October 2007

Al Gore’s Generation Investment Management’s Investment Portfolio Criticized. – [COMMENTARY] The list of stocks in this portfolio seems like that of most large cap mutual funds. Nonetheless, for green investors, it is worth a look at. For a list of their securities holdings as of September 30, 2007, see their SEC 13F filing. For a critique of their holdings, go to Al Gore’s Inconvenient Stock Portfolio Exposed, press release, by JunkScience.com, October 30, 2007, USA.

Fascinating Report On The Politics – And Disregard Of Economic Reality – Concerning Government Biofuel Programmes. – [COMMENTARY] Member governments of the Organisation for Economic Co-operation and Development, which includes the US, EU, Japan and most other industrialized countries, are now spending between $13bn to $15bn annually to subsidize biofuel programmes. Again, this is a farm support programme disguising itself as a major environmental initiative!
Biofuels: a tale of special interests and subsidies, by Martin Wolfe, October 30, 2007, FT.com, UK.

Europeans Are More Green Than Americans According To Porter Novelli (PN) and Natural Marketing Institute (NMI) Study. – [COMMENTARY] “Europeans, across the countries surveyed, are fifty percent more likely than Americans to buy ’green’ products – from solar panels to hybrid cars to natural/organic foods, personal care and home products… While Europeans are eagerly adopting new behaviors as it relates to green consumerism; paradoxically, they report being more price sensitive than their American counterparts.” We are also seeing that as LOHAS markets grow globally, there is increasing interest by environmentally conscious major corporations. This is good news for ethical investors as it means a broader, more diversified portfolio of green and socially responsible investments are possible.
Europeans Are Better Environmental Citizens Than Americans, New Research Study Reveals, press release, October 29, 2007, PR Newswire/CNN Money, USA.

Coca Cola, Mattel & Other Companies Cited In Unethical Practices From Reports Delivered To The Consumers International World Congress, Australia. – [COMMENTARY] This information is important for all ethical investors.
Drug firm tops ethical offender list, by Kelly Burke, October 30, 2007, theage.com.au, Australia. For a comprehensive review of their findings go to: Consumers International – Press briefing, International Bad Product Awards 2007, October, Consumers International, UK. See also: Corporate Social Responsibility News – BP fined for environmental crimes and Gap admits to child labour violations in outsource factories Guardian Unlimited Business.

US Religious Mutual Funds Reviewed. – [COMMENTARY] This article cites five US mutual funds that adhere to strong religious principles. So do they inculcate spiritual laws of financial prosperity as well?
Five religious-based mutual funds that keep the faith, by Murray Coleman, October 28, 2007, MarketWatch, USA.

Top Ten Canadian Cleantech Companies According To Corporate Knights. – [COMMENTARY] Well done Corporate Knights for this outstanding report on Canada’s cleantech (green technology) companies. Well worth reading by anyone looking for green stocks that are good to invest in. Please note though, that this is not a financial report and does not make stock recommendations. However, it does provide excellent material for you to have a valuable discussion with your investment advisor concerning cleantech companies.
First Annual Corporate Knights Ranking of Canadian Cleantech, 2007, Corporate Knights, Canada.

Do Small Socially Responsible Companies Get Lower Ethical Ratings When Purchased By Larger Firms? – [COMMENTARY] Yes, seems to be the answer. Nigel, the author of the Wildberry’s blog cites research that according to Ethical Consumer Magazine’s ’ethicscore’ ratings, appears to validate the concerns of many ethical investors. That is that highly regarded small socially responsible companies, when purchased by huge multi-nationals, score less favourably in terms of socially responsible indicators, as determined by ethicscore’s parameters. You may think you have the best corporation to invest in — say, when you invest in a small ’higher consciousness’ green company — but beware when they are taken-over by larger companies!
Is Ethical Business just Business after all? October 27, 2007, Wildberry’s blog, UK.

Another Study Shows High-Income US Consumers Would Pay More For Socially Responsible Goods. – [COMMENTARY] 57% of high-income adults (annual income over $307,000) would give greater consideration to a brand they deem more socially responsible, according to a new survey by The Luxury Institute. For companies engaged in producing or marketing of luxury goods, the advantages of using corporate social responsibility policies are clear.
Uber-wealthy Say Socially Responsible Brands Catch Their Attention, by Jeff Miller, October 26, 2007, Rapaport News, USA.

