Poor Ethics, Moral Hazard Endanger Global Financial System. – [COMMENTARY] This Financial Times (FT) of London story is an excellent overview of what is happening in the sub-prime mortgage and derivative markets. And frankly, it is scary! In particular, it appears that many financial institutions are carrying financial assets that may have to go through substantial write-downs, leading to losses in the countless billions of dollars for investors. Furthermore, it illuminates how numerous hedge fund managers ’cook-the-books’ to line their pockets. All investors may want to review with their advisors – including their legal and tax professionals – what their exposure is, and perhaps be prepared for battle. This is what happens when a new generation of financial ’whiz kids’ and math geniuses get overwhelmed with greed, and ethics goes out the back door.
Does it all add up? By Saskia Scholtes in New York and Gillian Tett in London, June 28, 2007, FT.com (Financial Times of London), UK.
Banks Rank Best Among Ten Industries In Ethical Reputation Among Multinationals. – [COMMENTARY] Covalence SA, a Swiss-based ethics organization has studied and ranked – according to their criteria based largely on positive and negative media reports – ten major industries. Their analysis is interesting because they are looking at ’perception’ rather than the analysis of corporate rights and wrongs. A chart is included that shows the scores and rankings of individual banks. This is worth looking at.
Banking Industry Report 2007, June, 2007, Covalence SA, Switzerland.
Consumers Urged To Boycott Three Companies Who Lobby Against Action On Climate Change. – [COMMENTARY] With the advent of the Live Earth concerts, Ethical Consumer is publicly urging consumer boycotts against Esso Petrol Exxon, Kenco coffee, and Nouvelle. Ethical investors may want to take note of who is being targeted and why. For a full list of companies they urge boycotting against see Ethical Consumer Boycotts List.
Consumers Urged To Boycott Three Climate Change Criminals, June 29, 2007, CommonDreams.org, USA.
Barclays Asks Suppliers About Their Corporate Social Responsibility (CSR) Policies. – [COMMENTARY] I hope that this trend of companies asking suppliers about their CSR policies gathers momentum. According to this article, “When Barclays considers appointing a new supplier, 10 percent of the calculation will be based on answers to those questions, which cover supply chain risk, human rights, environmental issues and business integrity.” Frankly, I feel the 10% CSR contribution is too low. However, it is a good start.
Barclays′ Suppliers Fill Out CSR Questionnaire, June 28, 2007, Environmental Leader, USA.
Demand Grows For Money Managers With Socially Responsible Investing (SRI) Skills. – [COMMENTARY] In London, the UK Social Investment Forum recently launched a special training programme in SRI for financial advisors. With demand for SRI products booming, investment and financial advisors everywhere need to avail themselves of greater knowledge in this area.
Growing Demand for Money Managers with Expertise in Socially Responsible Investing, by A. E. Feldman, June 28, 2007, USA.
US Psychiatrists Receive Large Payments From Drug Companies. – [COMMENTARY] In Vermont, psychiatrist received an average of $45,692 from drug companies in 2006. To me, this is scandalous that psychiatrists – or any other medical professional – should receive payments from drug companies in order to peddle their wares. What kind of ethics do these ’purported’ honest professionals and pharmaceutical companies have? What a huge conflict of interest is occurring here. Are doctors lining their own pockets at the expense of patients? As I have said before, ethical investors and socially responsible mutual funds, which often have major investments in drug companies, need to evaluate their own ethics, as well as those of the drug companies they invest in!
Psychiatrists Top List in Drug Maker Gifts, by Gardiner Harris, June 27, 2007, The New York Times, USA.
Hedge Funds Employing Socially Responsible Investing (SRI)! – [COMMENTARY] Can this be true? According to sources cited in this report, there are at least three dozen hedge funds applying environmental and social screens. Many of them see such positioning as an added benefit to gaining more investors. Some of these funds, by going ’short’, may even bet against companies with the worst environmental and social policies. (Going short means borrowing shares you do not own [from a broker], then selling them now, hoping to buy the same shares back latter at a lower price. For instance, by selling the shares at $50 and then buying them back latter at $30, you make a $20 profit per share.)
Hedge funds embracing social mandate, by Jeff Benjamin, June 25, 2007, InvestmentNews, USA.
