May 2012 Newsletter

May 2012 Newsletter

News & Commentaries by Ron Robins


US Stockholders Filing Over 30% More Political & Lobbying Disclosure Proxies in 2012 over 2011. – [COMMENTARY] “The transparency push, playing out at shareholders meetings from coast to coast this spring, has received cheers from campaign finance reformers and some corporate governance experts. It has drawn ridicule from critics such as the U.S. Chamber of Commerce, who see the effort as an attempt by liberal groups to squelch the voice of the business world.”

I find it difficult to believe how anyone could be opposed to such a fundamental right as shareholders knowing where the funds of the companies they invest in are being spent! Yes, it’s about time for complete transparency on this issue.
More shareholders call on companies to disclose their political spending, by Tom Hamburger and Brady Dennis, May 21, 2012, Washington Post, USA.

European CEOs Take Aim At Shareholder Advisory Firms.– [COMMENTARY] “European CEOs are so angered by the rise of opposition to gold-plated executive payouts that they have taken the unusual step of pushing for more red tape, calling for regulation of the advisory groups who advise fund managers on how to vote on issues such as executive pay.” This is not a surprising tactic when many individuals in senior management believe they have the God given right to exemplary compensation packages.
European CEOs push back against investor activism, by Tom Bergin, May 25, 2012, Reuters, UK.

Canadian SR-Ethical Funds Outperform Conventional Funds.– [COMMENTARY] “One of the continuing perceptions held by many advisors is that socially responsible investment funds underperform the market. These advisors believe that, by screening out certain companies or industries, investment opportunities are reduced and therefore risk is increased. The result … lower returns than funds invested in a conventional way… The Social Investment Organization recently did an in-depth analysis of returns for socially responsible investment (SRI) funds in Canada across major asset classes. Using the most recent performance numbers provided by Fundata 1 (to March 31, 2012) a portrait is emerging of a strongly performing industry with outperforming funds in every major fund category.”

Over the long term I’m convinced that such outperformance will become even more pronounced, not only in Canada but for SR-ethical funds globally.
Socially Responsible Investment Funds Perform Strongly, by Doug Watt, May 18, 2012, SRI Monitor, Canada.

$1 Trillion SRI Coalition Tell Shale Energy Companies To Clean Up Their Act. – [COMMENTARY] “The coalition, led by Boston Common Asset Management, the Investor Environmental Health Network and the Interfaith Center on Corporate Responsibility, includes companies such as Dexia Asset Management, Domini Social Investments and Pax World Funds. In a statement released Wednesday, the socially responsible investing (SRI) asset managers said they wanted energy companies to adopt 12 best practices regarding risk management and reporting that members of the coalition drew up last December.”

US shale energy extraction is becoming a huge issue, both for its promise of dramatically reducing energy imports, but also for its potential to cause serious environmental and health problems. Somehow the ’excitement’ has to turn from carbon-based energy to renewable energy!
SRI Investor Coalition Tells Shale Energy Companies to Clean Up Their Act, by Gil Weinreich, May 17, 2012, Advisor One, USA.

New Type Of Sustainable Global ETF Launched. – [COMMENTARY] “This is brilliant. AdvisorShares is launching next week a new exchange-traded fund that will support sustainability themes globally. A portion of the assets will support a charitable foundation co-founded by Philippe Cousteau, grandson of the famous explorer Jacques.” This is an interesting new concept for ethical investors. It will be well worth watching.
A global ETF to support sustainable development, by Thomas Kostigen, May 18, 2012, MarketWatch, USA.

Calls To End Corporate Secrecy In US Shell Companies.– [COMMENTARY] “A group of 41 businesses and nonprofits sent a letter to every member of Congress pressing them to pass legislation that would reveal the beneficial owners of shell companies. ’Investigations continue to reveal that American and foreign terrorists, narco-traffickers, arms dealers, corrupt foreign officials, tax evaders, individuals targeted for financial sanctions and other criminals easily and regularly set up U.S. shell companies, without providing any information about who owns or controls such companies,’ the letter says.” What is being called for here I believe sounds more than reasonable!
Nonprofits, Businesses Call For End To Corporate Secrecy, by Samuel Rubenfeld, May 16, 2012, WSJ blogs, USA.

New Human Rights Based ETF Planned. – [COMMENTARY] “The iShares Human Rights Index Fund takes a different approach to the category of SRI funds. The underlying index aims to exclude companies that provide material support for controversial regimes or governments that are subject to widespread sanctions based on human rights violations. At this time, governments in three countries—Sudan, Iran and Burma—meet those standards, according to MSCI, which created the index for BlackRock in November 2011.”

Should it be launched, it will be most interesting to see how this fund fares. One probable premise of the fund is that companies engaged with such regimes might see relatively lower stock prices. Hence, by avoiding such companies, this fund could benefit. Perhaps though, the main reason this fund could succeed is that from an ethical perspective it simply avoids such problem companies.
IShares files to launch human rights ETF, by Virginia Munger Kahn, May 11, 2012, FA News, USA.

