June 2011

Russian Stock Exchange Working On A Sustainability Index. – [COMMENTARY] “On June 27, 2011 a visiting meeting of representatives from the Committee on Corporate Social Responsibility of the Russian Union of Industrialists and Entrepreneurs, Moscow School of Management SKOLKOVO and RTS Stock Exchange took place. As a result of the meeting RTS and SKOLKOVO have started working on a joint project for establishing and calculating the first Russian Sustainability Index. The Index constituents list will include shares of Russian issuers traded on the organized stock market and selected on the basis of regularly published corporate and social responsibility reports (CSR).” Russia, among the world’s larger countries, has been a laggard concerning sustainability issues. This is a great sign that they are finally moving forward in this area.
RTS and Moscow School of Management SKOLKOVO will establish the Sustainability Index, June 28, 2011, RTS Exchange, Russia.

Singapore Stock Exchange Issues Sustainability Guide For Listed Companies. – [COMMENTARY] “The Singapore Stock Exchange (SGX) has issued a sustainability reporting guide for listed companies, following calls from global investors and stakeholders for companies to report on sustainability issues. The aim of the guide is to promote a more complete annual report, with companies integrating their financial information with environmental and social risks and strengths.” As I have long predicted, stock exchanges everywhere will gradually enforce much greater disclosure on sustainability and ESG issues.
SGX publishes sustainability reporting guide, June 28, 2011, The Accountant, Asia/Pacific.

Shell, Tesco, EDF, Unilever & Many Other Companies Call On UK Government For More Action To Reduce Carbon Emissions. – [COMMENTARY] “Some of the biggest names in British business will today join together to reiterate their call for the government to take more concrete action to cut carbon emissions and accelerate the development of low carbon technologies and business models.” Now we know that big business is getting the message when some of the world’s largest companies begin to call on governments to enact policies to lower carbon emissions! Also, see my post, Sustainability Profits Companies.
Business giants call on government to show more green ambition, June 29, 2011, BusinessGreen, UK.

Eurosif Reports On Aerospace & Defence Industries. – [COMMENTARY] “One of the most secretive sectors in which corruption and bribery issues are likely, the defence sector deals with flattening military budgets and controversial weapon international legislation to take effect in 2012… Research was provided by Sustainalytics, and the project was supervised by a steering committee of representatives from CM-CIC Asset Management, ECPI and Edmond de Rothschild Asset Management… With the EU Emission Trading Scheme taking effect on January 1, 2012, the report finds that the demand for alternative fuels is expected to grow in the coming years.”

Yes, I have met ethical investors who invest in the defence industry! And many ethical investors do invest in the aerospace sector. Eurosif produces another very useful report for those interested in these industries.
Aerospace and defence industries to encounter heavy obstacles with new pressures mounting, June 28, 2011, press release, Eurosif, France.

Mercer Reports On ESG Research Differences Between North America & Europe. – [COMMENTARY] “It is often stated within the investment industry that the European market is more advanced in the area of sustainable investing1 relative to its North American counterpart. This is evident in broad indicators such as the differences in policy debate and regulatory frameworks, as well as more straightforward measures such as the number of signatories to the Principles for Responsible Investment initiative where there are much fewer signatories from North America than in Europe/UK.” This report provides some useful insights.
Differences between North American and European ESG Research, by Sarika Goel, June 28, 2011, Mercer, USA.

Stronger CSR Reports Lead To Better Companies. – [COMMENTARY] “We [CSRHUB] recently compared the perceived CSR performance of 630 corporations who have committed to the Global Reporting Initiative (GRI) reporting standard with the perceived CSR performance of more than 4,000 corporations who have not, based on scores from CSRHUB’s CSR ratings system. Not only did we find that GRI-committed companies have higher overall ratings in the CSRHUB system, but they also receive more attention from socially responsible investment (SRI) firms and receive more awards from NGOs and activist groups.” Of course what ethical investors would want to know is what affect on stock prices does CSR reporting have?
Do Better CSR Reports Lead to Better Corporate Citizens? By Bahar Gidwani, June 28, 2011, GreenBiz, USA.

Swiss Bank Pictet Finds SRI Not A Shield Against Stock Market Downturns. – [COMMENTARY] “During the crisis, SRI equity portfolios performed in line with the broad market. The fact that the SRI community warned against some of the methods that caused havoc, such as dysfunctional incentives, unethical business conduct and bad governance, did not make its portfolios less risky, says the firm. The study found that for this type of investment to thrive it needs to look into the sustainability of companies′ financial fundamentals.”