A US ETF That Is ’Sudan Free’. – [COMMENTARY] Though I agree with the idea of not investing in countries with outrageous social or environmental policies, it does seem a little strange to base an entire ETF on such a specific one-country policy. Could this be the start of a trend?
Claymore Launches First Socially Responsible ETF Based on Sudan Divestment Issue, June 25, 2007, Business Wire, USA.
South African Platinum Mines Criticized For Health, Environmental And Other Problems. – [COMMENTARY] This new report by The Bench Marks Foundation of Southern Africa for Corporate Social Responsibility, found many failings by the mining companies involved.
South Africa: Platinum mines lack transparence, communities suffer, June 25, 2007, AfricaNews, South Africa.
Most United Arab Emirates (UAE) Consumers Reward Companies With Good Corporate Social Responsibility (CSR) Practices. – [COMMENTARY] It is wonderful to see the universality of the importance of CSR. This report is by YouGovSiraj and Globescan.
UAE consumers reward companies for social responsibility, June 25, 2007, ArabianBusiness.com, UAE.
New UN Report Shows Investors Flocking To Renewable Energy. – [COMMENTARY] Research and investment in renewable energy and energy efficient industries has taken-off! Higher consciousness is at last infiltrating the world’s investors. Read the UNEP press release below.
Investors Flock to Renewable Energy and Efficiency Technologies, June 20, 2007, United Nations Environment Program (UNEP), USA.
Website Tracks Sustainable Development In US Cities & States. – [COMMENTARY] This interesting website tracks and compares how some 400 jurisdictions in the USA are progressing in their sustainable development policies and activities.
Advancing Cross-Sector Sustainable Development for State and Local Government, Sustainlane.us, USA.
Another Insightful Review On The US Ethanol Stance. – [COMMENTARY] The writer makes a good case why we need to be very concerned about the push for corn ethanol. I believe the push for corn ethanol is almost exclusively to buy farm votes. Even with cellulosic fibre being used for ethanol production, I foresee higher food prices and much soil erosion as a result. Our focus must be on finding ways to make energy use far more efficient – and to find sources of energy that do not harm the environment or our food supplies.
Ethanolics Unanimous, June 21, 2007, by Denny Haldeman and Soddy Daisy, TheChattanoogan.com, USA.
New Report Criticizes Global Pharmaceutical Industry. – [COMMENTARY] I am highly critical of how big pharma has been peddling its wares around the world, frequently in an unethical and irresponsible and manner. This study appears to explain in detail all the problems. The link is to a press release on the study. However, investors may want to encourage the financial institutions they deal with to get copies of it.
New Report ‘Analyzing the Global Pharmaceutical Industry′ Takes a Critical View on the Irresponsible Drug Promotion and Advertising Practiced by Some Pharma Companies, June 22, 2007, Research and Markets, Ireland.
US HarrisInteractive Poll Shows People Have Good Intentions, But Few Follow Through On Them. – [COMMENTARY] This poll provides fascinating information on the ethics of American adults. It is interesting to note how most studies show that over 80% of investors want the companies they invest in to be socially and environmentally responsible, but this and other studies demonstrate that few of these individuals are willing to make significant changes in their own lives to be themselves more socially or environmentally responsible.
Social Responsibility: Most People Have Good Intentions but Only a Small Minority Really Practice What They Preach, June 18, HarrisInteractive, USA.
GreenMoney Journal’s Summer 2007 Edition Is Worth Reading For All Investors. – [COMMENTARY] Cliff Feigenbaum, founder and managing editor of the GreenMoney Journal has put together a series of articles that are worthwhile reading for all ethically, spiritually or environmentally oriented investors.
Essays on the Future: Looking Ahead, by Cliff Feigenbaum, June 2007, GreenMoney Journal, USA.
Are A Company’s Corporate Social Responsibility Activities Simply ’PR’ Or Real? – [COMMENTARY] A US group calling themselves the ’B Corporation’ is offering a new socially and environmentally responsible seal of approval to all corporations who ask for, and meet, their social and environmental standards. This sounds like a good idea. So far it seems that most of the companies who have gained their approval are small in size. Perhaps it fills a niche for small and medium sized private companies who otherwise would not be rated by such firms as KLD Analytics, Calvert Group and Dow Jones Sustainability Indices.
B Corporation, USA.
Bank Reports Cite Possible Winning Companies In Climate Change Thrust. – [COMMENTARY] Environmentally oriented investors may find some useful investment related information in these reports. Read the summary of these leading bank reports below.
