Over Half Of 1,000 Largest US Companies Have An Environmental Policy, But Lack Internal Environmental Management Structures, Says Survey. – [COMMENTARY]“This report, entitled “The Road Not Yet Taken: The State of U.S. Corporate Environmental Policy and Management,” presents a detailed review of the publicly disclosed environmental policies, management structures, systems, measurement and reporting activities, and disclosures of the 1,000 largest publicly traded U.S. corporations.” This is an important report concerning US companies’ environmental policies and actions. However, also needed are similar comparative studies with companies in Europe, Asia and other regions. The Road Not Yet Taken: The State of U.S. Corporate Environmental Policy and Management, August 2009, Sustainable Enterprise Institute, Inc., USA.
Study Shows Higher Returns On Companies Listed In FTSE KLD 400 Social Index.– [COMMENTARY]“Our study considers whether ethical investments are also good investments. We utilize long-run event study methodology to study abnormal returns associated with firms being included in, and dropped from, KLD Research and Analytics′ (KLD) Domini 400 SocialTM Index (DS400). There are positive and statistically significant long-run abnormal returns for firms being included in the DS400. The market also appears to anticipate decisions to include firms in the DS400; short-run abnormal returns associated with firms being included in the DS400 are consistent with the market correcting high abnormal returns before the date the firm is added to the index.”
This study supports my view that ethical stocks may well provide premium returns over the long-term. Are Ethical Investments Good? By Gariet Chow, Robert B. Durand, and SzeKee Koh, August 2009, University of Western Australia, Australia.
Carbon Efficiency Is Key To Gaining Market Share: Report.– [COMMENTARY]“Companies need to understand how looming carbon costs will impact their future profitability compared to their competitors in order to gauge how much can be passed on to customers, according to a new report from research firm Trucost Plc and standards nonprofit NSF International.” How companies deal with their carbon emissions will help determine their future market shares and profitability. This report clearly illustrates the relationships. Report Identifies ’Carbon Efficiency’ as a Key to Growing Market Share, August 20, 2009, GreenBiz, USA.
Americans Spending Big On Complimentary And Alternative Medicine.– [COMMENTARY]“Americans spent $33.9 billion out-of-pocket on complementary and alternative medicine (CAM) over the previous 12 months, according to a 2007 government survey. CAM is a group of diverse medical and health care systems, practices, and products such as herbal supplements, meditation, chiropractic, and acupuncture that are not generally considered to be part of conventional medicine. CAM accounts for approximately 1.5 percent of total health care expenditures ($2.2 trillion2) and 11.2 percent of total out-of-pocket expenditures (conventional out-of-pocket: $286.6 billionand CAM out-of-pocket: $33.9 billion) on health care in the United States.”
Many ethical investors are interested in investing in companies providing products and services in this area. It obviously has significant appeal to them. However, investors have to be particularly careful as many of these products and services ’come and go.’ Investors need to look for hard, independently verifiable data on the products/services of companies in this space before investing in them. Americans Spent $33.9 Billion Out-of-Pocket on Complementary and Alternative Medicine, Healthy News Service, USA.
The €276bn Norwegian Government Pension Fund Set To Pressure 1,100 Companies On Water Usage.– [COMMENTARY]“Norges Bank Investment Management (NBIM), which runs the Norwegian fund′s assets, said it had holdings in about 1100 companies with a combined market value of €33bn where it believes good water risk management could be critical to future performance. During the third quarter of this year, the fund said it will publish a list of water reporting and risk management ’expectations’ it has for portfolio companies.”
With increasing scarcity of fresh clean water worldwide and its implications for society and for corporate profits, NBIM is to be congratulated on this move. As Europe’s largest single investor, they have the clout to get companies to respond. It will be fascinating to see how companies respond and as to what they report. Ethical investors will also be most interested to see how the results of their survey affect this funds portfolio! Giant Norway fund launches campaign to pressure 1100 companies on water risks, by Hugh Wheelan, August 20, 2009, Responsible Investor, UK.
UNPRI Ejects Five Signatories For Reporting Failures.– [COMMENTARY]“The ejected groups are DESBAN, the Brazilian social security foundation, the Christopher Reynolds Foundation in the US, Foresters Community Finance, an Australian social investment company, Oasis Group Holdings, the South African fund manager and Trinity Holdings, the South African resources investor. It is the first time the PRI has toughened its membership criteria to exclude firms that show no signs of adopting the standards despite signing up. In addition, three institutions have voluntarily left the PRI, notably the $48bn New York State Teachers′ Retirement System (NYSTRS) – one of the top 10 largest US pension funds. Other voluntary leavers were Mennonite Mutual Aid (MMA), the Anabaptist financial group, and Rapaki Property Group in New Zealand.”
Study Highlights Links Between Government Green Spending, Jobs, Economy & Environment.– [COMMENTARY]“We find that green programs facilitate economic growth and job creation. Government investments in these programs stimulate economic growth and job creation as well as providing various other economic and environmental benefits. We thus conclude that there is a strong positive relationship between clean energy/energy efficiency/environmental investments and economic prosperity and job growth.”
