November 2015 Newsletter

November 2015 Newsletter

News & Commentaries by Ron Robins


Decarbonizer: The first planetary investment tool… answers the question – ’Does it pay to decarbonize?’ Created by Corporate Knights and powered by carbon data from South Pole Group, the Clean Capitalist Decarbonizer is a free interactive tool that shows the financial implications of divesting high carbon companies in favour of those that derive at least 20% of their revenues from environmental markets or new energy.

The Clean Capitalist database covers 7,000 securities (comprising more than 85% of global market capitalization), including all primary public equity securities with a market cap over $2 billion and/or listed on major national and global indices. A professional version of the Clean Capitalist tool for the investment community will be launched at the upcoming Paris Climate Conference.”

[COMMENTARY]Congratulations to Corporate Knights and the South Pole Group for creating an extraordinarily useful tool for investors wanting to know how portfolios would do were they to rid themselves of carbon related assets!
Decarbonizer, by Corporate Knights and South Pole Group, 2015.

(Benefits) Consultants adding ESG factors to decision mix.“According to research from Cerulli Associates, consultants are finding that they need to incorporate ESG factors into their manager selection decision-making process. More than half (53 percent) of consultants polled by Cerulli have dedicated resources for ESG manager research, and another 20 percent are considering adding resources.”

[COMMENTARY]Interest in ESG continues to spread — with this report that benefits consultants in their choice of investment managers are now largely taking managers’ perspectives on ESG into account.
Consultants adding ESG factors to decision mix, by Marlene Satter, November 25, 2015, Benefits Pro, USA.

Institutional Investors Increasingly Consider ESG Factors.“The number of U.S. institutional investors that incorporate environmental, social and governance (ESG) factors into investment decision making increased from 22% in 2013 to 29% in 2015, according to results of a Callan survey. The investment consultant′s 2015 ESG Interest and Implementation survey found that, by fund type, foundations (39%) and endowments (37%) have the highest rates of ESG adoption. Public fund usage of ESG factors has nearly doubled in the past two years, from 15% in 2013 to 27% in 2015.”

[COMMENTARY]I really wonder if I should continue posting these surveys. They’re all so repetitive — but in a great way! The only remarks I’ll make about this survey is that it demonstrates how far ahead foundations and endowments are relative to others and it would’ve been good to compare them to European equivalents.
Institutional Investors Increasingly Consider ESG Factors, by Rebecca Moore, Asset International, USA.

Stranded assets may add up to $2.2 trillion — blame COP21?“U.S. fossil fuel companies and their shareholders are exposed to $412 billion in potentially unusable assets from oil, coal and gas projects on their books that may never be needed, according to a report released today.

That vast U.S. exposure is part of $2.2 trillion globally in excess in fossil fuel drilling or mining projects that could well become stranded assets on the books of various private and state-run companies, according to Carbon Tracker.”

[COMMENTARY]Carbon Tracker has produced a fascinating study on this subject. All investors have to be aware that their portfolios often contain expose to many investments that could be hit hard due to asset write downs, etc. Fortunately, many ethical investors are ahead of the game.
Stranded assets may add up to $2.2 trillion — blame COP21? By Barbara Grady, November 24, 2015, GreenBiz, USA.

Individual Investors Can Now Divest From Fossil Fuels with One ETF. “A San Francisco investment firm today launched on the New York Stock Exchange what it touted as the world′s first diversified, socially responsible and fossil-free, exchange-traded fund (ETF) based on a climate leadership index.”

[COMMENTARY]It’ll be interesting to watch how this ETF performs financially compared to other fossil fuel free funds. It appears unique in its methodology.
Individual Investors Can Now Divest From Fossil Fuels with One ETF, by Jim Pierobon, November 19, 2015, TriplePundit, USA.

Investors use technology as tool to dissect ESG portfolios.“Institutional investors increasingly turn to new ways of deploying technology and data to up their ESG game. Environmental, social and governance issues have been moving up on the agenda in recent years. Now they are coming to a head with the onset of regulatory demand; new guidance from the Department of Labor stating that investors can consider ESG factors in their investment without fear of repercussions; student protests; and general pressure from investors across the globe.”

[COMMENTARY]This is a fascinating article on how technology is aiding portfolio integration of ESG criteria.
Investors use technology as tool to dissect ESG portfolios, by Sophie Baker, November 16, 2015, Pension & Investments (subscription required), USA.

S&P 500 companies up their game on climate: Report. “Corporate board level responsibility for climate change has soared to 95 percent in 2015 from 67 percent five years ago, according to a 2015 climate change report from the CDP, formerly the Carbon Disclosure Project. Among the other findings, S&P 500 companies actively working to reduce their greenhouse gas emissions have increased to 96 percent from 52 percent.”

[COMMENTARY]These are dramatic numbers and bode well for adaptation by business to not only climate change but for all issues related to ESG. It seems the ESG message to companies from SR-ethical investors over all these years is finally taking root!
S&P 500 companies up their game on climate: Report, by Heesun Wee, November 16, 2015, CNBC, USA.

SRI Research Prize Winner: The Market Places Significant Monetary Value On Greater Transparency. “The market values better corporate disclosure of greenhouse gas (GHG) emissions and these effects appear strongest among firms in carbon-intensive industries. That conclusion is drawn by Professor Philipp Kr…ger in a major study that was awarded the 2015 Moskowitz Prize for Socially Responsible Investing during a special ceremony last night at the 26th annual SRI Conference in Colorado Springs, Colorado.”

[COMMENTARY]The good news is the continuing and rapidly growing market of acceptance of GHG reporting due to the kind of research of Professor Philipp Kr…ger. Congratulations Professor Kr…ger on winning the 2015 Moskowitz Prize! (Seestudy.)
SRI Research Prize Winner: The Market Places Significant Monetary Value On Greater Transparency, press release, November 5, 2015, First Affirmative Financial Network, LLC/The SRI Conference, USA.

World Exchanges Agree Enhanced Sustainability Guidance. “The WFE Guidance & Recommendations identifies material ESG metrics which exchanges can incorporate into disclosure guidance to companies listed on their markets. Specifically, the enhanced guidance highlights 34 key performance indicators, including energy consumption, water management, CEO pay ratio, gender diversity, human rights, child and forced labour, temporary worker rate, corruption and anti-bribery, tax transparency in addition to other corporate policies.”

[COMMENTARY]More great news for ethical investors. Soon all stock exchanges will have ESG guidelines for their listed companies, making the task of promoting ESG and SR-ethical investing that much easier.
World Exchanges Agree Enhanced Sustainability Guidance, press release, November 4, 2015, World Federation of Exchanges, UK.

The ‘Sin Stock′ Premium: A Neat Illusion Dismantled. “Two scholars associated with the University of Reading′s ICMA Centre, in a new paper, take on the notion that the so-called “sin stocks” (chiefly: stocks of companies whose business plan is tied to highly addictive behaviors) outperform other stocks in an actionable alpha-generating way.”

[COMMENTARY]This is a fine article about an important study. The study counters the notion of sin industries outperformance! (Seestudy. Also my editorials:Investing Returns: Virtue vs. Sin andSin or Ethical Investing: Which Pays Best?)
The ‘Sin Stock′ Premium: A Neat Illusion Dismantled, by “cfaille,” November 3, 2015, UK.

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