Financial services â€“ Banking on climate change′s consequences, by Mike Scott, June 18, 2007, Climatechangecorp.com, UK.
2nd Major Canadian Bank To Offer Environmentally & Socially Responsible Mutual Fund. – [COMMENTARY] I believe it will not be long before all major Canadian banks offer socially and environmentally oriented mutual funds and ETFs. This is a good step forward!
TD gets a little greener, June 14, 2007, Advisor.ca, Canada.
Are US Mutual Funds Shirking Their Fiduciary Responsibilities? – [COMMENTARY] Huge pay increases are going to CEOs of top American companies whose profits are often flagging, yet few mutual funds voice a concern. This study indicates that the compensation of the top five highest paid executives in the average public company now approaches 10% of the company’s total corporate earnings. This has to be a concern of mutual funds, and in the interest of their unitholders, they should question company boards who lavish executives with big undeserved payouts. (I want to thank SHARE for this reference.)
Failed Fiduciaries: Mutual Fund Proxy Voting on CEO Compensation, American Federation of State, County and Municipal Employees, Corporate Library and the Shareowner Education Group, USA.
US Investors File Record Number Of Shareholder Resolutions Concerning The Environment, Political Contributions, Etc. – [COMMENTARY] It is wonderful to see that shareholders are finally holding to account companies whose practices they deem unsatisfactory. (Again, I want to thank SHARE for this reference.)
Investors Filing Record Number of Social and Environmental Shareholder Resolutions in 2007, May, 2007, Social Investment Forum, USA.
Study: The Financial Advisor – Client Relationship. – [COMMENTARY] State Street Global Advisors and Knowledge@Wharton (University of Pennsylvania) have completed an interesting survey of the financial advisor – client relationship. It is a useful read for all investors, especially the charts on pages 12-14. The charts frequently show marked differences between what advisors believe their clients perceive or understand in relation to fees, trust, satisfaction with their advisor, etc. – and what those clients actually think!
Bridging the Trust Divide: The Financial Advisor-Client Relationship, State Street Global Advisors and Knowledge@Wharton, USA.
Islamic Finance. – [COMMENTARY] The following is a useful introduction and description of Islamic finance describing its principles and ideals, some of which parallel those of socially responsible investing. Though not covered in this article, I am particularly intrigued about the role that gold and silver played in Islamic finance in promoting economic growth and social stability.
Unitarian Universalist heads Islamic investing group, by Michelle Bates Deakin, June 15, 2007, uuaworld.org, USA.
Survey: 87% of Execs Would Not Work For Companies With Negative Record On Social Issues. – [COMMENTARY] TheLadders.com website conducted a survey among executives to determine their attitudes towards corporate social responsibility.
Execs Say Social Responsibility is ’’Duty’’ for Companies, June 14, 2007, Businesswire.com, USA.
Ethical Funds Gaining. – [COMMENTARY] Ethical funds have been frequently enjoying above average gains in part because they have not invested in some industries that have lagged the market generally. This is what I have been predicting would happen – see About Us.
Ethical funds gain as screened-out sectors underperform, says Britton, by Matthew Goodburn, June 14, 2007, Citywire.com, UK.
Religious Organizations Pitch Action On Global Warming To US Senate. – [COMMENTARY] For an interesting review of who presented and what was said, read this.
Global Warming Alarmism and Religion – Together at Last? By Peyton Knight, June 14, 2007, Amy Ridenour’s blog, National Center for Public Policy, USA.
An Investor Relations (IR) Professional Offers A Perspective On Corporate Social Responsibility (CSR) Actions. – [COMMENTARY] The following essay is useful for ethically, spiritually or environmentally oriented investors to read. It will provide some insight as to how IR professionals deal with CSR in their companies.
Where should PR stop and IR start when it comes to corporate social responsibility (CSR) programs? By Peter Noel Schiefelbein, June 14, 2007, IRmanager.org.
Disconnect: 85% Of Americans Want To Invest In Alternative Energy Yet For Those With Advisors, Only 20% Have Discussed This With Them! – [COMMENTARY] I have long learned that there is usually a big difference between what people say, and what they do. I think that it is great that most investors now want to invest in alternative energy – and share prices of companies in that sector have generally seen enormous gains recently. My real concern for investors is that they make their decision to get into a sector only when the media buzz has reached a crescendo and prices are ready to top-out.