The finding of Pictet’s research is not new to me–though many ethical investors might be surprised and perhaps concerned by its findings. They should not be. Investing according to our own ethical or personal values also allows us to feel that we are doing the right thing while it also benefits our personal and spiritual development.
SRI Is Not Less Risky Than Average, Says Pictet, by Max Skjönsberg, June 27, 2011, Wealth Briefing, UK.

MSCI Launches New ESG Tool For Asset Managers. – [COMMENTARY] “The ESG Impact Monitor, according to the company, ’allows users to monitor a company’s significant social and environmental impacts and its ability to manage those impacts.’ At present, the ESG Impact Monitor covers companies listed on the MSCI World index, but will be expanded to include all companies in the MSCI Emerging Markets Index in September. Coverage of small-cap companies in several regions of the world will follow.”

Continuing, “[The] Business Involvement Screening Research ’allows investors to identify all global publicly-traded companies involved in activities such as the production of alcohol or tobacco products, or those that violate religious screening mandates,’ MSCI stated. ’It also allows investors to divest from companies that violate legislative mandates that prohibit investment in companies that manufacture controversial weapons such as cluster bombs and landmines or operate in countries such as Sudan and Iran.’” These appear to be exciting new tools for asset managers/brokers etc.
MSCI ESG Manager, June 23, 2011, MSCI, USA.

Informative Articles On Declining Carbon Prices, Wealthy US Families Backing Cleantech, & Problems In A Climate Change Investment Survey. June 23, 2011, Environmental Finance, UK.

UK’s Financial Times & IFC Name Bank Sarasin 2011’s Cross-Regional Sustainable Bank. – [COMMENTARY] “The FT/IFC Sustainable Finance Awards have been established as leaders in recognising the achievements of banks and other institutions focused on sustainable development. The 2011 awards attracted a record 187 entries from 161 institutions in 61 countries. The awards were presented at a gala event on 16 June 2011 in London attended by some 200 senior decision-makers from the world of finance and sustainability.” I’ve been aware of Bank Sarasin’s commitment to sustainable investing and banking for many years. They well deserve this honour.
Bank Sarasin named Cross-Regional Sustainable Bank of the Year 2011, June 20, 2011, press release, Switzerland.

’Play’ At Being An Ethical Investor! – [COMMENTARY] “A new environmentally educational board game called Ethica lets players assume the role of an investment banker or venture capitalist and see how well their green intentions stand up in the world of international finance. The game represents part of the developing trend of environmental education through play.” Though I haven’t played or even seen this game yet, it might be an intriguing way to introduce friends and family to ethical investing.
Play at being an ethical investor – new board game readies for launch, June 20, 2011, The Independent, UK.

Google, BT, Ikea Urge EU To Set Tougher Carbon Goals. – [COMMENTARY] “More than 70 companies, including big names like BT, Ikea, Google, National Grid, Philips, Puma, Swiss Re and Unilever, signed a joint declaration (PDF) urging the European Union to reduce its CO2 emissions by 30 percent below 1990 levels by 2020. That’s a much higher target than the 27-nation bloc’s existing goal of a 20 percent reduction. The companies claim such an aggressive target would spur investment, jump start the transition to a low-carbon economy and improve energy security, creating millions of new jobs in the process.” Finally, big companies are seeing the opportunity for profits and sustainability that carbon reductions offer.
Google, BT, Ikea Urge EU to Set Tougher Carbon Goals, June 15, 2010, by Tilde Herrera, ClimateBiz, USA.

Corporate Sustainability Reporting Rises In China. – [COMMENTARY] “More Chinese companies are producing sustainability reports, according to standard-setter the Global Reporting Initiative (GRI), driven largely by regulation and stock exchange listing requirements. Marjolein Bajhuis, Amsterdam-based director of communications and network relations for the GRI, said the number of sustainability reports produced in China has risen from 600 in 2009 to about 700 in 2010. Of these, around 60 applied the GRI′s guidelines. Chinese firms are increasingly required to produce such reports by regulation – including the listing requirements of the Shanghai Stock Exchange.”

It is wonderful that Chinese companies are finally getting on board with regards to sustainability reporting. Since so few use the GRI though, I’m wondrous about their quality.
Sustainability reporting on rise in China, June 14, 2011, by Jess McCabe, Environmental Finance, UK.

