86% Of Charity Supporters Less Likely To Give If Charities Do Not Invest ’Responsibly.’ – [COMMENTARY] “Eighty-six per cent would be less likely to give to charities that do not invest responsibly, according to guide by Charity Finance Directors’ Group and Eiris.” Who wants to donate to a charity when much of what you give ends up in invested in ways running counter to your values? It is time for all charities to be totally transparent with their investments and let their donors know where they invest.
Charity supporters ’prefer ethical investments,’ by David Ainsworth, June 29, 2010, Third Sector, UK.
Islamic Finance. KPMG Says It’s ’Coming of Age;’ Australia To Improve Tax/Financial Policies For Islamic Compliant Products. – [COMMENTARY] Islamic financial products now total well over the $1 trillion mark with only 3% of Muslims participating in them–and virtually no western participation–as yet. Studies predict they will reach $2 to $5 trillion in assets before 2015. Their venture onto the world stage is going to have a big impact on western financial products including those in the ethical investing arena too.
No doubt that with its growth, Islamic finance will become increasingly controversial. But I believe as it grows, particularly in the West, provisions will be put into place so that extremist elements within the Muslim community do not benefit from that growth. Ethical investors everywhere might want to acquaint themselves with Islamic finance and Shariah-compliant investing.
First, see my June 28 alrroya.com column, Ethical and Sharia-compliant Investing Takes Off. Then review KPMG’s June 2010 study, Islamic finance: Coming of Age, and Australian initiatives to boost Shariah-compliant projects, by Mushtak Parker, June 28, 2010, Arabnews.com.
UK Is Europe’s Worst Corporate Polluter, Says EIRIS. – [COMMENTARY] “A review of Europe’s top 300 companies by the ethical investment consultant Eiris found that the greatest proportion of those with ’very high impact’ in relation to global warming came from the UK, more than double the number from any other country. Of those companies in the top 300 dedicated to solving or mitigating the problems of climate change, only 3% were located in Britain.” This result is not surprising. Big oil and mining companies dominate the FTSE 100 Index.
Eiris review names Britain as ’dirty man of Europe,’ by Terry Macalister, June 27, 2010, The Guardian, UK.
SRI Will Play A More Important Role In How European Pension Funds Make Decisions, Says Allianz Survey. – [COMMENTARY] “While French and Dutch pension analysts were very optimistic, their British counterparts were quite pessimistic. The majority of experts surveyed believe the SRI approach will be extended to include asset classes other than equities. Again, the French and Dutch participants were the most optimistic. Apart from Germany, most experts are expecting pension funds to become more active owners. Environmental criteria are considered to be the most important element of the SRI concept. Respondents agreed that the growing SRI trend is being driven much less by the expectation of higher returns or lower risk as it is by public pressure.”
Consider the latter point, “SRI trend is being driven… by public pressure.” ’Public pressure’ means society. If society deems SRI important it also means favouring SRI oriented companies and therefore, ultimately, relatively higher stock prices for such companies! Sooner or latter most pension fund managers will realize this. It has been my thesis for some forty years.
’Doing Good by Investing Well’ – Pension Funds and Socially Responsible Investment: Results of an Expert Survey, revised June 24, 2010, Allianz Global Investors International Pension Paper No. 1/2010, UK.
FTSE Offers Two New Carbon Based Indexes For Ethical Investors. – [COMMENTARY] “The FTSE CDP Carbon Strategy Index Series aims to support investors in incorporating climate change risks into their investment strategy. It features future-oriented criteria that assess the exposure of individual companies to higher future costs associated with greenhouse gas emissions. Some companies will be better placed to exploit the transition to a low carbon economy; other companies will see their value diminished if they fail to adapt.”
The momentum for ethical investing indices continues unabated! It illustrates a more ethical, higher consciousness beginning to emerge among investors and in the investment industry.
FTSE CDP Carbon Strategy Indexes. June 23, 2010, FTSE, UK.
Deutsche Bank Publishes Excellent Overview & Introduction To Responsible-Ethical Investing In Europe. – [COMMENTARY] Responsible Investments: A new investment trend here to stay, June 24, 2010, Germany.
NASDAQ OMX Introduces Two Sharia-Compliant Indexes. – [COMMENTARY] “The NASDAQ OMX Group, Inc. (Nasdaq:NDAQ) announced the introduction today of two new Sharia-compliant indexes based on two of the world’s most widely-followed benchmarks: The NASDAQ-100 Index(R) (Nasdaq:NDX) and the OMX Stockholm Benchmark Index (OMXSB). The new NASDAQ-100 Sharia Index(SM) (N100SI) and the OMX Stockholm Benchmark Sharia Index(SM) (OMXSBSHARIA) are the first of a new family of indexes launched by NASDAQ OMX Global Index Group that are designed to serve investors who wish to develop and maintain an Islamic investment portfolio.”