This is a highly informative analysis of the situation put together by a UN sponsored group. I find one chart particularly interesting and that is how US government incentives for different types of energy producers overwhelmingly favour the oil industry. My perspective is that either government incentives be equal for all types of producers or that they should not exist at all. Why Clean Energy Public Investment Makes Economic Sense — The Evidence Base, August 2009, UNEP SEF Alliance, Switzerland.
Dow Jones Sustainability Japan 40 Index Launched.– [COMMENTARY]“SAM, the investment boutique focused exclusively on Sustainability Investing, and Dow Jones Indexes, a leading global index provider, today announce the launch of the Dow Jones Sustainability Japan 40 Index (DJSI Japan 40). The index measures the performance of the largest 40 sustainability leaders in Japan and provides market participants with a highly liquid and tradable sustainability benchmark for Japanese equities. The Dow Jones Sustainability Japan 40 Index is selected and weighted based on the SAM sustainability scores.” Here is another step in the right direction. Japan being ahead in many ways in orienting its society towards sustainability and healthy lifestyles should be ripe for the introduction of this index. SAM and Dow Jones Indexes Launch Dow Jones Sustainability Japan 40 Index, Dow Jones Indexes Press Room, Switzerland.
EIRIS Analyses 300 Of World’s Largest Companies For Their Actions On Climate Change.– [COMMENTARY]“Some improvements, but further
momentum needed: 33% of companies have unmitigated climate change risk (down from 34% in 2008); 55% have short-term targets on climate change (48% in 2008); 91% of high and very high impact companies disclose absolute CO2 or GHG emissions data (73% in 2008).” EIRIS is doing some great work here. It is well worth the trouble for ethical investors to read this report and their Investors Climate Change Toolkit, which helps investors integrate climate change factors into their investing decisions. Climate Change Compass: The road to Copenhagen, August 2009, EIRIS, UK.
Over Half Of Large UK Charities Now Have An Ethical Investment Policy.– [COMMENTARY]“The areas most avoided when investing were tobacco (pictured), by 85 per cent, followed by pornography (50 per cent), military involvement (48 per cent), alcohol (36 per cent) and gambling (33 per cent). The survey of 164 CFDG members found that 60 per cent of charities with investments over £1m had an ethical investment policy. Meanwhile, only 25 per cent of smaller charities with investments of under £1m invest ethically.”
Though I am not aware of any prior years research on this subject, from what I know I believe that UK charities are making a leap forward with so many now having an ethical investment policy. Again, it is likely that for many years to come, ethical stocks and bonds may well have an edge over investments not deemed to be in that category. Tobacco tops list of most unethical investments, by Vibeka Mair, August 5, 2009. Survey conducted by Charity Finance Directors′ Group (CFDG) and EIRIS Foundation. Appeared in Charity Finance, UK.
Environmental Issues Dominate Canadian Shareholder Engagement Activity In 2Q/09 Says SHARE Canada.– [COMMENTARY]“This quarter, SHARE engaged with a total of 65 companies on nine issues: disclosure & transparency, human rights, child labour, precarious employment, fair trade coffee, carbon disclosure project, oil sands land reclamation, toxic chemicals and sustainable forest management.” Ethical investors investing in Canadian companies may want to read this report as it details shareholder resolutions and discussions SHARE is having with many companies on ESG related issues. Shareholder Engagement Activity Report 2Q/09, August 2009, SHARE, Canada.
French Private Equity Firms Incorporating ESG Factors Into Investment Decisions: Novethic.– [COMMENTARY]“Results showed that 66 per cent of respondents take ESG considerations into account when making financial decisions. Although this figure confirms their concern for the topic, it fails to match the practices of the different private equity businesses that invest in unlisted companies where it remains a nascent approach. When respondents were asked why financial tools remain undeveloped, 64 per cent attributed it to the lack of ESG expertise within companies, while 52 per cent believed it was due to private equity managers′ lack of special assessment tools.” Investment managers are increasingly using environmental, social and governance factors (ESG) in their research because it simply makes sense to do so. And many studies of ESG in the investing arena point to this. French private equity firms integrate environmental criteria, research shows, August 4, 2009, AltAssets, France.
Over Thirty SRI Research Papers Submitted For Moskowitz Prize.– [COMMENTARY]“The Center for Responsible Business at UC Berkeley’s Haas School of Business has concluded the submission process for the 14th Annual 2009 Moskowitz Prize, the only global award recognizing outstanding quantitative research in the field of socially responsible investing (SRI). According to First Affirmative Financial Network, co-sponsor of SRI in the Rockies, over 30 research entries were accepted by this year’s submission deadline.” Apparently, this is a record number of submissions and the quality of the research continues to improve markedly. 2009 Moskowitz Prize Draws Record Number of Studies, August 4, 2009, press release, First Affirmative Financial Network/Social Investment Forum, USA.