October 2008

Leading Socially Responsible Investment (SRI) Index Providers, FTSE (UK) & KLD (USA) To Combine Forces. – [COMMENTARY] “With the exception of the FTSE4Good index family, all the FTSE and KLD indexes in the sustainability space will be relaunched early in 2009 under the ‘FTSE KLD′ banner… Jerry Moskowitz, New York-based president of FTSE Americas, told Environmental Finance that the FTSE Group will take over responsibility for managing the KLD indexes, with KLD focusing on ESG research which will help underpin all the indexes.” This partnership will be interesting to watch. FTSE is strong in Europe while KLD is a leader in the US. Interest in ethical stocks and bonds should be further enhanced by this merger.
FTSE and KLD join forces on sustainability indexes, October 30, 2008, Environmental Finance, UK.

Investor Coalition Writes To 9,000 Companies To Pressure Them On UN Global Compact. – [COMMENTARY] “The United Nations Principles for Responsible Investment (UNPRI) has formed a pressure group of more than 50 global investors running about $4 trillion (€3.2 trillion) in assets to lobby companies they invest in to sign up to the UN Global Compact, a set of 10 corporate standards on human rights, working conditions, the environment and anti-corruption.” This is a great initiative. The group argue that companies that sign-on improve their governance and as a result, over time experience better investment performance.
Investor coalition writes to 9,000 companies to pressure them on UN Global Compact, by Hugh Wheelan, October 27, 2008, Responsible Investor, UK.

Responsible Investment Market To Be Mainstream By 2015, Reaching 15-20% Of Global Assets. – [COMMENTARY] This is another report saying that investment in ethical stocks and bonds is likely to grow significantly in the years ahead. As ethics in financial markets rises to the forefront of investor concerns, it is clear that the mainstream investment industry will have to embrace this trend.
RI will reach 15-20% of global asset management market: fund manager report, by Hugh Wheelan, October 28, 2008, Responsible Investor, UK. For the actual report, see Responsible Investing: A Paradigm Shift: From Niche to Mainstream, by booz&co, Netherlands.

Certified Financial Analyst’s (CFA) Institute Offers ESG Manual For Investors. – [COMMENTARY] The manual provides an environmental, social and governance (ESG) framework for investors analyzing companies.
ESG manual launched, by Giovanni Legorano, October 27, 2008, Global Pensions, UK. Click here for PDF version of the manual.

TIME Magazine Reports On US Religious Mutual Funds. – [COMMENTARY] This is worthwhile reading for ethical investors. It covers a number of key issues and addresses the performance of top religious funds.
Which Religion Picks the Best Stocks? By David Van Biena, October 25, 2008, TIME Magazine, USA.

Fourteen Large US Investors Call On Securities Exchange Commission (SEC) To Demand Greater Corporate Climate Risk Disclosure. – [COMMENTARY] “The letter was sent in response to the SEC’s request for public comment on its 21st Century Disclosure Initiative, File No. 4-567, which proposes to modernize the current SEC disclosure system to enhance its usefulness to investors. The 14 signatories to the letter include asset managers and leading U.S. institutional investors such as CalPERS, CalSTRS, and the Maryland, New Jersey, New York City and New York State public pension funds or treasurers.”

Again, should not transparency in things that affect corporate performance be something obvious? For an overview of the state of global corporate social responsibility reporting and my thoughts on the subject see We Need Mandatory Corporate Social Responsibility Reporting.
Investors Call on SEC to Require Better Disclosure on Climate Change and Other Risks, October 24, 2008, CSRWire via Accountability-Central.com, USA.

72% Of Canadian Financial Advisors Say Investments Emphasizing Environmental, Social & Governance (ESG) Screens Will Become More Popular. – [COMMENTARY] “… nearly half of all advisors said their clients had initiated discussions about ESG investments.” This survey by VenGrowth Asset Management Inc., continues to highlight the growing investor and advisor interest in funds that screen for ESG issues.
Growing Demand for “Green” Investments a Hot Topic for Canadian Financial Advisors: Criterion Investments Limited, October 23, 2008, press release by VenGrowth Asset Management Inc., Canada.

The Robin Cosgrove Prize For Ethics In Finance. – [COMMENTARY] “The global prize aims to promote greater awareness among young people with an interest in the banking and related financial industries of the benefits of ethics in finance.” The Prize of $20,000 is for papers providing “Innovative Ideas for Ethics in Finance”. Submission deadline is March 31, 2009. This is a great idea with some big sponsors. Some of you might know someone who might want to apply.
Robin Cosgrove Prize, Geneva, Switzerland.

Canada’s Ethical Funds Posts Survey Results Of Investor Concerns & Actions It Seeks From Affected Companies. – [COMMENTARY] This is not only an interesting survey of what issues most concern Canadian ethical investors with regard to screening criteria, but also Ethical Funds provides the names of the companies it is in discussion with, what they are discussing with them, and how they rate the progress of those discussions. This is useful information for anyone looking for ethical stocks and bonds. To review the press release see: Ethical Funds Unveils 2009 Plan to Engage Major Corporations on Top Investor Concerns, October 22, 2008, on Yahoo, and see their list of companies and engagement activities at: Ethical Funds Focus List 2009. October 2008, Ethical Funds, Canada.