You do not have to be a Muslim to know that Shariah-compliant funds and Islamic finance in general are making big gains in global finance. Look for my forthcoming column, “Bright and Long Term Future of Ethical & Sharia Investing,” at alrroya.com for a good look at this subject. The column should appear by June 28.
NASDAQ OMX Introduces Two Sharia-Compliant Indexes, press release June 22, 2010, NASDAQ, USA.
Bloomberg CEO Believes ESG To Be ’Fundamental To Equity market Analysis.’ – [COMMENTARY] “Grauer [Bloomberg CEO] said: ’We believe this [incorporation of ESG] will be a long term growth area for us. We′ve really only just begun. Look at the eco system of risk that climate change presents – our role is to help get the message out and get acceptance… ’” That is why ’best-in-class’ ESG performing companies might just outperform over the long term.
Bloomberg chief outlines ESG data strategy, by Daniel Brooksbank, June 24, 2010, Responsible Investor, UK.
Canadian Companies Rarely Disclose Environmental Practices. – [COMMENTARY] “The review found only 10 of 60 corporations in the index (17 per cent) disclosed detailed data on four environmental factors assessed in the ranking. Only 25 per cent of those companies provided data on their water use and waste production. Fewer than half (47 per cent) reported their energy use, while 58 per cent disclosed their carbon-dioxide emissions… Loblaw Cos. Ltd… Canada′s largest grocery chain operator, tops the ranking of corporate responsibility in the country, compiled by research group Corporate Knights Inc. The review assessed environmental, social and governance (ESG) practices of companies in Canada′s S&P/TSX 60 index.”
This review by Corporate Knights is worthwhile reading for any ethical investor interested in the Canadian marketplace. However, it brings to light the importance of environmental disclosure while demonstrating the timidity of Ontario’s Ed Waitzer’s report in not being strong enough on mandatory corporate social responsibility reporting.
Few Canadian companies disclose environmental practices, by Janet McFarland, June 21, 2010, Report on Business, The Globe & Mail, Canada.
Johannesburg Stock Exchange Requiring Listed Companies To Integrate Their ESG Report With Annual Report. – [COMMENTARY] “South Africa′s JSE stock exchange (www.jse.co.za) is requiring listed companies to integrate their sustainability reports with their annual reports, with effect from this month. According to a report in Business Day newspaper (www.businessday.co.za) Mervyn King, chairman of the King committee and a leading expert on governance, said: ’SA is among the first countries in the world to require integrated reporting of listed companies. This puts us ahead of the game.’” South Africa has become a global champion for mandatory corporate social responsibility reporting! Well done South Africa and Mr. King.
SA listed companies have to integrate sustainability reports, by Tom Minney, June 9, 2010, African Capital Market News, South Africa. Also, see my June 18 column, Ethical Investing Shines in Africa as Economy Grows.
80% Of Americans Say “Socially Responsible Corporations Can Also Create A lot Of Wealth For Their Shareholders.” – [COMMENTARY] “’Over the years, there has been a core shift in the American public’s expectations,’ Mittal says in a statement. ’The old idea was that businesses were only responsible to their shareholders. But now people are realizing that this isn’t a zero-sum game,” Mittal said. “No matter their political leanings, Americans expect corporations to be profitable, sustainable and socially responsible.’” Again, more encouragement for corporate social responsibility and ethical investing.
Survey: Corporate responsibility valued, June 18, 2010, upi.com, USA.
C.A Cheuvreux Wins Thomson Reuters Extel Survey Award For Best European SRI Research. – [COMMENTARY] “Cheuvreux beat French rival, Société Générale (SG), into second place in 2010 after SG had won the award for the second year running in 2009. Swiss bank UBS was third in the 2010 line-up.” In Europe these awards are big news. Though some awards are given by various North American organizations to SRI participants, they seem to lack the prestige and coverage that the European awards have.
C.A. Cheuvreux wins best sustainability research gong at 2010 Thomson Reuters Extel awards, by Hugh Wheelan, June 17, 2010, Responsible Investor, UK.
