May 2013 Newsletter

May 2013 Newsletter

News & Commentaries by Ron Robins


Survey: Most Would Boycott Irresponsible Company.– [COMMENTARY] “Nine out of 10 consumers say they would boycott companies that are being irresponsible, according to an international “corporate social responsibility” report being released Wednesday. And it’s more than theoretical exercise: More than half of consumers in 10 countries say they have refused to buy a product in the past year because of what they saw as bad corporate behavior, according to the report by marketing and public relations agency Cone Communications, which has specialties in cause marketing and corporate social responsibility.”

Obviously, activist consumers are necessary to hold companies to account. Hopefully, this trend will continue. Ethical investors will benefit greatly from it.
Survey: Most would boycott irresponsible company, by Jayne O’Donnell, May 21, 2013, USA Today, USA.

Shareholders Press Companies To Disclose More About Political Spending. – [COMMENTARY] “As regulators wrestle with whether to force companies to disclose more about their political spending, an increasing number of shareholders are taking matters into their own hands, thrusting the issue before boards of directors at companies across the country. The number of shareholder proposals demanding more transparency in political spending has more than doubled since 2010, jumping from 61 to 128 this proxy season, according to the Sustainable Investments Institute, a research group that tracks the issue.”

It seems obvious to me and most ethical investors that companies should disclose all political contributions. Transparency of all spending should be available to shareholders. Company boards and officers should not be allowed to secretly support their political favourites with company funds.
Shareholders press companies to disclose more about political spending, by Dina ElBoghdady, May 17, 2013, Washington Post, USA.

European Responsible Investment Grown 19% Since 2010.– [COMMENTARY] “Assets under management in European responsible investment funds now total …237.9 billion (…201 billion) … a 19% increase since 2010 … according to a survey by the Association of the Luxembourg Fund Industry (ALFI). The European Responsible Investment Fund Survey, published by accountancy giant KPMG on behalf of ALFI, found that the proportion of responsible investment assets compared to the total had increased by 1.6%.” In time, most of the conventional fund industry will also move towards a responsible-ethical investing approach. They will realize that evaluating investments on an ESG basis simply makes more money.
European responsible investment grown 19% since 2010, by Emma Websdale, May 16, 2013, Blue & Green Tomorrow, UK.

Investor Group Proposes ESG Disclosure Rules. – [COMMENTARY] “The Ceres-led Investor Network on Climate Risk has proposed that companies listed on US and global stock exchanges be required to include a series of environmental, social and governance sustainability disclosures in their annual financial filings.” It’s good that CSR/SRI groups maintain their pressure on regulatory authorities on this issue, as regulators are less likely to make such changes without it.
Investor Group Proposes ESG Disclosure Rules, press release, May 13, 2013, Ceres, USA.

Has Sustainability Become A Risky Business? – [COMMENTARY] “A new report released by Ernst & Young presents a disconcerting paradox when it comes to corporate sustainability efforts. While more companies are concerned about increased risk and proximity of natural resource shortages, corporate risk response appears to be inadequate to address the scope and scale of some of these challenges.”

As in most human activities, it’s only when a crises hits that remedial and proactive action to mitigate future problems are enacted. So, it’s not surprising to find companies poorly prepared to address future material sustainability issues.
Has sustainability become a risky business? By John Davies, May 7, 2013, GreenBiz, USA.

Report: Half of U.S. Fracking Wells Are Drilled In Highly Water-Stressed Regions. – [COMMENTARY] “A report released last week maps the relationship between water stress and the unconventional oil and gas reserves that have pushed the boom, while outlining actions energy companies can take to improve resource management. Nearly half of the wells drilled in the U.S. in recent years, 47 percent, are located in river basins with high or extremely high risk of water stress, according to the report from Ceres, a nonprofit that works with investors, businesses and credit rating agencies to identify environmental risks in business models.”

