October 2014 Newsletter
News & Commentaries by Ron Robins
Green bonds to exceed $40 billion in 2014. “The market for green bonds has existed in one form or another since about 2007, but only recently exploded. According to Bloomberg, $18 billion of green bonds has been issued as of early August 2014. That already matches, in seven months, the total volume done from the inception of the market in 2007 to the end of 2013, a six-year period. At this pace, the market will exceed $40 billion this year.”
[COMMENTARY] This article provides a good overview of what’s happening with the green bond market.
Green bonds to exceed $40 billion in 2014, by Suzanne Buchta, October 27, 2014, GreenBiz, USA.
Mark Carney (Governor of the Bank of England): most fossil fuel reserves can’t be burned. “The governor of the Bank of England has reiterated his warning that fossil fuel companies cannot burn all of their reserves if the world is to avoid catastrophic climate change, and called for investors to consider the long-term impacts of their decisions. According to reports, Carney told a World Bank seminar on integrated reporting on Friday that the ’vast majority of reserves are unburnable’ if global temperature rises are to be limited to below 2C.”
[COMMENTARY] I just saw (October 23) this report courtesy of The Responsible Investment Association (Canada). As one of the world’s top central bankers, this is truly astonishing! Can anyone imagine Janet Yellen, Chair of the Board of Governors of the Federal Reserve, ever making a remark like that! She’d be ’fried alive.’ As readers here know, I’ve long argued that many fossil fuel companies could have significant write-downs and losses as the affects of climate impact government policies entailing the reduction of our carbon footprint.
Mark Carney: most fossil fuel reserves can’t be burned, by Jessica Shankleman, October 13, 2014, The Guardian, UK.
Good Money Week: 83% of young Brits not familiar with sustainable investment. “A poll commissioned by the UK Sustainable Investment and Finance Association (UKSIF) has revealed that the majority of 18-24 year olds do not know what sustainable investment is … with 37% even unsure of what a bank actually is.”
[COMMENTARY] A mammoth hole in developed countries’ education is that of money management. It’s truly startling that one of the most important areas of life is not taught in school. Mind you, where money education exists, the curriculum is hugely influenced by establishment interests such as banks! Thus, though I’m in favour of money education, I’m not if it’s a one-sided viewpoint promoting establishment interests.
Good Money Week: 83% of young Brits not familiar with sustainable investment. By Ilaria Bertini, October 20, 2014, Blue & Green Tomorrow, UK.
The 2014-2015 Ethics In Finance – Robin Cosgrove Prize For People Under 35. “The global Prize aims to promote greater awareness of the importance of ethics in finance among young people with an interest in accountancy, banking and financial services. This is the fifth edition of the Prize, originally launched in 2006, well before the topic of ’ethics in finance’ became fashionable. The global financial crisis has since shown the relevance of the theme and the significance of the Prize. The Prize for Innovative Ideas for Ethics in Finance is open to young people, aged 35 years or younger, from throughout the world.”
[COMMENTARY] This is a very worthy endeavour and I encourage those under 35 with an interest in this subject to submit their ideas. See press release:Global Ethics Prize Builds on Success. Website:Robin Cosgrove Prize.
Why clean energy might be cheaper than you think. “Wind and solar power often get a bad rap for being more expensive than energy produced from fossil fuels. But what happens when you factor in, say, the health costs of people breathing smoggy air? Or the financial impact of climate change′s effect on ecosystems and precious resources like water?
Those are some of the questions the European Commission sought to answer. A new report written for the EC includes those environmental costs and more in calculations of the total costs of producing electricity from various renewable and nonrenewable sources. The result? Wind and water are the best bargains for making megawatts.”
[COMMENTARY] It’s great that a major governmental body has finally produced these calculations! Of course, the input data will be controversial, but the discussion has to start somewhere. This study provides governments with some firepower for renewable energy. Incidentally, in their calculations, solar is not that much expensive than wind. Gas and coal powered plants are much more expensive.
Why clean energy might be cheaper than you think, by Sam Bliss, October 14, 2014, grist, USA.
Impact investing market grows 132% from 2011-2013. “Responsible investment strategies grew at a much faster rate than the European market as a whole between 2011 and 2013, according to research by the European Sustainable Investment Forum (EUROSIF).”