Survey Ranks Citi Best In SRI Research. – [COMMENTARY] “The winners have been unveiled in Environmental Finance′s inaugural survey of environmentally-themed investment research. CA Cheuvreux was voted best research house for renewable energy, HSBC came top in climate change and Citi took the honours in water. Meanwhile, Société Générale was voted top in resource/energy efficiency, while Barclays Capital came first in carbon markets research. Citi was voted best research house overall, based on the total number of votes cast across all five categories.”
I think it is great that Citi is paving the way in SRI research. Now I do wonder though how much it reflects the fact that Citi is under the thumb of the Democrats in the U.S. Congress? Either way, it is still very positive.
Winners announced in Environmental Finance Investment Research Survey, June 10, 2010, Environmental Finance, UK. (Log-in required. Registration is free.)
Top ESG Reporters Are Sweden, Austria, and Switzerland. Worst Is China, Says EIRIS Report. – [COMMENTARY] “Ethical investors looking to put money into emerging market economies should avoid China, Egypt and Vietnam, the Ethical Investment Research Service (Eiris) has claimed… Both Brazil and Mexico scored higher on environmental indicators than the United States and Canada, demonstrating that emerging markets can achieve rapid growth while mitigation ESG risks.” This report demonstrates the timidity of jurisdictions like Ontario, Canada (see below), in backing-off some sought of mandatory ESG reporting.
China ranked bottom for ethical investment, by David Masters, June 16, 2010, Finance Markets, UK.
Two Reports Cite Islamic Oriented Financial Assets At $1 Trillion & $1.5 Trillion. – [COMMENTARY] (1) “Tan Jeh Wuan, a managing director at the Islamic Bank of Asia, said the assets of the world’s top 500 Islamic banks are expected to top one trillion US dollars this year, up from 822 billion dollars in 2009 and 639 billion dollars in 2008.” Islamic finance set to cross $1 trillion: Moody’s,, June 14, 2010, The Economic Times, India. (2) “It is estimated that investors globally hold more than $1.5 trillion in Sharia-compliant investments. These include equities that are in line with Islamic principles, sukuk and Islamic funds.” Key Islamic securities market set for growth, May 25, 2010, Gulf Daily News, Bahrain.
Islamic, Shariah compliant assets are growing twice as fast as conventional financial assets globally. I will be writing more about the reasons for this in my forthcoming column for alrroya.com.
Carlyle Group, Kohlberg Kravis Roberts (KKR) & Others Incorporating ESG Into Investment Decisions. – [COMMENTARY] “Some of the world′s largest private equity companies, battling an image problem and a shift in market dynamics, had very warm words about incorporating environmental, social and governance (ESG) factors into their operations at a conference in London last week… [the] PEI Responsible Investment Forum, co-hosted by the United Nations Principles for Responsible Investment… ” Environmental, social, and governance (ESG) analysis has entered mainstream investment decision making.
Private equity ‘barbarians at the gate′ of ESG: conference report, by Daniel Brooksbank, June 15, 2010, Responsible Investor, UK.
CSR: Canada’s Top 50 Companies. – [COMMENTARY] “For many successful companies, corporate social responsibility (CSR) is no longer just a boardroom buzzword, but a key to business. So, for the second year in a row, Maclean′s has partnered with Jantzi-Sustainalytics, a global leader in sustainability analysis, to present the country′s Top 50 Socially Responsible Corporations.” The majority of the top fifty are multi-nationals. The write-ups on each of them are brief and convey useful information for ethical investors.
Top 50 Socially Responsible Corporations, June 2010, macleans.ca, Canada.
Lack Of CSR Reporting Standards Inhibit Mandatory CSR Reporting, Says New Canadian Report. – [COMMENTARY] “Toronto lawyer Ed Waitzer, a former OSC [Canada’s Ontario Securities Commission] chairman who helped spearhead the review, said that investors want more disclosure but that there is no clear consensus about which social reporting factors are most relevant. He said companies and other stakeholders are still experimenting with various disclosure options. ’In this area, we just don′t have the standards yet,’ he said in an interview. ’So part of the exercise is how the OSC can take a leadership position in developing the standards.’”
Frankly, it is true that standards are evolving, but what I think is really at play here is that Ontario wants to be a follower with regard to CSR reporting. I believe it fears that going-it-alone could jeopardise Ontario businesses. Therefore, they are likely waiting to see how CSR reporting progresses in other jurisdictions, most especially with the US and the SEC’s recent directive requiring companies to report on climate-change impacts. See my editorial, Why We Need Mandatory Corporate Social Responsibility Reporting, and June 9 column at alrroya.com, A Call for Mandatory Corporate Social Responsibility Reporting.