Will the fracking boom be cut dry due to water scarcities? It could happen.
Report: Half of U.S. Fracking Wells Are Drilled in Highly Water-Stressed Regions, by Brett Walton, May 10, 2013, Circle of Blue, USA.

Investor Attitudes, Investment Screen Use, And Socially Responsible Investment Behavior. – [COMMENTARY] “We find that four out of five components of the New Ecological Paradigm (NEP) scale, a measure of basic environmental attitudes, are associated with specific attitudes towards environmentally responsible investment. These specific attitudes in turn are positively associated with SRI screen use, and SRI screen use is positively associated with the percentage of investors′ portfolio held in SRIs. There is also a significant direct relationship between specific environmentally responsible investment attitudes and SRI holdings. Our results suggest that there are complex, multi-dimensional relationships between investor attitudes, SRI screen use, and investment behavior.”

Though these are unsurprising findings I do believe this type of research is useful.
Investor Attitudes, Investment Screen Use, and Socially Responsible Investment Behavior, by William N. Dilla and Diane Joyce Janvrin (both of Iowa State University – Department of Accounting and Finance), Jon D. Perkins (Iowa State University), and Robyn Raschke (University of Nevada, Las Vegas), May 2, 2013, USA.

Phil Angelides Wins Joan Bavaria Award For Promoting Sustainable Markets. – [COMMENTARY] “Phil Angelides has been awarded the fifth-annual Joan Bavaria Award for Building Sustainability into the Capital Markets. The announcement was made today, the first day of the annual Ceres Conference, which is running May 1-2 at The Fairmont in San Francisco, CA.” Awards such as these help spur interest in sustainable and ethical investing. That’s why I like to mention them.
Phil Angelides, a Leader in Shareholder Activism and Green Investment, Wins the Joan Bavaria Award, press release, May 3, 2013, Ceres, USA.

Global Women’s Equity Fund A First For Canada. – [COMMENTARY] “In a first for the Canadian investment landscape, the Global Women′s Equity Fund announced today that it is almost ready to launch.’This fund is great for society, great for women and a unique concept that didn′t exist here in Canada’ said Chief Marketing Officer Alexis Klein. The fund will invest primarily in equity securities of companies that have demonstrated their support of women′s causes and are leaders in promoting gender equality in the workplace.” This fund will serve an interesting niche. It’s already known that where women are well represented on company boards, the boards function better and the companies have relatively higher earnings. I wish the find sincere best wishes.
Global Womens Equity Fund a first for Canada, by Sucheta Rajagopal, May 2, 2013, SRI Monitor, Canada.

Most Firms Don′t Report GHG Emissions, Report Says.– [COMMENTARY] “Only 37 percent of the world′s largest companies report their greenhouse gas emissions fully and correctly, according to research from the Environmental Investment Organisation.” Again, not an unsurprising outcome. It’s interesting to see who does report though.
Most Firms Don′t Report GHG Emissions, Report Says, press release, May 2, 2013, Environmental Leader, USA.

India’s BSE Launches Broad-Based Islamic Index. – [COMMENTARY] “May 1 (Reuters) – Mumbai’s stock exchange (BSE) has launched an Islamic equity index based on the wide-measure S&P BSE 500 index, providing a new benchmark for Islamic investors in one of the world’s largest stock exchanges.” This index could a real winner, especially in India’s huge Muslim population.
India’s BSE launches broad-based Islamic index, by Bernardo Vizcaino, May 1, 2013, Reuters, India.

Featured New Book

The Short Guide to Sustainable Investing, by Cary Krosinsky, Do Sustainability 2013.
“This concise guide by one of the sector’s leading experts: … Disentangles the terminology around SRI and describes a new, positive, opportunities -oriented paradigm for sustainable investing … Showcases funds and strategies that are delivering outperformance within ecological limits … Sets out the key megatrends and scenarios which investors need to consider, and … Offers a practical guide to constructing a sustainable portfolio. This is absolutely essential reading for investors, fund managers and analysts who need to get up to speed on sustainable investing.”—Book description.

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