocks that appear to be underpriced relative to their metrics as measured by Steel City Re′s proprietary Corporate Reputation IndexTM, whichtracks 5500 companies weekly. In using the RepuStars Index as an investment strategy, investors can take advantage of this price disparity.”

Though not strictly an ethical index, the index may carry some credibility for ethical investors. RepuStars past numbers suggest potential market outperformance. It will be interesting to follow its progress.
RepuStars… Variety Corporate Reputation Index … Calculated by Dow Jones Indexes, press release, November 1, 2011, RepuStars, USA.

New Book

Impact Investing: Transforming How We Make Money While Making a Difference, by Antony Bugg-Levine and Jed Emerson, Jossey-Bass 2011.
“My experience with eBay demonstrated that you can do well by doing good. Impact Investing explores this important idea and provides many examples of the social impact that a for-profit business can ignite.”—Pierre Omidyar, founder and chairman, eBay; founding partner, Omidyar Network, USA.

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