April 2017 Newsletter
News & Commentaries by Ron Robins
The 2017 100 Best Corporate Citizens. “Compiling the 18th annual list of the 100 Best Corporate Citizens began with our research team documenting 260 data points of disclosure and performance measurements for the entire Russell 1000. The data was gleaned from publicly available information and each company was ranked in seven categories.”
[COMMENTARY] This is a great list compiled by people who really know the subject. Hasbro, Inc,; Intel Corp; and Microsoft Corporation are the top three. See the rankings here.
The 2017 100 Best Corporate Citizens, April 21, 2017, CR Magazine, USA.
The Ethics & Trust in Finance Prize — Formerly Ethics in Finance, Robin Cosgrove Prize. “[The prize] promotes greater awareness among young people throughout the world concerning the benefits of ethics in finance, and encourages high-quality management of banking, insurance and financial services based on trust and integrity.
Launched in 2006 and now in its 6th Edition, the global competition for the Prize for Innovative Ideas for Ethics & Trust in Finance is open to young people, aged 35 years or younger, from throughout the world. The competition invites creative papers, which may be submitted in English or French, setting out analyses or proposals for innovative ways to promote ethics & trust in finance. The Jury allocates the prize money of USD 20,000 among the winners.”
[COMMENTARY] I’ve been promoting this prize almost since it’s inception. It’s a very worthy endeavour and I encourage those under 35 with an interest in this subject to submit their ideas! The fact that Christine Lagarde, IMF’s Managing Director has been involved, demonstrates the importance of what the prize is attempting to do. For entering the competition or information on the prize, go to Ethics & Trust in Finance Prize.
Hermes finds ’clear relationship’ between ESG and credit spreads. “Companies with the weakest ESG credentials, as captured in low QESG scores, tended to trade with the widest CDS [credit default spreads] spreads, Hermes found … indicating a higher risk of default.”
[COMMENTARY] It makes sense that companies with bad ESG characteristics are poor credit risks. And that’s why their financing costs are higher too. As companies understand that good ESG performance means lower financing and human resources’ costs with potentially higher prices for their shares, they’ll increasingly strive to improve their ESG performance.
Hermes finds ’clear relationship’ between ESG and credit spreads, by Susanna Rust, April 19, 2017, Investment & Pensions Europe, UK.
US companies rank miserably low on the UN′s new corporate responsibility rankings. “The SDG Commitment Report 100… is the first-ever analysis to use annual reports as the sole metric to assess corporate commitments to the UN′s 17 sustainable development goals. Analysts argue that the corporate annual report, a legally-required document, is a higher—and better—standard to judge a company′s commitment to sustainability than any voluntary corporate responsibility report.
… Apple is joined at the bottom of the gilded heap by more than a dozen companies who also ignored sustainable development in their annual reports, including Disney, Walmart, and General Electric.”
[COMMENTARY] This report is deeply embarrassing for those multi-national corporations priding themselves in their good social and environmental activities. Obviously, the UN wants to shame these corporations to significantly engage in their Sustainable Development Goals.
US companies rank miserably low on the UN′s new corporate responsibility rankings, by Dan Morrison, April 19, 2017, OrbMedia, USA.
ESG increasingly important in global shift towards sustainable economy. “In a bid to better understand the mindset of investors globally,EYrecently surveyed, for its ’Is your nonfinancial performance revealing the true value of your business to investors?’ report, part of the global investment community, which included 320 participants, of which one-third have more than $10 billion under management.”
[COMMENTARY] This EY survey is revealing in showing how far the investment community has come concerning the importance of climate change and sustainability in assessing potential investments. For instance, the concept of stranded assets — unknown just a few years ago — has become a major concern to investors.
ESG increasingly important in global shift towards sustainable economy, April 13, 2017, Consultancy.uk, UK.
Green Bonds Awards, Environmental Finance. They cover banks, underwriters, companies, etc.
[COMMENTARY] An interesting list, particularly for those in the investment industry. Provides good insight into the growing importance of the green bond market.
Green Bonds Awards, Environmental Finance, press release, April 13, 2017, Environmental Finance, USA.