USDA Not Acting Against Organic Milk Dairy ’Factory’ Says The Cornucopia Institute. – [COMMENTARY] Dean Foods′ Horizon dairy in Paul, Idaho, is being taken to task by the Cornucopia Institute for allegedly failing to meet regulatory, organic milk standards. Apparently, many other large US organic dairy factories are not meeting these standards either, according to consumer groups who have launched class-action lawsuits around the US. If you are an investor in affected companies, you may want to ask them some pointed questions — and get them to respond to you in writing!
Halloween Trick — USDA lets “Organic” Factory Farms off the Hook, press release, October 31, 2007, Cornucopia Institute, USA.

Ethical Corporation Launches New, Free Report: “The climate change industry takes root.” – [COMMENTARY] There are many topics of interest and ideas for green investing in these reports.
The climate change industry takes root, October 31, 2007, Ethical Corporation and ClimateChange.com, UK.

Australian & New Zealand Responsible Investment Grows At Double The Pace Of Mainstream Investment. – [COMMENTARY] “Specialist managed responsible investment portfolios grew 43% during the 2007 financial year from $11.98 billion to $17.10 billion whereas, according to the latest Morningstar report, the total managed investments industry grew 20% in the same period.” This is another example of how ethical investing (in its broadest sense) continues to gain in momentum throughout the world.
Responsible Investment 2007, October 2007, Responsible Investment Association Australasia (RIAA), Australia.

Geothermal Public Companies — A Brief Review. – [COMMENTARY] Geothermal power is an emerging area with possibly great potential, though we do not hear much about it. The article linked to below is a brief overview of what the reviewer believes are six interesting public companies in this field. Are they stocks that are good to invest in? Only time will tell. However, always get help with investing from a qualified investment advisor before making investments.
6 Geothermal Developers that Could Break Out, by Tim Plaehn, October 25, 2007, Ecototality Life, USA.

New Report By UN Environmental Program’s Finance Initiative Demystifies Responsible Investment Performance. – [COMMENTARY] An incredible review of key academic and broker studies on the effects of environmental, social and governance (ESG) issues on corporate performance and stock prices. It convincingly demonstrates that by incorporating ESG factors, investors may actually improve their returns. When clicking the link to it, please be aware that it is a big 2.35MB PDF file.
Demystifying Responsible Investment Performance, October 2007, UNEP Finance Initiative & Mercer Investment Consulting, UN.

World Bank Issues ’Green Bonds’. – [COMMENTARY] The World Bank is issuing euro-denominated bonds through two European banks, ABN-AMRO and Sparkassen-Finanzgruppe, to finance ’green technology, environmentally friendly development, and anti-poverty programs.’ It is good to see finally, this mammoth and heavily criticized institution getting behind sustainable investing.
News & Broadcast – World Bank Forges Links with Socially Responsible Investors, October 24, 2007, World Bank, USA.

Groups Call On Canadian Government To Withhold Support To Canadian Mining Companies Who “… violate international environmental and human rights standards.” – [COMMENTARY] Around 153,000 Canadians signed an action letter proposed by Development and Peace, was presented to the Canadian government. Development and Peace is in its second year of action on this front. Ethical investors need to take note of such groundswell protests when looking for resource stocks that are good to invest in.
DEVELOPMENT AND PEACE delivers strong message to Ottawa on the need to call Canadian mining companies to account, press release, October 24, 2007, Canada.

Ethics At Major US Financial Institutions Questioned Again (2). – [COMMENTARY] Among the major financial institutions Goldman Sachs has been in the forefront in promoting sustainable investing. And it needs to be congratulated for that. However, in another department, that concerning their ethics in first packaging and selling mortgage-backed securities, then a year later selling them short, certainly creates some bad feelings. How would you feel if your broker sold you some shares in an exciting new public offering, and then you found-out a few months latter that they were selling them and making huge amounts of money by doing so! Also, the net downstream effect of such actions is to further harm the already bad US housing market.
Sub-Prime? So Over! Part II, by Adrian Ash, The Rude Awakening, October 24, 2007, USA.