Businesses Say They Are Better At Delivering Social Change Than Charities. – [COMMENTARY] “More than 90 per cent of businesses said they were equally or better equipped than charities to deliver social change, according to a snapshot survey.” This is an interesting perspective. Are the businesses just being pompous or are they simply being factual?With the growth of CSR there could be some substance behind this claim.
Most businesses in a survey say they are better equipped than charities to deliver social change, by Chloe Stothart, May 10, 2012, Third Sector, UK.

Prior To London Olympics, Religious & Ethical Investors Ask Corporations To Step Up Anti-Trafficking & Slavery Efforts.– [COMMENTARY] “Christian Brothers Investment Services (CBIS), a leader in socially responsible investing, and a coalition of U.S. and U.K. investors and NGOs have united to call on corporations to strengthen their focus against human trafficking and modern slavery in advance of the 2012 Summer Olympic Games taking place in London from July 27 to August 12. The initiative focuses on the London tourism industry and key sponsors of the Olympic Games that may be at a higher risk for on-premise child and labor trafficking and that have the potential to help raise public awareness of these crimes.”

At first glance, it might be difficult to link human trafficking and slavery to the Olympics. Nonetheless, there’s never not a good time to raise those issues.
In Advance of London Olympics, U.S. and U.K. Investors Ask Corporations to Step Up Anti-Trafficking and Slavery Efforts, press release, May 8, 2012, Christian Brothers Investment Services (CBIS), Interfaith Center on Corporate Responsibility (ICCR), The Ecumenical Council for Corporate Responsibility (ECCR), and Fair Pensions, UK/USA.

EIRIS Reports On The Most Sustainable Companies.– [COMMENTARY] “This research paper provides a global snapshot of corporate sustainability performance on the 2063 companies from the FTSE All World Developed (AWD) Index. It presents the 10 current sustainability leaders as well as insight on the sustainability performance of 50 of the world′s largest companies (by market cap). Our analysis reveals some surprising differences in the extent to which leading companies are prioritising and responding to sustainability.”

EIRIS is one to the most respected organizations in the ESG-ethical analyst space. This is worth the read for any SR-ethical investor.
UK and continental European companies are outstripping their US and Asian counterparts, according to a EIRIS’ latest report, &EIRIS Sustainability Report, April 2012, EIRIS, May 1, 2012, UK.

2012 Sustainability Leaders Survey. Rankings & How They’re Assessed.– [COMMENTARY] “The 2012 Sustainability Leaders Survey… asked respondents in February to name up to three specific companies that they consider to be leaders in integrating sustainability into their business strategy. Unilever, which launched its Sustainable Living Plan in late 2010, was mentioned most frequently for the second year in a row, while Interface was the next most frequently mentioned, followed by GE, Patagonia, and Walmart… A number of criticisms are routinely levelled at the poll.”

This is a good review of what’s required to understand the various methodologies of these polls.
What puts companies on top of the Sustainability Leadership list? By Eric Whan, May 4, 2012, GreenBiz, USA.

MSCI, Barclays Launching ‘ESG′ Bond Indexes. – [COMMENTARY] “The so-called Environmental, Social ’ Governance (ESG) fixed-income indexes, which will be co-branded, cater to asset managers and owners who need to integrate ESG mandates into their fixed-income investments, the companies said in a joint press release. The indexes could eventually be used to benchmark ETFs.” This is good news. We have many SR-ethical equity investing raters, but few on the debt side.
MSCI, Barclays Plan ‘ESG′ Bond Indexes, by Cinthia Murphy, May 4, 2012,, USA.

Most US Companies Falling Short On Sustainability, says Ceres.– [COMMENTARY] “In the first major assessment of progress on a unique Ceres Roadmap to corporate sustainability released two years ago, Ceres and global research and analysis firm Sustainalytics today released ’The Road to 2020: Corporate Progress on the Ceres Roadmap for Sustainability.’ The findings – based on an assessment of how 600 U.S. companies are responding to environmental and social challenges such as climate change, water scarcity and supply chain conditions … show individual examples of leadership but significant need for overall improvement.”

The results are unsurprising. However, as investors realize that companies with strong ESG/sustainability programs outperform financially, companies will have to cater to investor demands for a strong ESG/sustainability focus.
New Ceres/Sustainalytics Report Shows Most U.S. Companies Falling Short on Sustainability, press release, April 27, 2012, Ceres, USA.

US Churches Increasingly Divesting Bank Stocks. – [COMMENTARY] “…religious congregations have withdrawn about $40 million nationwide from the country’s largest banks, including Bank of America, JP Morgan Chase, Wells Fargo and Citigroup, said Tim Lillienthal, lead organizer with the PICO National Network, the largest faith-based organizing network in the United States.” It’s a movement that could grow. The churches have many complaints against the banks ranging from home foreclosure misdeeds to excessive executive pay.
Growing divestment campaign among churches targets biggest U.S. banks, by Dennis Sadowski, April 27, 2012, Catholic News Service, USA.

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