January 2009

Major Socially Responsible Investor (SRI) Groups Ask Obama To Create ’Office for Innovation in Corporate Social Responsibility (CSR).’ – [COMMENTARY] “A dynamic Office for Innovation in CSR will help ensure that the federal government not only leads and assists the business sector to integrate best practices in governance, transparency and management of environmental and social issues, but also that it incorporates this focus on sustainability throughout its own agencies.” This is a great idea, especially when we see the need for enhanced ethics and transparency in business and government. Obama has said himself that he favours such goals.
Obama Administration Urged by Over 50 U.S., Overseas Leaders to Create “Office for Innovation in Corporate Social Responsibility,” January 29, 2009, Social Investment Forum, USA.

At Davos, UN & GRI Launch New ESG Reporting Guidelines For Financial Services. – [COMMENTARY] “A set of best-practice sustainability reporting criteria for financial services companies has been launched at a high-level dinner at the World Economic Forum in Davos by the United Nations and the Global Reporting Initiative (GRI)… hosted by Innovest, the SRI research company, expected [were] Lord Nicholas Stern, author of the Stern report, Joseph Stiglitz, the Nobel Laureate Economist, George Soros, the financier and philanthropist.”

This initiative is worth watching as it integrates and represents views of those devoted to ESG as well as established financial interests.
Davos launch of UN-backed ESG reporting guidelines for financial services companies, by Hugh Wheelan, January 29, 2009, Responsible Investor, UK.

At Davos, World Economic Forum Report: US $515 Billion needed in Green Investments. – [COMMENTARY] “New Energy Finance, which collaborated with the World Economic Forum on the report, warns that unless at least US$ 515 billion per annum is invested in clean energy between now and 2030, carbon emissions will reach a level deemed unsustainable by scientists, causing temperatures to rise by two degrees globally… Clean energy investments increased from around US$ 30 billion in 2004 to over US$ 140 billion by 2008… Developing countries attracted 23% (US$ 26 billion) of asset financing in 2007, compared to 13% (US$ 1.8 billion) in 2004.” Clearly, with so many reports like this coming-out in rapid-fire succession, the world is getting the green message.
World Economic Forum Report: US $ 515 Billion needed in Green Investments, January 29, 2009, World economic Forum, Switzerland.

At Davos, IFC, United Nations Global Compact & Swiss Government Issue Report Urging Financial Industry To Incorporate ESG Issues In Investing Decisions. – [COMMENTARY] “Ambassador Thomas Greminger, Head of the Political Affairs Division IV, Federal Department of Foreign Affairs (Switzerland), said, ’Better ESG performance and integration into the management practices requires not only market incentives but standards set by regulation [of]… environmental and social risk assessments and reporting as well as transparency.’” Well done, I have been calling for government action like this for years. To see more on this point, read my editorial, We Need Mandatory Corporate Social Responsibility (CSR) Reporting.
New Report Urges Financial Industry to Integrate Sustainable Investing Practices, January 28, 2009, press release, UN Global Compact & Swiss Department of Foreign Affairs, Switzerland.

From An Investors Perspective, F&C Looks At Corporate Governance In Emerging Markets. – [COMMENTARY] Investing in emerging markets poses many difficulties for ethical investors, including poor laws, lack of enforcement, and frequent use of bribes, amongst other impediments. This is a useful overview of the subject.
Research Review: Corporate Governance in Emerging Markets: An Investor’s Roadmap, December 2008, F&C Investments, UK.

Corporate Knights Publishes Its Canadian 2009 Responsible Investment Guide. – [COMMENTARY] Canadian ethical investors, particularly, will want to read this guide.
2009 Responsible Investing Guide, February 2009, Corporate Knights, Canada.

Barrick Gold & Textron Inc. Dumped & Blacklisted By Norway’s Oil Fund. – [COMMENTARY] Barrick was excluded over concerns about the environmental impact of its mines, while Textron was blacklisted because its defence unit makes cluster bombs, Finance Minister Kristin Halvorsen said.” This massive $300 billion sovereign wealth fund has been a leader in applying environmental, social and governance (ESG) strategies to its holdings.
Norway’s oil fund dumps Barrick, by Doug Mellgren, January 30, 2009, The Globe & Mail, Canada.