Ethics At Major US Financial Institutions Questioned Again (1). – [COMMENTARY] An investors’ class action lawsuit has just been resolved involving Morgan Stanley clients who paid storage and insurance fees for silver supposedly held for them by the firm. Apparently, Morgan Stanley admitted that they never stored the silver purchased by their clients! Now Morgan Stanley is agreeing to refund millions of dollars in storage and insurance fees to some 22,000 affected clients. In their defense, Morgan Stanley said that the charging of storage and insurance fees for silver and other bullion, though not held in company vaults, was widely practiced among financial institutions. Of course, what this means is that there is likely a massive ’short’ position in the silver market. That is, should these silver certificate holders demand delivery of their silver, the silver price could skyrocket. Furthermore, these financial institutions have the free use of the silver purchaser’s funds until they actually put the silver in their vaults!
Money for Nothing, by Ted Butler, October 23, 2007, SilverSeek.com, USA.

Harvard Study Shows High-End New York Shoppers Will Pay More For ’Fair-Labour’ Goods. – [COMMENTARY] This study seems to have just come to light and shows that well-heeled New Yorkers will pay 10-20% more for goods ’being made under good labor standards.’ At least we can now see one study where consumers’ beliefs marry with the goods they buy.
Is There Consumer Demand for Improved Labor Standards? Evidence from Field Experiments in Social Product Labeling, by Michael J. Hiscox and Nicholas F. B. Smyth, Department of Government, Harvard University, USA.

Morgan Stanley Predicts Renewable Global Energy Sales Of $1 Trillion By 2030. – [COMMENTARY] The investment bank also says that solar power could gain 11.2% of the world-wide energy market by 2030, while wind power would take another 9.6% of that market. When looking for environmental stocks that are good to invest in, do get help with investing from your financial advisor. As in any new industry, many start out, but few survive. However, the survivors often win big!
Morgan Stanley Predicts Trillion-Dollar Renewable Sales By 2030, October 19, 2007, Alternative Energy Retailer (based on a Reuters article), USA.

The Greenest Car Companies. – [COMMENTARY] If, you are a green or ethical investor looking for the best automobile stocks that are good to invest in, see this review of what car companies are offering and plan to offer in terms of green technologies.
Car makers – who′s the greenest? October 3, 2007, ClimateChangeCorp.com, UK.

US Shareholders Overwhelmingly Say No To Reductions In Shareholder Rights. – [COMMENTARY] The US Securities & Exchange Commission’s (SEC) proposal to reduce shareholder voting privileges has been met by a massive outpouring of resistance by socially responsible and religious shareholders.

Big Banks Ethical Lapses. – [COMMENTARY] The fact that the big three US banks – Citigroup, Bank of America and JPMorgan Chase will create a special $75-100 billion fund to purchase bonds and other instruments that are having difficulty finding buyers, is in effect collusion to support certain asset prices. In any other industry, such collusion could be the subject of massive fines! Yet here it is sanctioned by the US government. What they are doing is trying to avert massive write-downs in securities they own by artificially creating a market with higher than market prices! Enron created webs of artificial companies that traded energy products to each other at ever higher prices. As each entity booked higher profits, Enron’s profits shone. The same thing seems to be going on among the banks. Ethically, it is reprehensible. It covers-up banks’ bad bets in a massive way, letting bank executives’ off-the-hook, and promotes what economists call, ’moral hazard’–the latter meaning it will encourage market players to take on even bigger out-sized bets with the knowledge that if anything goes wrong, that they will be bailed out. Truly, ethics is at an all-time low in our financial markets and in the US Treasury Department!
Banks to Start Fund to Protect Credit Market, by Vikas Bajaj, October 15, 2007, The New York Times, USA.

Innovest Breaks New Ground With Study Relating Company’s Carbon Beta And Equity Performance. – [COMMENTARY] “The study evaluates the relationship among climate change, companies′ ability to manage the associated risks and opportunities, and their financial performance….The ’Carbon Beta(c) premium’ for leading companies appears to be growing larger over time, as regulatory regimes tighten around the world.” This is a fascinating background study to the whole issue of a company’s carbon emissions, how they deal with them, and relationship to financial performance. Congratulations to Matthew Kiernan and his team at Innovest!
Carbon Beta & Equity Performance: An Empirical Analysis, October 2007, Innovest Strategic Advisors, Canada.

EIRIS Produces Report On Global Indigenous Rights & Resource Sector Risks. – [COMMENTARY] This is as comprehensive a report as any that I have seen concerning the risks resource companies face when creating ventures in aboriginal areas. “This briefing seeks to identify the risks and opportunities faced by companies with respect to managing indigenous rights issues and the ways in which these can materialise in the short to medium term for companies involved in resource sectors.” Important reading for anyone interested in resource stocks.
Indigenous rights, indigenous wrongs: risks for the resource sectors, October 2007, Centre for Australian Ethical Research (CAER) and Ethical Investment Research Services (EIRIS), Australia/UK.