UKSIF Report: The Future of Investment: Sustainable Investment Boutiques. – [COMMENTARY] “UKSIF′s ’Future of Investment’ Reports seek to highlight the activities and views of those driving this new flowering of successful long-term investment. As the UK′s hub for sustainable and responsible investment, we are privileged to have many of these leading-edge investment practitioners among our members.” This report is useful reading for all ethical investors.
The Future of Investment: Sustainable Investment Boutiques June 2010, UKSIF, UK.
Africa’s First Sustainable Investment Forum AfricaSIF Launched. – [COMMENTARY] “AfricaSIF is an independent pan-African not-for-profit network, knowledgebase and advocate promoting sustainable investment across the continent. The network aims to achieve its objectives by attracting investment in the public, private and philanthropy sectors across asset classes, countries and stakeholders.” This is great step forward for ethical and sustainable investing in Africa.
Africa′s First Sustainable Investment Network Launched, press release, June 9, 2010, AfricaSIF, South Africa.
US Social Investment Forum Calls On House-Senate Conferees For Strong Financial Reform Measures. – [COMMENTARY] See Social Investment Forum Urges House-Senate Conferees to Frame Strong Financial Reform Bill, press release, June 11, 2010, Social Investment Forum, USA.
Canada’s Desjardins Group Says Investors Under 40 Show Most Interest In SRI. – [COMMENTARY] “In fact, 44% of SRI fund holders at Desjardins Group are in that age group, while only 29% of them have shown regular interest in our conventional funds… given the choice between a conventional fund and an SRI fund with a 1% lower return, 85% of investors would choose the SRI fund. Even if the return was 3% lower, 58% of investors would still choose SRI funds!”
These are very interesting stats. Their investors hail mainly from Quebec, Canada. The full data from their survey will be provided June 15 at the 2010 Canadian Responsible Investment Conference.
Canadian Responsible Investment Conference Preview: Attitudes towards socially responsible investment, by Benjamin Commerie, June 11, 2010, SRI Monitor, Canada.
BP Disaster Results In UK Members of Parliament Calling For Pension Funds To Include ESG Assessments In Investments. – [COMMENTARY] “A cross-party group of UK Members of Parliament (MPs) has called on their parliamentary peers to push UK pension funds to do more to look at environmental risk in their investment as a result of the ongoing BP Deepwater oil spill disaster.” Such an action would require asset managers to take a long term view of their investments… wow what a change that would be!
UK parliamentary motion says BP disaster shows need for better pension fund ESG reporting, by Hugh Wheelan, June 10, 2010, Responsible Investor, UK.
MSCI Incorporating ESG Factors Into Its Indices. – [COMMENTARY] “Index firm MSCI, fresh from its $1.55bn (€1.28bn) acquisition of risk and corporate governance advisory firm RiskMetrics, is to include environmental, social and governance (ESG) factors into its investment offerings such as the benchmark MSCI World.” Including ESG into everything investing will happen in the next few years.
MSCI to incorporate ESG risks into indices, by Telis Demos, Financial Times, USA.
Screens Can Moderate SRI Returns, Study. – [COMMENTARY] “Screening intensity has no effect on unadjusted (raw) returns or idiosyncratic risk. However, we find a significant reduction in α of 70 basis points per screen using the Carhart performance model. Increased screening results in lower systematic risk – in line with managers choosing lower β stocks to minimize overall risk.”
The findings are inline with what I would have expected. However, this study does not negate the fact that what type of screen(s) one uses can provide hugely different outcomes. Nonetheless, this is an interesting and useful study.
Socially Responsible Investment Fund Performance: The Impact of Screening Intensity, by Darren David Lee, Jacquelyn Humphrey, and Karen L. Benson–all at University of Queensland, Australia, and Jason Ahn. June 2010, Accounting and Finance, Australia.
F&C Says 73% Of UK Investors Would Invest In An Ethical Investment Trust (Mutual Fund) If Available To Them. – [COMMENTARY] “Penny Shepherd, chief executive of UKSIF – the sustainable investment and finance association, explained ’… Following the financial crisis there is an increasing recognition that it makes sense to look at how your wealth is being created… There is also an increasing recognition that issues like climate change aren’t going to go away and there are opportunities to both make money and make a difference by addressing it.’” She is right.
Green investment rise predicted, June 9, 2010, investments.co.uk, UK.