CSR Reporting Guidance For Financial & Retail Firms Launched By UN Environmental Programme’s (UNEP) Finance Initiative & Global Reporting Initiative (GRI). – [COMMENTARY] “From 2003 to 2008 UNEP FI and the Global Reporting Initiative (GRI) led two international working groups to develop and pilot-test the GRI Financial Services Sector Supplement for the finance sector. The Supplement provides guidance for retail, corporate and commercial banking, insurance and asset management on how to report on the environmental and social performance of their products and services.” Another big step is made in CSR reporting. For my comments on this subject see: We Need Mandatory Corporate Social Responsibility Reporting.
GRI Financial Services Sector Supplement, October 20, 2008, UNEP FI, Switzerland.

UN Launches ’Green New Deal.’ – [COMMENTARY] “The United Nations is backing a global Green New Deal, which it says could be a ‘historical′ opportunity to rebuild economies debilitated by the credit crisis and target future investment for environmentally friendly markets.” This UN initiative could fit well with a possible new US government stimulus package. Over the medium to longer term, green-ethical stocks and bonds could significantly benefit from such spending initiatives.
UN launches Green New Deal for sustainable investment, by Hugh Wheelan, October 22, 2008, Responsible Investor, UK.

Is Alternative Energy Threatened By Cheaper Oil & Gas? – [COMMENTARY] Financing for alternative energy projects seems to be becoming more difficult as oil and gas prices plummet. Government support will be vital to make continued rapid progress in this industry. Fortunately, a new proposed US economic stimulus package is likely to contain such support.
Alternative Energy Suddenly Faces Headwinds, by Clifford Klaus, October 20, 2008, The New York Times, USA.

Shariah Finance: Its Ethics And Avoidance Of Excessive Risk. – [COMMENTARY] This article makes fascinating reading and provides insight as to how western finance, especially securitization, might benefit from the ethics and risk strategies inherent in Shariah finance. Securitized securities involving sub-prime mortgages, etc., are at the heart of the derivatives meltdown.
Could It happen here? October 19, 2008, Zawya.com, UAE.

Boston College & Reputation Institute Reveal Top 50 Companies That US Public Says Rank Best In Corporate Social Responsibility (CSR). – [COMMENTARY] “Google, Campbell Soup, Johnson & Johnson top the 2008 Corporate Social Responsibility Index (CSRI)… Rounding out the top 10 are: Walt Disney, Kraft Foods, General Mills, Levi Strauss, UPS, Berkshire Hathaway and Microsoft.” See the report, discussion, and rankings.
Perception of Corporate Responsibility Linked to Reputation, October 17, 2008, Boston College Center for Corporate Citizenship, USA.

Social Investment Forum (US) Survey Shows More Clean Energy/Green Technology Funds Coming To Market. – [COMMENTARY] All of the respondents surveyed said demand for such products was going up. With the next US government likely to get behind green technology in a big way, green investment opportunities should flourish.
Social Investment Forum: Clean Energy/Green Technology Focus Growing In Mutual Funds, Other Investments, October 16, 2008, press release, Social Investment Forum, USA.

Resources Groups Lead In Sustainability In South Africa, According To Ernst & Young Survey. – [COMMENTARY] “Platinum producer Anglo Platinum, and synfuel producer Sasol shared this year′s top honours, followed by diversified miner BHP Billiton, gold producer Anglogold Ashanti, and financial service provider Standard Bank.” It is refreshing to here resource companies having good sustainability policies.
Resources groups lead in sustainability report, by Esmarie Swanepoel, October 16, 2008, Engineering News, South Africa.

Eight Of Nine US Banks Receiving US Government Funds Were Targeted For ’Say On Pay’ Resolutions In 2008. Many Large Funds Refused To Support Resolution. – [COMMENTARY] “Analysis of mutual fund voting data from Fund Votes′ proprietary database of investment fund proxy voting shows that sixteen of the 70 fund groups (including 1700 individual funds) surveyed by Fund Votes failed to support even a single ‘say-on-pay resolution at the eight bail-out banks targeted with this resolution in 2008.” Follow the link below to see who did and did not support these resolutions.
Large Fund Groups Failed to Support Tighter Pay Practices at Banks named in Bailout Plan, October 15, 2008, Governance Map, USA.

UK Companies Lead Europe In Green Energy Investment. – [COMMENTARY] “UK companies attracted GBP 1 billion of venture capital and private equity investment for renewable energy projects and technologies. The figure is more than twice that of any other European country and 41 per cent of the EU total.” This survey was commissioned by Shell to determine the role of small and medium-sized enterprises are playing in dealing with climate change.
Colour of money is green, and UK small firms lead the race, October 15, 2008, originally published in The Scotsman, World Business Council of Sustainable Development, Switzerland.

George Soros, Renowned Billionaire Investor, Sees Combating Climate Change & Green Investing As Way Out Of Global Economic Crises. – [COMMENTARY] In times like these it is good to have this kind of support for green investing from one of the world’s most successful investors. View this short PBS video and get inspired.
Can green investing save the global economy? October 15, 2008, 4entrepreneur, USA.