[COMMENTARY] Thestudy is useful reading for everyone in the investment industry. Though you might want to read it on the weekend! It’s a large and extensive report. I find it particularly interesting that portfolio strategies excluding particular stocks or industries involve “41% (…7 trillion) of European professionally managed assets.” Many people might think it’s tobacco and alcohol stocks that are the largest excluded segments, but no, its cluster munitions and anti-personnel landmines that are. It’ll be interesting to follow how fossil fuel divestments gain traction in future years.
Impact investing market grows 132% from 2011-2013, by Stephanie Baxter, October 9, 2014, Professional Pensions, UK.
War … a minefield for ethical investors. “’The world is changing,’ says Ron Robins, a Niagara Falls, Ont.-based analyst who founded an ethical investing advice website called Investing for the Soul. ’Investors in sin industries may see their returns suffer due to government austerity programs,’ he says.
Governments facing deficits, unfunded pension liabilities and rising health-care costs find it irresistible to boost taxes on the sin industries, particularly tobacco, alcohol and gaming, he says, eventually driving away consumers. Meanwhile, more socially responsible portfolios typically include sectors that are on the rise in the 21st century, he adds … finance, technology, medical equipment, clean energy, consumer gadgets and so on.”
[COMMENTARY] I was pleased the writer, David Israelson, used these quotes of mine, especially because I believe most conventional investors seriously underestimate the ramifications of most governments’ mammoth unfunded liabilities as well as the financial impacts of required adjustments concerning climate change. Thus I suggest that ethical investors are in a superior position to ’sin’ or conventional investors with regards to long-term investment returns.
War … a minefield for ethical investors, by David Israelson, October 6, 2014, The Globe & Mail, Canada.
New Numbers Show Increased Profits from ESG, Climate Action, and Sustainability Communications. “A recent study by New Amsterdam Partners finds that stocks with higher ESG ratings deliver superior returns and lower price volatility… CDP, formerly the Carbon Disclosure Project, has released a study that shows… an 18 percent higher return on equity by companies addressing climate change over their peers, and a 67 percent higher return than companies that do not disclose on climate change. Dividends to shareholders were also higher, by 21 percent.”
[COMMENTARY] With report after report showing that companies rated highly on ESG factors perform better financially and offer superior stock returns, when will mainstream investors wake-up and fully integrate ESG criteria for picking stocks? This demonstrates how structurally impaired is the mainstream investment world. Ethical investors can now enjoy their ’superiority’.
New Numbers Show Increased Profits from ESG, Climate Action, and Sustainability Communications, by John Howell, October 2, 2014, 3BL Media, USA.
Will There Be Enough ESG Opportunities To Meet Demand? “But even as 87% of asset managers surveyed in the report, The Cerulli Edge: U.S. Monthly Product Trends (August 2014), said they viewed the growing awareness about ESG investing as a secular trend, the vast majority of them said it′s only somewhat important to offer it. Does that mean they′ll be slow to roll out products or invest in the space?”
[COMMENTARY] It seems a strange headline, but what they’re saying is that if most asset managers go for ESG screened portfolios, there might not be enough ESG eligible stocks around. Well, what a great day that’ll be! I think the study authors might be overlooking the fact that when company’s see their peers with higher ESG ratings and higher stock prices, they will gravitate to improve their own ESG performance. Ideally, the majority of companies would then also become high ESG performers. True, this would likely have the effect of lowering ESG stock premiums–but hey, it’ll mean higher profits too for most companies, and thus, higher stock prices everywhere.
Will There Be Enough ESG Opportunities To Meet Demand? October 1, 2014, FA Magazine, USA.
How solar can become the world′s largest source of electricity.“One, with the right policies in place, solar could be the largest provider of global electricity by 2050…. The second interesting bit is that IEA [International Energy Agency] has gotten much more bullish on PV [photovoltaic], even since May. The agency now sees it providing 16 percent of total global electricity by 2050 (in the 2DS scenario), up from less than 1 percent today.”
[COMMENTARY] The fact that the establishment’s energy agency, the IEA, is now so very bullish on solar should say to all the doubters that they should give up their doubts. The IEA observes that, “Based on its competitive advantage in distributed applications, PV is unbeatable by any generation technology, distributed or not.” Still, ethical investors have to be careful. In any burgeoning technology there are always winners and losers. But this is great news for the environment.
How solar can become the world′s largest source of electricity, by David Roberts, September 29, 2014, grist, USA.
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