April 2012 Newsletter

April 2012 Newsletter

News & Commentaries by Ron Robins


Walmart Investors Voice Deep Concerns Over Bribery Allegations.– [COMMENTARY] “Members of the Interfaith Center on Corporate Responsibility (ICCR), a coalition of faith-based and responsible investors that have been actively engaging Walmart on social, environmental, and governance issues are dismayed by recent reports in the New York Times alleging systemic bribery and corruption to facilitate the rapid expansion of their retail operations in Mexico.”

For a company that’s trying to make it to the forefront of CSR, if proven true, this could seriously erode what little support the company presently has among ethical investors.
Walmart Investors Voice Deep Concerns over Bribery Allegations, press release, April 25, 2012, ICCR, USA.

UK Investors With …1.5 Trillion Of Investments Rally Against Excessive Pay. – [COMMENTARY]“A coalition of pension funds and asset managers, who together control more than …1.5 trillion of investments, hits out at ’disproportionate’ rises in bonuses and calls for companies to ’claw back’ unwarranted payouts… [They include:]… Allianz Global Investors… two Swedish state pension funds with more than …40 billion in funds under management together, the City group F&C Asset Management, a clutch of ethical investment funds and the Local Authority Pension Fund Forum, whose members control more than …100 billion in funds, and the Church of England Pensions Board.” Finally, these groups are standing together to fight excessive management compensation.
City funds prepare assault on excessive executive pay, by John Bingham, April 23, 2012, The Telegraph, UK.

Canada Promoting Board Diversity. – [COMMENTARY] “The Canadian Board Diversity Council (CBDC) announced today it is launching Canada′s first ever database of diverse candidates for board of director positions in Canada′s largest 500 organizations. The new initiative, Diversity 50, supports the Council′s mandate to increase representation of candidates who reflect the diversity of the broader Canadian population.”

For multinational companies, board diversity should be a given so as to optimize corporate performance in multi-lingual, multi-cultural markets. Yet that is often not the case. This is a good socially responsible initiative by Canada that is also likely to benefit corporate performance.
CBDC Launches Canada-First Diversity 50 Database of Board Candidates, press release, April 19, 2012, Canadian Board Diversity Council, Canada.

’Say On Pay’ Stockholder Vote Rebukes Citi CEO’s Pay Package.– [COMMENTARY] “In a stinging rebuke, Citigroup shareholders rebuffed on Tuesday the bank′s $15 million pay package for its chief executive, Vikram S. Pandit, marking the first time that stock owners have united in opposition to outsized compensation at a financial giant.” Finally, it’s happening! The outsized compensation packages for financial industry executives are being scrutinized by stockholders as never before. This could be the beginning of a trend that might influence the entire financial industry. I hope so.
Citigroup′s Chief Rebuffed on Pay by Shareholders, by Jessica Silver-Greenberg and Nelson D. Schwartz, April 17, 2012, The New York Times, USA.

Global Green Energy Investments Fall. – [COMMENTARY] “Global investment in green energy fell sharply in the first three months of 2012 as European financial woes, upcoming U.S. elections and fears of declining federal support fed a ’destabilizing uncertainty,’ a report unveiled Thursday finds. New financial investment fell 28 percent from the prior quarter to $27 billion, according to Bloomberg New Energy Finance, which called the first quarter 2012 tally ’the weakest since the depths of the financial crisis’ in early 2009.” If oil prices continue to climb, green energy investments could still recover.
Global green-energy investment drops, by Ben Geman, April 12, 2012, The Hill, USA.

UK Banks & Insurers Blacklist Cluster Bomb Companies.– [COMMENTARY] “The Guardian has learned that major firms such as Lloyds Banking Group (through its investment arm Scottish Widows), Aviva, the UK’s largest insurer, and the Co-op have imposed a blanket ban on holding shares in companies that make or supply cluster munitions, purging them from nearly all their share portfolios. Royal Bank of Scotland has banned all new lending to the same companies, and is now reviewing its defence industry shareholdings.”

It seems that some financial institutions are taking a higher ethical stance. Perhaps many more will follow? Let’s hope so. It’s good news for ethical investors and investments.
UK banks and insurers blacklist cluster bomb manufacturers, by Severin Carrell, April 9, 2012, The Guardian, UK.

Why Businesses Aren’t Trusted. – [COMMENTARY] ” …trust appears to be increasing in value to our clients’ businesses at the same time as it is becoming more elusive. Trust — or the absence of it — is having an ever-greater impact on the things that businesses care about such as such as brand equity, customer loyalty and market share, propensity for collaboration opportunities and the attraction and retention of talent. Time and again, when we look into what drives the success of our clients’ businesses, trust is at the heart of it. And yet the corporate world as a whole continues to suffer from a chronic trust deficit.”

When societies and individuals within those societies demonstrate caring attitudes towards each other, trust can grow. When the rich grow richer at the expense of the less fortunate, distrust grows. It is in the interests of the rich to demonstrate they care for everyone’s welfare. It requires a change in consciousness.
Why businesses suffer from a trust gap, by Sam Mountford, April 5, 2012, GreenBiz, USA.

HP, Intel & GE Create Fund To Boost Conflict-Free Minerals.– [COMMENTARY] “A U.S. law requiring companies to disclose if they source key minerals from conflict-torn areas has lit a fire under businesses to trace their supply chains and find conflict-free supplies. But with other countries also pressuring companies to eliminate conflict materials, there’s more demand for conflict-free minerals than supply.” It’s a shame that it took a new US law for companies to get behind this, but it’s a good start. However, will Chinese and Russian companies participate as well?
HP, Intel and GE start fund to boost conflict-free minerals, by Jonathan Bardelline, April 4, 2012, GreenBiz, USA.

Social Investment Organizations To Produce Global Ethical Investing Data. – [COMMENTARY] “Sustainable investment membership organisations in major markets have agreed to join forces to create a trailblazing report on the global scope of sustainable and responsible investment. For more than a decade, these regional bodies have produced research reports, generally on a biennial schedule, on the trends in sustainable and responsible investing within their own markets. The release of this harmonized global ’Trends’ report, the first ever, is scheduled for December 2012.”

I’m happy to see this. I hope too, that they’ll publish data in relation to global non-SR-ethical investing equity and bond market assets. That way, investors can assess exactly how large and proportional are SR-ethical investing assets in relation to the universe of stock and bond investments.
Global collaboration on sustainable investment advances as leadership of sustainable investment organizations meet in London, press release, April 2, 2012, UKSIF, UK.

Eiris Says European Companies Lead, Americans Lag, In ESG.– [COMMENTARY] “UK and continental European companies have outstripped their US and Asian counterparts in taking a ’socially responsible’ approach to their business and reducing risk, according to findings based on more than 2,500 FTSE global companies by Eiris, the responsible investment research specialist. A fifth of UK companies scored A (the highest of five grades) based on environmental, social and governance issues, followed by 12 per cent of mainland European ones. But only 2 per cent of US companies and 1 per cent of Asian ones made the top grade in Eiris′s recently launched Global Sustainability Ratings.”

These are significant results and may encourage ethical investors to review some of their holdings in US companies.
European groups lead way on ESG, by Ruth Sullivan, April 1, 2012, Financial Times, UK.

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