SHARE Releases Its Canadian 08 Key Proxy Vote Survey. – [COMMENTARY] “The 2008 survey results suggest a slight, but encouraging, increase in the number of pension plans that are giving their proxy-voting agents direction on how to vote their proxies.” Getting pension plan and other institutional money managers to actively engage in proxy voting is important for ethical corporate governance. Considering our present circumstances, the need for this is critical.
08 Key Proxy Vote Survey, January 2009, SHARE, Canada.

US Considering Legislation On Nanotechnology. – [COMMENTARY] “The U.S. House of Representatives Committee on Science and Technology is considering legislation that will strengthen federal efforts to learn more about the potential environmental, health and safety risks posed by engineered nanomaterials, as well as the ethical and societal aspects of the technology.” This is not only welcome, but action should have been taken prior to now on this exceptionally important topic. The risks, and some might say the gains of this technology, are as great as in biotech, GMOs, etc.
U.S. research offers chance to address nanotechnology social, ethical concerns, January 27, 2008, Nanowerk, USA. To see the comprehensive new report on this subject, click Nanotechnology: the social and ethical issues, by Ronald Sandler, USA.

PNC Wealth Management Survey Found 71% Of US Wealthy Have Socially Responsible & Green Investments. – [COMMENTARY] “The survey of 1,263 wealthy Americans, all of whom had at least $500,000 in investable assets, revealed that 71 percent have socially responsible and green investments in their portfolio, while 57 percent say they have up to 25 percent of their portfolio in such investments, while nine percent have between 25-50 percent. One quarter (25 percent) believe that green investments will gain in 2009.” These are impressive figures. Increasingly, stocks that are good to invest in could have a green colour. Obama’s new stimulus package will also help in this regard.
Wealthy Americans Go Green: Most Support Environmentally-Friendly Choices and Policies, January 29, 2009, The Energy Daily, USA.

Coca-Cola To Receive World Environment Center′s (WEC) Twenty-Fifth Annual Gold Medal for International Corporate Achievement in Sustainable Development. – [COMMENTARY] “… for implementing strategic business initiatives in the high impact areas of water stewardship, sustainable packaging, energy management and climate protection.”
The Coca-Cola Company to Receive 2009 World Environment Center Gold Medal for International Corporate Achievement in Sustainable Development, January 29, 2009, BevNet.com, USA.

McKinsey & Company: It’s Possible To Contain Increases In Global Warming To Below 2 Degrees Celsius Until 2030. – [COMMENTARY] “McKinsey & Company, supported by ten leading global companies and organisations – The Carbon Trust, ClimateWorks, Enel, Entergy, Holcim, Honeywell, Shell, Vattenfall, Volvo, WWF – has assessed more than 200 GHG abatement opportunities across 10 major sectors and 21 world regions between now and 2030.” This is a monumental study and is important reading for investors. It will help you think about where you want to place your long-term investment funds.
Pathways to a low carbon economy, January 26, 2009, McKinsey & Company, USA.

Covalence Publishes Its Updated Ethical Rankings List Of  Multinationals. – [COMMENTARY] “Geneva-based Covalence is publishing today its annual ethical ranking covering an enlarged universe of 541 multinationals within 18 sectors and based on a renovated calculation methodology combining popularity and diversified performance… Leaders are HSBC, Intel, and Unilever… The following companies enter the top 10: Xerox (5th), General Electric (8th), and DuPont (10th), replacing IBM (14th), Hewlett-Packard (30th), and Toyota (34th).” It is always useful for ethical investors to review these rankings.
Covalence Ethical Ranking 2008, January 2009, Covalence SA, Geneva, Switzerland.

US Alternative Energy Industry Will Find It Difficult To Meet Obama’s Objectives. – [COMMENTARY] “Obama′s goal to double U.S. renewable-energy by 2012 may take years longer because even fully funded projects take at least three years to develop. [Quote by Clayt Tabor, finance director at Midwest Wind Finance, a wind-farm developer in Minneapolis]. See this article for a good overview of the headwinds Obama’s alternative energy objectives face.
Obama Green-Energy Dream May Lag Development Pace of Bush Years, by Jim Efstathiou Jr., January 26, Bloomberg, USA.

