January 2013 Newsletter

January 2013 Newsletter

News & Commentaries by Ron Robins


$13.6 Trillion Invested Sustainably Globally, Says Report.– [COMMENTARY] “The report finds that, globally, at least US$ 13.6 trillion worth of professionally managed assets incorporate environmental, social and governance (ESG) concerns into their investment selection and management. This represents 21.8 percent of the total assets managed professionally in the regions covered by the report, conclusively showing that the sustainable investment industry has significant scale in the global arena. The Global Sustainable Investment Review 2012 is a collaboration of the Global Sustainable Investment Alliance (GSIA), as well as non-member organizations AfricaSIF.org and SIF Japan and is the first report to collate the results from the market studies of regional sustainable investment forums from Europe, the US, Canada, Asia, Japan, Australia and Africa. Sustainable investment information was not available from the Latin American regions, which do not yet have an organized sustainable investment forum.”

What I’m really happy about is that the various country and regional social investment organizations now have a common way of compiling the data–and the data is impressive!
Global Sustainable Investment Review 2012, January 2013, Global Sustainable Investment Alliance.

UK: Three-Quarters Of Independent Financial Advisors (IFAs) Get Requests For Ethical Investment Options. – [COMMENTARY] “Seventy-three per cent of independent financial advisers (IFAs) get requests for ethical investment options from clients, according to a Blue & Green Tomorrow survey of the industry. Just over half (51%) say they got the same amount of such requests in 2012 as they did in 2011, with 10% getting more and 13% getting less… although these advisers also report that it is a minority of their total clients (1 in 9) who ask about it.”

Yes, this is good news. However, on a proportional basis, IFAs still aren’t putting client funds into ethical investment vehicles: only about 2-3% of retail fund assets are in ethical investments. Obviously, UK-CFAs aren’t fully responding to client wishes. It’s the same situation in most other developed countries.
Three-quarters of IFAs get requests for ethical investment options, by Simon Leadbetter, January 24, 2013, Blue&Green, UK.

Ethical Investors Step Up Focus On Tax Avoidance.– [COMMENTARY] “Growing anger at aggressive tax avoidance by big business has prompted ethical investors to consider shunning shares in companies that don’t pay their fair share of tax… reports that big companies like Apple (AAPL.O), Google (GOOG.O) and Vodafone (VOD.L) pay minimal taxes in some big markets have sparked public protests in Europe and the United States.” Very few ethical investors are taking this viewpoint to-date. It certainly has some merit, but remains to be seen how far this goes.
Ethical investors step up focus on tax avoidance, by Tom Bergin and Sinead Cruise, January 20, 2013, Reuters, UK.

Canadian Socially Responsible Investment Assets Up 16% Since 2010: New Report. – [COMMENTARY]“The Canadian SRI Review 2012, released today, shows that assets managed under sustainable and socially responsible guidelines in Canada grew by 16% between June 30, 2010 (the effective date of the last report) and December 31, 2011. By comparison, total assets under management grew by 9% in the same time period. The report shows that total assets managed under SRI guidelines is $600.9 billion, up from $517.9 billion. At $600.9 billion, this represents 20% of assets under management in the financial industry, up from 19% of the market in 2010. The two areas that showed the most growth are in the pension fund sector and impact investing.”

These results demonstrate continuing mainstream acceptance for SRI/ESG/ethical investing approaches in Canada. Also, the fact that SRI assets are growing faster than the growth in conventional assets is highly encouraging!
Canadian socially responsible investment assets up 16% since 2010: new report, press release, January 17, 2013, Social Investment Organization (SIO), Canada.

UNPRI: ESG Critical To Private Equity Dealmaking.– [COMMENTARY] “Two-thirds of corporate buyers of private equity portfolio companies said that poor performance on environmental, social and governance (ESG) factors impacted their willingness to buy the company or prevented the entire deal, survey results by the United Nations-backed Principles for Responsible Investment Initiative has found. The PRI commissioned PricewaterhouseCoopers… The results showed that over 80% of companies had reduced the valuation of an acquisition target or not gone ahead with a deal because of poor performance on ESG factors, while 75% said poor performance in this area had prevented a deal from taking place.”

This is great news. It demonstrates how ESG analysis is going mainstream. The case for including ESG in investment and portfolio selection is so obvious. It’s difficult to understand why some people still oppose it.
UNPRI: ESG Critical to Private Equity Dealmaking, by Paula Vasan, January 11, 2013, Chief Investment Officer, USA.

Left Leaning Investors Invest Less In The ’Sin’ Stocks.– [COMMENTARY] “Managers who donate to Democrats underweight (relative to non-donors or Republican donors) stocks that are deemed socially irresponsible. (e.g., tobacco, guns and defense, natural resources, and firms with low KLD scores). This effect is approximately one-half of the underweighting observed for socially responsible (SRI) mutual funds.” Though it’s interesting to see this type of analysis, the findings don’t surprise me.
Left Leaning Investors Invest Less In The ’Sin’ Stocks, by Lisa Mahapatra, January 7, 2013, Business Insider, USA.

Climate Institute Selects Australia’s Local Government Super Fund Of NSW As World’s Top Green Retirement Fund. – [COMMENTARY] “The superannuation fund for 90,000 current and former NSW council employees, Local Government Super has been named the world’s No.1 ’green’ retirement fund, after collecting a swag of awards for its sustainable investment strategies in the past few years. LGS, which manages $6.5 billion in funds, was deemed to be the best fund in a survey of 300 big retirement funds by the Climate Institute’s first global asset owners disclosure project.” Congratulations to the Super Fund of New South Wales for their dedication to sustainability and for their performance.
Super fund tops sustainability poll, by Harvey Grennan, January 8, 2013, The Sydney Morning Herald, Australia.

Asia Sustainable Investment Review 2012. – [COMMENTARY] “The Association for Sustainable & Responsible Investment in Asia (ASrIA), the region′s professional membership association for the sustainable and responsible investment industry, today released the Asia Sustainable Investment Review 2012, a baseline study of sustainable investment strategies and practices by investors based in Asia. ASrIA reports that over 130 investment managers use sustainable investment approaches, with US$74 billion of identified sustainable investment assets under management (AUM) in the region.” For ethical investors interested in investing in Asia, this is a useful read.
Asia Sustainable Investment Review 2012, December 21, 2012, ASrIA, Hong Kong.

Featured New Book

Conscious Capitalism: Liberating the Heroic Spirit of Business, by John Mackey and Rajendra Sisodia, Harvard Business Review Press 2013.
“Conscious Capitalism is a wonderful book, full of fiery passion and incisive insights. So buy it. Read it. Implement it. It′s a true guide to future.”—Forbes.com

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