November 2017 Newsletter

November 2017 Newsletter

News & Commentaries by Ron Robins


Responsible investors have burning questions about cannabis. “Determining whether marijuana is a responsible investment depends on several fundamental factors that should be discussed with an investment professional versed in ESG analysis.”

COMMENTARY] How can you rate the ESG performance of cannabis stocks? This is becoming an important question for numerous ethical investors and advisors. In this article, Dustyn Lanz (chief operating officer of Canada’s Responsible Investment Association) provides a good overview of many of the points to consider.
Responsible investors have burning questions about cannabis, by Dustyn Lanz, November 26, 2017, Investment Executive, Canada.

ESG investing and smart beta combination grows in popularity. “A survey by FTSE Russell shows nearly half (46 per cent) of global asset owners have an allocation to smart beta, and 41 per cent of those using it or considering its use anticipate applying ESG considerations.”

[COMMENTARY] Again, more proof that global asset managers are utilizing ESG criteria.
ESG investing and smart beta combination grows in popularity, by Pauline Skypala, November 27, 2017, Financial Times, UK.

European pension funds ramp up responsible investments. “Six in 10 investors plan to increase their allocations to responsible investments over the next three years. The same proportion is concerned about the impact of scandals on the value of their holdings, according to a survey by Create-Research, the consultancy.”

[COMMENTARY] Contrast the finding in this survey with that below where “82% [of advisors] also believe responsible investing has a long way to go before it becomes mainstream.” Advisors are well behind institutional investors in their understanding of ESG!
European pension funds ramp up responsible investments, by Angus Peters, November 27, 2017, Financial Times, UK.

Responsible Investing Strategies Still a Challenge for Advisers–Q4 2017 Eaton Vance Advisor Top-of-Mind Index (ATOMIX) survey of 1,000 financial advisers. “Only 21% of advisers surveyed reported feeling very well informed about responsible investing strategies, and the survey found accessing ESG data is a challenge for advisers…

Eighty-four percent of advisers reported their clients have at least some interest in responsible investing options. However, 82% also believe responsible investing has a long way to go before it becomes mainstream.”

[COMMENTARY] The data in this survey clearly demonstrate — yet again — how out-of-touch are most financial advisors. Is it a simple case of ’I just don’t want to bother?’ Clearly, they aren’t fulfilling their most important goals of ’knowing their client’ and acting in the client’s best interests.

Furthermore, the fact that about $1 in $5 in the US equity markets is now invested according to responsible investing principles appears to be unknown to the advisors surveyed. That fact alone says that it’s already becoming mainstream — and fast.
Responsible Investing Strategies Still a Challenge for Advisers, by Rebecca Moore, November 21, 2017, Plan Advisor, USA.

Top 10 brands with the best green supply chains. “The latest rankings on international brands’ environmental performance in the China supply chain was jointly released by the Institute of Public & Environmental Affairs (IPE) and the Natural Resources Defense Council (NRDC).

The rankings are based on the Corporate Information Transparency Index (CITI), which collects public data on areas including government compliance, online monitoring, confirmed public complaint records, self-reporting and third-party environmental audits.

This year’s ranking evaluated 267 international brands that run businesses in China. A total of 25 Chinese brands were ranked among the top 100.”

[COMMENTARY] Apple, Dell, and Levi’s are the top three companies.
Top 10 brands with the best green supply chains, by staff, November 20, 2017, China Daily, China.

EU considering sustainable investing as fiduciary duty for investors. “The European Union′s executive has decided to start work on an impact assessment to assess whether and how such a clarification could contribute to a more efficient allocation of capital, and to sustainable and inclusive growth.”

[COMMENTARY] Various advisory groups to the EU are deeply concerned about the short-term focus of fund managers at the expense of long-term issues that are largely ESG related. It’s likely the EU will formally clarify its policy and incorporate the importance of ESG measures in its guidelines. That’ll be good news for all investors.
EU considering sustainable investing as fiduciary duty for investors, Susanna Rust, November 13, 2017, IPE, UK.

Advisors Failing To Talk ESG With Clients. “According to a recent study by Allianz Global Investors, only 14 percent of 1,061 investors with at least $100,000 in investable assets who were surveyed had had a conversation with their advisors about ESG investing, and 61 percent of the clients had to bring up the subject themselves.”

[COMMENTARY] Is it that advisors don’t keep up-to-date about investment performance — so can plead ignorance about the generally comparable and good results of ESG investing — or are they purposefully withholding important information from their clients? And, if so, why? I suspect it has mostly to do with not creating more work for themselves and present fees/commission arrangements. Tell me if I’m wrong. Anyway, they’re not fulfilling what should be their number one mandate to know and do their best for their clients!
Advisors Failing To Talk ESG With Clients, by Karen Demasters, November 8, 2017, Financial Advisor, USA.

Just released: new surveys related to ESG investing.

[COMMENTARY] It’s clear that the mainstream investment industry is adopting ESG criteria as important to investment analysis and attracting millennials to investing. However, I remain skeptical about much of the surveys’ findings due to the definition of ESG and what people say and do being two quite different things. Also, some surveys seem to contradict each other in their results.

The following surveys have just been released on the subject.
Responsible Investing: the Evolution of Ownership, October 30, 2017, RBC Global Asset Management (GAM), Canada.
Money Meets Morals Study,
press release, October 30, 2017, Harris Poll for Swell Investing, USA.
Responsible Investing & the Persistent Myth of Investor Sacrifice,
October 31, 2017, Hermes Investment Management, UK.
New Equity Perspectives … Emerging markets, ESG and the active/passive debate,
October 30, 2017, bfinance, UK.
Over one third of [UK] charities do not have an ethical investment policy, survey finds,
October 30, 2017, Gabriel Research and Management, UK.
Commentary: What′s behind asset owners′ slow adoption of responsible investment,
October 30, 2017, Pensions & Investments, UK.

McKinsey: ESG No Longer Niche as Assets Soar Globally. “More than a quarter of the $88 trillion assets under management globally are now invested according to environmental, social and governance principles known as ESG, a McKinsey & Co. study found.”

[COMMENTARY] McKinsey doesn’t seem to be referring to original work as the figures they’re quoting appear largely from published works such as the 2016 Global Sustainable Investment Review. Perhaps they should state their sources. Anyhow, it’s terrific they’re engaged in promoting ESG!
McKinsey: ESG No Longer Niche as Assets Soar Globally, by Amy Whyte, October 27, 2017, Institutional Investor, USA.

Featured Book

The Greening of Asia: The Business Case for Solving Asia’s Environmental Emergency, by Mark L. Clifford, Columbia University Press, 2015.
“In this well-researched and ultimately optimistic account, Clifford makes the case that environmental policies ’can and must be fixed’ and gives us examples of companies that have worked to find private-sector solutions. In doing so, Clifford sheds much-needed light on the workings and future of the region’s efforts on the environment, and on the need for governments to set clear rules so that business can do its part to solve the region’s environmental crisis.”—Joseph E. Stiglitz, 2001 Nobel Laureate in Economics.

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