US Poll Finds Investor Interest In Green Investments Undiminished. – [COMMENTARY] “About 78%, said they believed that there will be more policies encouraging investment in the environment in the next year than under the Bush administration and that environmental technology could be the ’next great American industry’… 48%, said that it is likely that they will make an investment this year to capitalize on the environmental trend… [yet] 85% of the investors surveyed said that advisers had made no recommendations to them about environmental investing.”

This survey for Allianz Global Investors demonstrates again a great disconnect between what investors would like to do and what most mainstream advisors advise them to do. Certainly, the advisors fiduciary duty is to show caution concerning their clients’ investments. However, by not even discussing green/environmental investment opportunities with their clients they run the risk of losing them! (See my editorial, Advisor: KNOW Your Client. Know their values!)
Mass-affluent investors are still optimistic about green investing, by Sue Asci, January 21, 2009, Investment News, USA.

Consumer Survey Says Ethics In UK Financial Sector Badly Lacking. – [COMMENTARY] “Only 2 per cent of the 852 adults questioned said their bank was ethical, while 4 per cent said it was trustworthy, and 5 per cent said it was transparent, according to the study by communications firm Cohn & Wolfe.” It is no wonder that Triodos and other socially conscious banks are gaining in the UK when public perception of the mainstream financial industry is so pitiful.
Lenders fail to pass on mortgage interest rate cuts, by Myra Butterworth, January 23, 2009, Telegraph.co.uk, UK.

Nestlé, UBS, And Credit Suisse, Agree To ’Say On Pay’ Shareholders Vote. – [COMMENTARY] “The Ethos Foundation for Sustainable Development in Geneva says that food giant Nestlé and the country’s two big banks, UBS and Credit Suisse, have agreed to an advisory vote on management remuneration.” We are beginning to see the glimmer of a more ethical business environment. One aspect of this is increasing shareholder engagement in overseeing corporate activities, such as ’say on pay.’ Well done Ethos Foundation.
Major firms agree to vote on top salaries, January 23, 2009, by Robert Brookes, Swissinfo, Switzerland.

F&C Reports On Factory Labour Standards In Emerging Markets From An Investors’ Perspective. – [COMMENTARY] A fascinating read for ethical and socially responsible investors. One key point that many economists have also stressed is that it will be rising incomes from factory workers in the developing world who will help lead the world to greater future prosperity.
Factory Labour Standards in Emerging Markets: An Investor Perspective, January 2009, by F&C Investments. Courtesy of Responsible Investor, UK.

Views On How Downturn Is Affecting Corporate Social Responsibility (CSR) & Green Corporate Behaviour. – [COMMENTARY] FORTUNE magazine describes how Intel and other companies continue to grow their CSR activities despite the downturn. Meanwhile, a Booze & Company survey reveals, “… that 40% of respondents expect ’green’ and other corporate social responsibility initiatives to significantly slow due to the downturn. The pullback will be especially pronounced in transportation and energy industries, with, respectively, 51% and 47% of respondents in those industries saying CSR agendas will be delayed.”

Studies show that carefully thought-out and implemented CSR/green initiatives can reduce costs and/or become revenue generators for companies. Thus, this is not the time to cut them. Ethical investors might want to see how companies in their portfolios are reacting in this recession in regards to their CSR/green activities.
Surprising survivors: Corporate do-gooders, by Lawrence Delevingne, January 20, 2009, FORTUNE, USA. Why Companies Are Making the Wrong Moves, January 20, 2009, press release, Booze & Company, USA.

Singapore Launches First Islamic Bond Programme. – [COMMENTARY] “Singapore launched its first Islamic bond programme, worth a total of S$200 million ($134 million), to promote Islamic finance in Southeast Asia’s financial capital. The bonds, also known as sukuk, are backed by the sale and lease-back of real estate assets, or Al-Ijarah structured, and will be treated at par with government securities.” This is the first such deal by a non-Muslim majority country. Singapore hopes to attract petro-dollars from the Gulf States, where Islamic finance is growing fast. When companies issue such bonds, they do not pay interest. Instead, bondholders receive a share of company profits.
Singapore launches first Islamic bond plan, January 19, 2009, Reuters, Singapore.