Biofuels ’Emit More Greenhouse Gases than Fossil Fuels’. – [COMMENTARY] A Nobel prize-winning chemist and his team have found that biofuels may emit up to 70% more greenhouse gases than fossil fuels!  Evidence continues to mount that promoting biofuels at public expense was a bad, bad idea. Not only are billions of tax payers dollars going to support its production, but it is driving up food prices and ending-up causing more damage to the environment than fossil fuels. One wonders why this report never made it into mainstream American media.
Rethinking Renewables: Biofuels ’Emit More Greenhouse Gases than Fossil Fuels’, September 26, 2007, Spiegel Online International, Germany.

Merrill Lynch Launches Low Carbon Index For European Blue Chip Stocks. – [COMMENTARY] This is a welcome development and shows that mainstream investment firms are moving into green investing in a big way. So if you are looking for green stocks that are good to invest in, one good way is to look at what Merrill Lynch, HSBC, and others are including in their green indexes.
Merrill launches carbon footprint index, by Tom Fairness, October 11, 2007, Financial News Online, US.

Australian Study Supports Sustainable Investing For Funds. – [COMMENTARY] The report by the Russell Investment Group said that after reviewing over 40 empirical studies that, “’There is no necessary performance penalty from pursuing a sustainable approach; and there is unlikely to be a performance premium from pursuing a sustainable investing approach when account is taken of appropriate risk and style effects.” Of course most of these studies have been done in a period when the concern for global climate change, green and ethical  investing, was not as acute as it is now. With much more investor attention now being paid to sustainable, ethical stocks and bonds, I believe the returns on such assets have the potential to do even better than what these prior studies indicated. Always get help with investing from a professional advisor though.
No more sustainable investment roadblocks: Russell, by Chris Nicholls, October 11, 2007, Financial Standard, Australia.

UK Social Investment Forum Reports On UK Ethical Investing Oriented Pension Funds. – [COMMENTARY] Probably a first by any ethical or socially responsible investment entity to report on the responsible investing practices of pension funds. Congratulations to them on this initiative! Ethical investors might glean some ideas for ethical stocks and bonds by reviewing this report too.
Top UK Corporate Pension Funds named in UKSIF report, October 4, 2007, UK Social Investment Forum, UK.

Socially Responsible Investing (SRI) Gaining In South Korea. – [COMMENTARY] It is good to see how investing in ethical stocks and bonds continues to gain in countries around the world.
SRI Funds Attract Investors (The Korea Times), by Park Hyong-ki, October 7, 2007, The Korea Times, South Korea.

Are Ethical Investors & Funds Making The Same Mistake As In 2001? – [COMMENTARY] This commentary makes the argument that just as ethical investors and ethical funds over-invested in tech stocks in the late 1990s, and then saw them implode, the same over-investment has probably taken place by them investing in financials! Now with many financial organizations taking multi-billion dollar hits on bad financial plays, and with their stocks under-performing many other sectors, ethical investors and funds could see much poorer performance when compared to non-screened funds. Personally, I suspect that as the mortgage crises deepens and derivative losses mount in the USA and elsewhere, financial institutions are likely to suffer extraordinary losses in the years ahead.
Ethical Corporation: Governance – Credit crunch: US social investors repeat past mistakes, by Jon Entine, October 5, 2007, Ethical Corporation, UK.

Mounting Extreme Climate Events & Losses Charted By IPCC. – [COMMENTARY] Everyone is aware of this report by the UN’s International Panel on Climate Change (IPCC). However, to visually see the growth of extreme climatic events and their costs multiplying over the decades, and adjusted for price inflation, is stunning! Go down about half-way on this page – following the link provide here – to see the graph.
UN Chronicle | Financing the Response to Climate Change, UN Chronicle, UN.

Kenexa Survey Shows Companies The Advantage Of Using Corporate Social Responsibility (CSR). – [COMMENTARY] “The latest research suggests that an organization′s active participation in corporate social responsibility efforts has a significant influence on employees′ engagement levels and views of senior management.” Kenexa press release. This can only be good news for all those companies that aspire to be the best corporation to invest in!
BEING SOCIALLY RESPONSIBLE HAS A POSITIVE IMPACT ON EMPLOYEES AS WELL AS THEIR LOCAL COMMUNITIES AND THE ENVIRONMENT, press release by Kenexa, October 5, 2007, USA. Also see: Time for Wall Street to recognize what a ’good’ company is, by Thomas Kostigen, October 5, 2007, MarketWatch, USA.