Calvert Climate Change/Alternative Energy Survey, June, 2007, USA.
Today’s Farming Methods Threaten Agriculture’s Future. – [COMMENTARY] Modern farming techniques rely less and less on agricultural diversity. Eventually though, due to climate change, more diversity among crop species may be needed to fight various climate threats. Modern farming techniques have brought food prices down. However, my reading in this area leads me to believe that these modern farming techniques are causing massive soil erosion, nutritionally deficient food, and possibly badly damaging our future food supply. I suggest this is an area that all consumers – and investors – will become increasingly concerned about.
Climate and changes in the food supply, by Jess Halliday, June 13, 2007, FoodNavigator.com/Europe.
G8 Promote Corporate Social Responsibility (CSR) At Recent Meeting. – [COMMENTARY] Probably inspired by European countries, their joint statement supporting CSR is the first time these leaders and countries have formally endorsed the idea.
The G8 and responsible business: wading into CSR waters, by Paul Hohnen, June 12, 2007, Ethical Corporation, UK.
Will Push For Fairtrade Lead To Increased Protectionism? – [COMMENTARY] This could become a very real problem, especially when local producers within a country push for protectionist laws favouring them. The idea of a consumer paying a little extra to help farmers or producers in developing countries is fine with me. However, to use the Fairtrade argument for protectionist trade policies could lead to trade wars with major international economic and political repercussions.
Retailers Say Proposed Trade Remedy Laws Would Lead to More Protectionism, June 12, 2007, National Retail Federation. USA.
Are Genetically Modified (GM) Foods Increasing Allergic Reactions? – [COMMENTARY] “Beginning in 1996 [in the USA], bacteria, virus and other genes have been artificially inserted to the DNA of soy, corn, cottonseed and canola plants. These unlabeled genetically modified (GM) foods carry a risk of triggering life-threatening allergic reactions, and evidence collected over the past decade now suggests that they are contributing to higher allergy rates.” – Jeffrey Smith, from the following article in Foodconsumer.org. I for one have never believed that sufficient long-term studies have been done on the safety of GM foods. Actually, I would never purchase GM foods anyway because I do not believe that we can ever know their true long-term effects on our health, agriculture or the environment. Do you have funds invested in companies producing, distributing or marketing GM foods? Where do you stand on this issue?
Genetically Engineered Foods May Cause Rising Food Allergies – Part 1, by Jeffrey M. Smith, June 8, 2007, Foodconsumer.org, USA.
UK Spending On Organic Foods Doubles In 3 Years. – [COMMENTARY] “Spending on organic food has soared from Â£849 million in 2004 to Â£1.23 billion last year, and is forecast to hit Â£1.7billion this year.” This is according to the article below, as reported in a new study by Minto. The study also found significant growth in the number of UK residents interested and buying Fairtrade products and recycling their waste. Britain is definitely a leader in going green. For ethically, spiritually and environmentally oriented investors, this is particularly good news. Of course it is good news for the planet too!
Rise of the ethical shopper as demand for organic goods soars, June 8, 2007, Daily Mail, UK.
Florida To Ban State Investments In Iran & Sudan. – [COMMENTARY] The directive is largely aimed at the state’s pension funds. The momentum for divesting funds in political hotspots is gaining speed. Ethical investors also may need to review their investments in light of their own ethics concerning investing in troubled countries. Should such divestment continue and accelerate, companies with investments in these countries might see their share values negatively affected.
Florida governor to sign ban on state investments in Iran and Sudan, by Anthony Man, June 7, 2007, Sun-Sentinel.com, USA.
Four In 10 UK Bank Customers Would Accept Lower Interest If Their Bank Invested Green. – [COMMENTARY] This study, by consumer campaigner Which? in the UK, makes the same point as another UK survey that I saw some months ago. The real point is that most savers and investors want to see their money used for good purposes. However, there is no need to believe that this means lower returns. On the contrary, we are beginning to see, and what I strongly believe will be even more the case in the future, is that above average returns will be the norm from ethically and green oriented investments.
Bank customers′ ethical credit boost, by Eryl Jones, (Western Mail), June 6, 2007, IcWales.co.uk, UK.