Report Raises Concerns Regarding Investment Analysts’ Research. – [COMMENTARY] If you read analysts investment reports or studies, you should read this! It cites inadequacy and bias in many investment studies.
For commentary on the report, see Three simple steps to improve sell-side broker research, by Hugh Wheelan, January 19, 2009, Responsible Investor, UK. To download actual report click Sell side research, three modest reform proposals, by Michael Mainelli, Jamie Stevenson and Raj Thamotheram.

The Social Investment Forum (SIO) Asks President-Elect Obama For Securities’ Industry Policy Changes. – [COMMENTARY] “Needed Changes: Expanded Shareholder Access to Ballot, Clarity on Duties of Fiduciaries, Expanded ESG Reporting; New Direction Sought in SEC Rules and Practices.” The proposed changes make sense to me, though ESG reporting should not only be expanded, but should be made mandatory.
SIF Urges President-Elect Obama to Lead on Policies Advancing Shareholder Rights, Increased Disclosure, and Corporate Responsibility, January 15, 2009, press release, Social Investment Forum, USA.

Shareholder Resolutions Concerning Nanotechnology Use And Policies Growing. – [COMMENTARY] “… companies that use nanomaterials will increasingly be asked by shareholders to disclose the presence of nanomaterials in their personal care and food products and to describe their policies for dealing with nanomaterials. Socially responsible investment firms and advocacy organizations are targeting such companies, and resolutions have been filed for the 2009 annual meetings of Avon Products, Kellogg Company, Kraft Foods, and McDonald’s Corporation.”

For those concerned about the environment, the use of nanotechnologies is going to be a huge issue in the years ahead. Though touted as potentially creating a new industrial revolution benefiting the whole world, its risks to humanity could be extraordinarily large.
Increase Expected in Shareholder Resolutions Urging Disclosure of Nanomaterials, Policies, by Pat Rizzuto, January 15, 2009, Meridian Institute, USA.

Ethical Bank Increasing Loans In 2009 Over 2008. – [COMMENTARY] “While the rest of the banking sector is cutting credit lines and rebuilding balance sheets, Triodos Bank in the UK expects 2009 to be a record year for its lending to environmental businesses.” This is an example for the whole banking industry. Behave ethically!  Ethical and socially conscious banks are likely to see big gains in business in the years ahead.
Triodos Bank bucks trend with lending expansion, January 15, 2009, Environmental Finance, UK.

European Socially responsible Investing Funds Outselling Mainstream Funds. – [COMMENTARY] “Total sales for the SRI sector for November were €784.2m ($1bn) to take the overall value of the sector to €35.3bn. Sales of mainstream equity funds totalled €588.7m over the same period.” Is this a sign that the European investing public is taking ethics and the environment more seriously when investing? It will be interesting to see if this trend continues and replicated elsewhere.
SRI funds beat mainstream equity fund sales, by Hugh Wheelan, January 16, 2009, Responsible Investor, UK.

Investor Coalition With $3 Trillion In Assets Asks 130 Major Listed Companies To Subscribe To Ten Principles Of Corporate Responsibility. – [COMMENTARY] “Twenty-five of the companies have been praised by the investors for producing notably high-quality COPs [Communication on Progress], including Air France and Starbucks, while over 100 companies  were identified as laggards by the investors for failing to submit a COP this year.” Submitting a COP is mandatory for all members of the UN Global Compact. Clearly, many of them are lagging in their COP reporting and institutional investors want action from them.

Companies sign-up to the UN Global Compact because they see the advantages of using corporate social responsibility (CSR). But their lack of compliance by not completing the COP reports shows the necessity for governments everywhere to legislate CSR reporting. You might find my editorial, We Need Mandatory Corporate Social Responsibility (CSR) Reporting interesting in this regard.
Investors Give New Twist to Good COP/Bad COP, United Nations Global Compact, January 12, 2009, UK.