64% Of Canadians “… say that investing in alternative energy is a good investment choice with potential for good returns…” – Investors Group. – [COMMENTARY] The poll was conducted by Harris Decima and it also found that 82% of Canadians plan to change their behaviour and increase their green activities. It seems that Canadians are certainly getting the green message. Also, it is clear that among the stocks that are good to invest in, environmental stocks have stood out in terms of performance recently.
Canadians see financial benefits of going green, Investors Group finds, press release, October 4, 2007, Investors Group, Canada.

Islamic Shariah Compliant Green Fund Launched. – [COMMENTARY] “Malaysia’s AmanahRaya Investment Bank said Wednesday it will team up with Asian Finance Bank to launch an Islamic green fund to tap the multi-trillion dollar sharia-compliant market. The one-billion ringgit (294 million dollar) green fund will invest in environmentally friendly projects compliant with sharia law such as biofuel ventures in Malaysia and the Middle East.” (From article linked to below.) It is good news indeed to see that shariah compliant funds are being oriented to green investments. However, the mention of investing in biofuels makes me concerned as to who is advising them on their investments.
Malaysian and Middle Eastern banks plan green fund, October 3, 2007, AFP, Malaysia.

FTSE & Impax ET350 Join Forces. – [COMMENTARY] The Impax ET350 index of leading environmental companies will now become the FTSE ET350. Both companies believe the ET350 will be more successful and useful to the investor with these new arrangements.
FTSE And Impax Sign Agreement For Environmental Technology (Impax ET50) Index, press release, October 2, 2007, FTSE, UK.

UK KPMG Survey Shows Most Institutional Investors Do Not Consider Carbon Footprints In Evaluating Companies. – [COMMENTARY] When looking for the best stocks that are good to invest in, institutional investors are unlikely to take into account a company’s carbon footprint. The KPMG survey shows fully 63% of them believe that a company’s carbon footprint does not really figure in their investment decisions. Perhaps one of the difficulties they and all investors face is that there is still a lack of information from companies regarding their carbon footprints and that there is yet no recognized independent auditing procedure for such information.
FT Alphaville » Blog Archive » Not so green after all, FT.com, October 2, UK.

Christian Financial Ad Pulled From Morningstar.com. – [COMMENTARY] It seems that US Faith Financial Planners was asked to remove “Christian” references in their proposed advertisements on Morningstar.com. I believe that any religious or spiritual group should be able to state their values in their ads and mention the tradition from which those values spring from. We hear a lot about Shariah (Muslim) based investment vehicles today. I wonder how Morningstar would react to a Shariah oriented fund explaining its values and background in an advertisement on their site? Incidentally, for anyone interested, I have on this website spiritual quotes and sayings (and relevant spirituality information) from many traditions on the subject of wealth.
Devotionals – Christian Advertising Rejected! October 1, 2007, Devotionals, USA.

US Retailers Embracing Green Practices. – [COMMENTARY] According to this BDO Seidman Retail Compass Survey of chief financial officers, two-thirds  of leading US retailers say that they are “actively involved with ’green’ or environmentally friendly practices…” However, their motivation is mostly to enhance their image rather than a sincere belief in green values. Nonetheless, it is good to see leading retailers becoming environmentally conscious major corporations.
U.S. Retailers Embrace ’’Green’’ Practices According to BDO Seidman, press release, October 1, 2007, BDO Seidman, USA.

Some BHP Billiton Shareholders Want Company To Divest Itself Of Uranium Activities. – [COMMENTARY] BHP Billiton Shareholders for Social Responsibilities are trying to enlist other shareholders, especially churches, conservationists and unions to support their motion to get BHP to drop uranium activities. BHP owns the largest uranium deposit in the world at its Australian Olympic Dam property, and the company has contracts to supply uranium oxides to many countries. “Claims that uranium is ’carbon-free’ completely ignore the substantial carbon costs of its mining, processing, power station construction, protection and disposal,” says Mr. Poppins, a retired engineer leading the shareholder proposal, quoted in The Guardian newspaper. Mr. Poppins has 60 of the required 100 shareholders to actually put the motion onto next month’s agenda of BHP’s annual general meting in Adelaide, Australia.
BHP Billiton shareholders call for moral stand on lucrative trade, by Jan Mayman, October 1, The Guardian, UK.

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