US Federal Trade Commission (FTC) Wants To Stop Whole Foods Market Inc.’s Proposed Takeover Of Wild Oats Markets Inc. – [COMMENTARY] I suppose the FTC is concerned that the two largest organics food retailers would create some sort of monopoly. I suggest that they visit almost any other large US supermarket to see just how absurd that proposition is!
Whole Foods, Wild Oats To Challenge FTC Lawsuit, by Jessica Wohl, June 6, 2007, Environmental News Network, Source: Reuters, USA.
New Study: Globalization Vs Sustainability. – [COMMENTARY] A new study by SustainAbility discusses the issues involved, and should be read by all investors. Only a glimpse of the study is presently available, its full release is on June 28.
New Study Forecasts to the Year 2027, Asks – Are Globalization and Sustainable Development on a Collision Course? June 5, 2007, CSRwire.com, USA.
19% Of US Defined Contribution (DC) Pension Plans Offer Socially Responsible Investing (SRI) Options; Another 41% Will Within Three Years. – [COMMENTARY] As reported on June 1, the growth of SRI options in DC pension plans for US employees is growing fast. Now we have the full details of the Mercer Investment Consulting Report. See the article below.
DC Plans & SRI in the USA, June 5, 2007, Mercer Investment Consulting, USA.
The Ethics & Morality Of Debt Financed Private Equity Deals. – [COMMENTARY] It is clear that lenders to these private equity deals are exhibiting signs of what economists call ’moral hazard’. This is where market participants get overly confident and throw-out all caution. When the inevitable credit market tightening happens, I believe we could see some truly big financial fireworks.
What Henry Kravis isn’t saying about private equity, by Brian Milner, June 2, 2007, The Globe & Mail, Canada.
Use Of Ethical Investment Symbol Grows Quickly In Australia. – [COMMENTARY] Australia’s Ethical Investment Association has a symbol that fund managers can use if they consider “… a company’s environmental sustainability, corporate governance, social responsibility and labour standards before buying shares for a super portfolio…The value of managed portfolios with the symbol grew by 56 per cent over the year to the end of June 2006 to $11.98 billion from $7.67billion.” The idea of creating a symbol like this, providing it was properly monitored, is something that all national socially responsible investing organizations should create and implement. I believe it can go a long way in assisting the investing public in deciding in what funds they may want to invest in.
Investors focus on climate policies, by Stephen Johnson, June 2, 2007, The Canberra Times, Australia.
Americans View Poorly US Companies Corporate Social Responsibility (CSR) Efforts. – [COMMENTARY] This Fleishman-Hillard/National Consumers League study is useful for all socially responsible investors to read. It confirms my opinion that US companies are still seen as infants in implementing CSR.
Rethinking Corporate Social Responsibility, May, 2007, USA.
Major Problems With Kyoto. – [COMMENTARY] This article describes huge problems with some of Kyoto’s implementation schemes. Two pillars of Kyoto, carbon trading and the Clean Development Mechanism, are found in practice to have huge faults. After you read this, let me know your thoughts on how these problems can be fixed.
Truth about Kyoto: huge profits, little carbon saved, June 2, 2007, The Guardian, UK.
World’s Greenest Companies According to UK Newspaper & EIRIS. – [COMMENTARY] The UK’s The Independent newspaper and Ethical Investment Research Services (EIRIS) report on what they consider to be the greenest companies in Britain and the world.
Green Leaders: A guide to the world’s greenest companies, by Karen Attwood, June 1, 2007, The Independent, UK.
Big Growth Of Socially Responsible Investment (SRI) Choices In U.S. Workplace Retirement Plans Reported. – [COMMENTARY] This is great news for American workers. Mercer Investment Consulting will release the report on June 5. I will give highlights from the report as soon as they are available.
The Greening of Retirement: Report to Show Major Gains in Socially Responsible Investment Choices in U.S. Workplace Retirement Plans, June 1, 2007, PRNewswire-USNewswire, USA.
Shares Of Green Companies Make Big Gains In London. – [COMMENTARY] Large mainstream funds are now going green and contributing to significant price rises in green companies on the London Stock Exchange. We are still in the early stages of the green revolution. However, as in all past technological phase transitions, there will only be a few winners. If you are considering investing in this area, be sure to seek both expert technical and investment advice.
How green turned into gold, by Patrick Collinson, June 2, 2007, The Guardian, UK.