China Honours Companies For Their Corporate Social Responsibility (CSR). – [COMMENTARY] “The 13 award-winning enterprises were: China Construction Bank, Bank of China, China Datang Corporation, China Steel Corporation, Lenovo, China Ping An Insurance, Total (China), Volkswagen (China), Du Pont (China), Hitachi (China), Amway (China), Philips (China), and Phoenix Satellite Television.. The forum was jointly sponsored by China Newsweek and the Red Cross Society of China… The companies were selected after a three stage process: a public vote, a media forum, and an expert appraisal based on a corporate social responsibility index.”

China seems to be making real headway with CSR as the country opens-up to the world. Note that some of these companies are subsidiaries of multi-nationals.
Firms honored for social responsibility, by Wang Zhiyong, January 11, 2009, China.org.cn, China.

Groups Call For Exclusion Of PetroChina From UN Global Compact. – [COMMENTARY] “The [eighty] NGOs say PetroChina, the publicly traded arm of China National Petroleum Corporation (CNPC), is Sudan′s largest oil industry partner and has financial links to the regime perpetuating the six-year humanitarian crisis in Darfur which many consider to be genocide.” I suspect that the new global ethical business environment that is taking shape will put PetroChina and other companies like it under much closer scrutiny.
NGOs from 25 countries demand PetroChina’s exclusion from United Nations Global Compact, January 8, 2009, Responsible Investor, UK. Read group’s letter calling for the exclusion. Also, visit website, Investors Against Genocide.

Denmark Mandates Corporate Social Responsibility Reporting (CSR) For All Large Public & Private Companies By 2010. – [COMMENTARY] For a full appreciation of what’s going-on and for my views in this area, again, see We Need Mandatory Corporate Social Responsibility (CSR) Reporting. Companies too, are realizing the advantages of using corporate social responsibility programmes and initiatives in enhancing customer loyalty, long-term financial performance, and potentially higher stock prices.
Mandatory CSR Reporting for Denmark’s Largest Companies, January 8, 2009, Greenbiz.com, Denmark.

US Hybrid Car Sales Down 8% In 2008 From 2007 And 42.8% Lower In December Over Year Ago. – [COMMENTARY] Lower gas prices, the recession, and credit tightening all played a part in declining sales of hybrids. I suspect gas prices might rise in 2009 and may thus make hybrids more attractive relative to the gas guzzlers.
Ouch! Sales of US Hybrid Car Sales Down 42.8% in December, by Michael Graham Richard, CARS & TRANSPORTATION on Treehugger.com, USA.

Norway’s Huge $300 Billion Pension Fund Ordered To Review Holdings In Palestinian Territories In Light Of Israeli-Hamas Conflict. – [COMMENTARY] “The ethical guidelines prohibit the fund from investing in companies where there is an unacceptable risk of contributing to serious or systematic abuses of human rights or serious violations of individuals’ rights in war or conflict… At the end of 2007, the fund owned stocks in 12 Israeli companies and bonds from three Israeli issuers.” It remains to be seen if they find any companies in the region in which they have holdings violated their guidelines. Ethical investors investing in companies who may have activities in war or terrorist conflicts always have to be alert as to whether their own values are being compromised by holding such investments. Investors also have to be concerned of the potential effects on stock prices of affected companies.
Norway oil fund’s Israel holdings under scrutiny, by John Acher, Reuters, Norway.

US Green Tech Venture Capital Declines to $2.5 Billion From $2.9 Billion Between Q3 & Q4, 2008. – [COMMENTARY] Evidence of a slowdown in green tech venture capital is mounting. However, with the Obama administration set to increase spending on green energy/tech, it is possible that this sector will not be as badly hit as many others will be in 2009.
A Record Year in Greentech Investing — $7.7B in 2008, by Eric Wesoff, January 5, 2009, Greentechmedia.blog, USA.

Dell Says Apple Not So Green. – [COMMENTARY] “The broadside from Dell, which claimed its operations reached carbon-neutral status about six months ago, was launched by Bob Pearson, vice-president, in a company blog. In the blog he accused Apple of using environmentalism as a PR stunt.” Furthermore, this article says, “A survey by Gartner, the IT analysts and intelligence group, places the development of green policies in the top three of executives’ revenue-raising priorities for 2009.” Green is still in despite the recession.
Apple ’not green enough’, says Dell, by Bill McGee, January 4, 2009, Scotland on Sunday, UK.

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