Small Ethical Banks See Gains. – [COMMENTARY] Europe’s biggest ethical-socially responsible bank, Triodos, is making profits and relatively unscathed by the current global banking mess. It is likely that many more banks will imitate the Triodos model — which is great news for ethical banking.
Day of the minnow, by Patrick Butler, October 15, 2008, The Guardian, UK.

US Ethical Mutual Funds Online Screening Tool. – [COMMENTARY] Ethical fund investors in the US might fund this tool useful. It allows them to compare the different screens used by most US socially responsible mutual funds. Please note though, that you have to provide an email address and name in order to receive the information.
Mutual Fund Social Screen Tool, investedinterests, USA.

Australian Funds Research Shows Different Carbon Footprints According To Fund Type. – [COMMENTARY] “Investment funds run by Australian superannuation funds and asset managers show a 36% difference between the largest and smallest carbon footprints and an eightfold difference in footprints of the equity investment portfolios, according to joint research between Trucost and the Australian Institute of Superannuation Trustees. The report examined the greenhouse gas emissions associated with 100 equity portfolios of different investment styles: growth, value, sustainability, index, enhanced index, core and small/mid caps.”

Continuing, “It [the research] said that sustainability and growth portfolios tended to be the most carbon efficient, while enhanced index portfolios had the greatest carbon intensity because of their tendency to select more resources, construction and materials, oil & gas and utilities stocks.” For many ethical investors, these results are unexpected. However, it is good to have confirmed that green investing does equate with helping create a lower carbon footprint.
Investment funds run by Australian superannuation funds, by Hugh Wheelan, October 9, 2008, Responsible Investor, UK.

Green Funds Take Hit. – [COMMENTARY] “Investment into green themed investment funds in Europe plummeted again in July with €202.9m ($279m) being pulled from the sector as the credit crunch started to raise significant concerns about financing for renewable and clean energy projects.” It seems that green investments and oil prices are definitely correlated. I have been calling for a level playing field in government energy incentives and tax policies for a long time. Consider what would be the cost of oil if you included the defence costs to maintain our oil supplies. And for nuclear energy, imagine adding these costs: the costs of decommissioning — which are as much as building the original plant — and the net present value of fuel storage expenses for 10,000 years! Nope, it is nowhere near a level playing field. But it will be one day.
Green fund sales dive over credit crunch concerns, by Hugh Wheelan, October 9, 2008, Responsible Investor, UK.

Overview of Sharia Compliant Investing, Primarily A UK Perspective. – [COMMENTARY] “Islamic assets already total around $1 trillion (£560bn) globally, estimates the Asian Development Bank, with annual growth of 10 to 15 percent a year.” There are aspects to Islamic finance that many ethical investors will find appealing. Their strict ethical code has meant that they have largely bypassed the difficulties associated with many other financial entities.
Islamic funds, by David Stevenson, October 7, 2008, Investors Chronicle, UK.

Ethical Investing Research Gets A Boost. – [COMMENTARY] “The [United Nations] Principles for Responsible Investment (PRI) and the Enhanced Analytics Initiative (EAI) have today announced that they will join forces under the PRI name to internationalise the call for better investment research. With joint assets under management of more than US$15 trillion, this new approach will represent a single, powerful voice within international investment markets, continuing to encourage the production of better integrated and longer term research.” The research is aimed at ’extra-financial’ issues. This means promoting the role of environmental, social and governance issues in investment research at the world’s biggest investment firms. This is welcome news, further encouraging everything related to ethical investing.
EAI and PRI join forces to internationalise the call for better investment research, joint press release, UN’s PRI and Enhanced Analytics Initiative, UK.

New Digital Book Describes Green Programs At Some 70 North American Companies, Including Apple, GAP, & Whole Foods. – [COMMENTARY] “The Vault Guide to Green Programs was released this week. The firm [vault.com] says the book can be highly useful to anyone considering environmentally friendly companies.” Investors interested in green-ethical stocks and bonds, might want to see what’s in this book.
New Digital Book Profiles Green Programs at Apple, Gap, Other Firms, October 2, 2008, GreenBiz.com, USA.

American Executives Believe Strongly In Climate Change. But Fail To Act As Strongly In Corporate Actions. – [COMMENTARY] “As consumers, they [executives] are personally concerned about climate change and its potential impact on the quality of life of future generations (80%); Addressing climate change on a corporate level can help make businesses more competitive (73%)…  76% say that their companies should be collaborating with industry groups, suppliers and/or customers to address CO2 emissions standards, but only 57% say that their companies are doing this.”

“While 71% say that their companies should be educating employees on climate change issues, only 49% say that this is currently being done.” Surveys like this demonstrate the importance of corporate governance in the world economy in addressing climate change. I find it rewarding to hear that executives are themselves convinced of the need to act on climate change issues and that it can be beneficial to their corporate performance.
The Green Gap between Attitudes and Actions on Climate Change with Executives, October 3, 2008, press release by Makovsky + Co., lohas.com, USA.

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