Arabesque Combines Big Data and AI to Launch Unique Corporate Transparency Tool. “A new tool that allows investors, regulators, NGOs, corporates, and consumers to monitor the sustainability of over 4,000 of the world′s largest corporations has been launched today. Arabesque S-Ray… is designed to streamline vast amounts of environmental, social, and governance (ESG) information into one easy-to-use, smart application. Its unbiased diagnostic technology processes countless data points to evaluate companies in three ways…
Arabesque S-Ray… is the first tool of its kind to score corporate performance on the normative principles of the United Nations Global Compact: Human Rights, Labor Rights, the Environment, and Anti-Corruption.”
[COMMENTARY] Another great analytical tool for ethical investors. However, the free version is pretty basic.
Arabesque Combines Big Data and AI to Launch Unique Corporate Transparency Tool, press release, April 11, 2017, Arabesque, UK.
Academic Research Based on RepRisk Data Shows That Negative ESG News Increases Credit Risk. “A new academic study shows that negative news linking a company to environmental, social, or governance (ESG) issues increases credit risk. The study used data from RepRisk, a leading provider of ESG risk analytics and metrics. Researchers at ETH Zurich, MIT Sloan, and the University of Hamburg performed the research which was published by the prestigious peer-reviewed journal ’Strategic Management Journal.’”
[COMMENTARY] These findings aren’t surprising. After all, if a company has ESG issues creditors less likely to continue lending to that company as if there are no problems. Anyway, it’s good to see these findings as it further incentivizes companies to perform better on ESG issues. And that benefits companies and investors.
Academic Research Based on RepRisk Data Shows That Negative ESG News Increases Credit Risk, press release, April 5, 2017, RepRisk, Switzerland.
2017 Future 40 Responsible Corporate Leaders in Canada ranking. “Shifting the spotlight to medium-sized corporate sustainability leaders across Canada.”
[COMMENTARY] An interesting and useful list, particularly for Canadian ethical investors. It includes many public companies.
2017 Future 40 Responsible Corporate Leaders in Canada ranking, April 6, 2017, Corporate Knights, Canada.
This Man Will Purify Your Portfolio. “Portfolios were far from [Michael] Jantzi’s ambitions when he landed degrees from Canadian universities in economics and international affairs. He was going to help humanity via a career in the foreign service. But those jobs were scarce. He was partway through the process of getting licensed in securities sales when he had a revelation. If he must sell out to Wall Street, why not feed its less avaricious appetites? He would do research on ethical investing.”
[COMMENTARY] This is a terrific overview of the career to-date of Michael Jantzi, one of the world’s true pioneers in ethical investing and presently CEO of Sustainalytics, a global leader in ESG ratings.
Under Mr. Jantzi’s direction, Sustainalytics has recently made a great breakthrough in bringing their individual ESG company ratings directly to the investor through Scotia iTRADE, the large Canadian discount broker. It’s likely only a matter of time before many more brokers offer this service and the retail public finally has direct inexpensive access to quality individual company ESG ratings and research.
This Man Will Purify Your Portfolio, by William Baldwin, April 3, 2017, Forbes, USA.
Sustainable strategies on growth track in U.S. “Assets under management in U.S. mutual funds and exchange-traded funds using an environmental, social and governance-only approach reached $200 billion at the end of February, up 5.8% from Dec. 31 and up 17% from year-end 2015, Morningstar Inc. data show. The data do not include institutional separate accounts or ESG assets managed internally by U.S. pension plans.”
[COMMENTARY] Good overview by Mr. Diamond of US funds utilizing ESG criteria. Also, it’s great to see Morningstar collecting and publishing fund/ESG data since they have a such a terrific database to mine for it. Their benchmarking will be particularly useful.
Sustainable strategies on growth track in U.S, by Randy Diamond, April 3, 20-17, Pensions&Investments, USA. (Subscription required.)
The Routledge Handbook of Responsible Investment, by Tessa Hebb, James P. Hawley, Andreas G.F. Hoepner, Agnes L. Neher, David Wood, Routledge 2015.
“Comprehensive and very timely, this handbook provides helpful insight and analysis on the geographical reach and significance of what is becoming a global movement in responsible and sustainable investment.”—Colin Melvin, Chief Executive Officer, Hermes Investment Management, UK.