European Institutional Investors Consider Litigation Issues Concerning Tar Sands. – [COMMENTARY] “The Institutional Investors Group on Climate Change (IIGCC), which comprises more than 50 European pension funds and asset managers with a combined worth of around €5trn, said in a new report that its members were focusing increasingly on the risk of environmental litigation.” Should such legal challenges succeed, tar sands development could become very expensive. Oil investors gloating over the difficulties in the Gulf need to take heed. Alternative energy will increasingly be seen as the only solution to our energy needs.
Institutional investors consider tar sands litigation, by Daniel Brooksbank, June 8, 2010, Responsible Investor, UK.
GoodGuide. Useful Site For Ethical Investors To Find Companies Making The Greenest Consumer Products. “GoodGuide provides the world’s largest and most reliable source of information on the health, environmental, and social impacts of the products in your home.”
Virgin & Continental Top Green Airlines, Says Greenopia. – [COMMENTARY] “Virgin earned the highest score overall, the only airline to earn four leaves from in the website’s ranking system, while Alaska and Continental each earned three leaves. The laggards in the rankings were Northwest, United and US Airways, each with one leaf.” For both travellers and ethical investors, this report offers useful information.
Virgin, Continental Fly High in Green Airlines Rankings, June 2, 2010, GreenBiz, USA.
China & US Tied As Most Attractive Places For Green Investment, Says Ernst & Young. – [COMMENTARY] “China has climbed two points in the consultancy’s Renewable Energy Country Attractiveness Indices, having invested a total of $34.6 billion into clean energy projects in 2009. The figure is almost double the U.S. and China is already the global leader in installed wind power capacity last year… ” It looks to me that Asia will take the lead in green investment.
China, US Tie As Most Attractive For Green Investment – Report, by Selina Williams, June 2, 2010, Dow Jones, USA.
Ethical Fund Managers Questioned BP Over Safety Record For Many Years. – [COMMENTARY] “Though once hailed for its investments in renewable energy and a green advertising campaign, the British oil giant worried fund managers over a string of accidents and safety fines dating to 2005. The company also had dialed back its outreach, and even as BP became a mainstay of sustainable-investing stock indexes, many specialists had sold their shares or were moving to do so.” The problems of BP bring to the fore the importance of green and ethical investing.
Environmental funds battled BP for years, by Ross Kerber, Tom Bergin, and Matthew Daily, June 3, 2010, Reuters, USA.
65% Of US Companies Want Tax Breaks To Significantly Increase Green Spending. – [COMMENTARY] “In the US specifically, the survey found that only 13% of companies monitor their carbon footprint and less than one-third (27%) monitor their energy consumption. In addition to this, 76% had no company policy to invest in energy efficient equipment. Running costs were found to be very important to more than one-third of companies (37%) who declared that they would only invest in low-carbon equipment if it were cheaper or the same to run as conventional equipment.” There are some useful global numbers in this survey too.
US Business Demands More Tax Breaks for Green Investment, press release, June 2, 2010, The Regus Group, UK.
EIRIS Reports At End Of 2009 Investment In UK Green & Ethical Funds Increased To £9.5 Billion From £2.4 Billion In 1999. – [COMMENTARY] “Mark Robertson, EIRIS spokesperson, said investors were becoming more aware of the power they had. He said: ’It’s clear that increasing numbers of consumers are turning to those financial institutions which offer financial products that make money whilst making a positive difference to the world.’” No further comment required!
Ethical funds hit £9.5bn high, by Samantha Downes, June 1, 2010, FT Advisor, UK.
75% Of Middle East Companies Say CSR Can Be A Means To Attract New Investment, Capture New markets & Market Share. – [COMMENTARY] “The survey was conducted with 100 key decision makers across eight countries namely United Arab Emirates (UAE), Bahrain, Egypt, Jordan, Oman, Qatar, Kingdom of Saudi Arabia (KSA) and Yemen. Further, 86% of respondents strongly agree that CSR fosters innovation while 82% believe it can help to attract new customers.” With these numbers it seems the Middle East could become a leader in corporate social responsibility (CSR)!
75%of business leaders believe that CSR grows business, press release, May 31, 2010, Sustainability Advisory Group, UAE.
Huge Japanese Trades Union Group Preparing ESG Recommendations For Its Retirement Funds. – [COMMENTARY] “RENGO, the powerful Japanese trades union confederation, says it is preparing plans for its member pension schemes – a significant part of the country′s institutional retirement savings – to incorporate ESG factors into their investment decisions.” Here is another step of progress on the march to incorporate environmental, social and governance (ESG) factors in big institutional pension schemes.
Powerful Japanese trades union body prepares major ESG recommendation for its pension funds, by Hugh Wheelan, June 1, 2010, responsible Investor, UK.