Social Investment Forum Changes Name to US SIF. – [COMMENTARY] “US SIF CEO Lisa Woll said: ’Our new name — US SIF: The Forum for Sustainable and Responsible Investment – reflects an important evolution. The socially responsible and sustainable investing space has shifted considerably over the past 20 plus years since the organization was founded…’ Michael Lent, US SIF Board Chair and CIO of Veris Wealth Partners, added: ’US SIF is the umbrella organization for responsible, sustainable, socially responsible, ethical, values based, mission, green, impact and other double- and triple-bottom line investors. We believe our new name is a better fit for a rapidly evolving and growing field that has changed considerably since the days when the Social Investment Forum was first named.’”

The US SIF is probably the largest such organization in the world. You can also read what Al Gore has to say at the organization’s DC conference.
Al Gore Opens SIF National Conference As Organization Changes Name to “US SIF: The Forum for Sustainable & Responsible Investment,” June 13, 2011, US SIF press release, USA.

Ceres, Tellus Unveil Global Initiative for a Standardized, Comprehensive Corporate Sustainability Rating. – [COMMENTARY] “Founding partners of the new coalition, the Global Initiative for Sustainability Ratings, include leading investors and businesses like TIAA-CREF, the Calvert Group and Bloomberg. The initiative will be modeled on a successful Ceres/Tellus-launched program, the Global Reporting Initiative, that has become the de facto global standard used by 2,000 companies worldwide for corporate reporting on environmental, social and economic performance.” Many in the SRI-ethical investing industry have long advocated for such a uniform measure. I believe it would be good to achieve, particularly to see if such a comprehensive rating is really viable, but I am unsure of its value from an analyst’s perspective.
A Single Measure, Unbiased Results: Ceres, Tellus Unveil Global Initiative for a Standardized, Comprehensive Corporate Sustainability Rating, June 9, 2011, media release, Ceres/Tellus, USA.

Canada’s Maclean’s Magazine & Jantzi-Sustainalytics Rank Canada’s Top 50 Socially Responsible Companies. – [COMMENTARY] “Each of the companies featured is either Canadian-listed or a wholly owned subsidiary of a foreign-listed company with significant operations or brand presence in Canada. Each of the companies has a significant market capitalization or brand presence in Canada and is featured on at least one of the following lists: the ROB Top 1000, the ROB Top 350, or Interbrand′s Best Canadian or Best Global Brands lists. Given that Canadian subsidiaries of foreign companies are inextricably linked to their parent companies, the evaluation is based on the performance of the foreign corporate entities.” This is another highly valuable analysis and ranking of Canadian companies leading in socially responsibility.
Top 50 socially responsible corporations, June 9, 2011, Maclean’s Magazine, Canada.

Most Firms Failing In Water Management. – [COMMENTARY] “A vanishingly small proportion of large companies are adequately managing risks posed by water shortages, drought and pollution, according to research by EIRIS. The London-based research house specialising in environmental, social and governance (ESG) issues surveyed 3,000 large companies globally identified as exposed to water risks. Only 0.22% were adequately managing these risks – all of which were in the chemicals and pharmaceuticals sectors.”

The news contained in this report is shocking. Ethical investors might want to encourage the companies they invest in to take a more proactive stance on water management. They can stress possible benefits to the company’s bottom line–as well as investor appeal–that monitoring and reducing water usage may have.
Most firms failing on water risk management – report, by Jess McCabe, June 9, 2011, Environmental Finance, UK.

Large Investors Controlling $1trn In Assets Request Russell 1000 Companies To Integrate Sustainability. – [COMMENTARY] “Citing global climate change, resource constraints and growing population pressures, more than two dozen major institutional investors, collectively managing $1 trillion in assets, have asked the Russell 1000 companies in a jointly-signed letter to actively embrace the ’new reality’ of so-called ESG risks – environmental, social and governance – in both their actions and required investor disclosures.” As we see here and from all that we know about the benefits of integrating sustainability into corporate activities, it is time that major asset managers demanded companies integrate sustainability into their strategic plans.
Investors Controlling $1 Trillion in Assets Call on Russell 1000 Companies to Integrate Sustainability Into Business Models, June 8, 2011, press release, Ceres, USA.

UBS, Citi Outperform Their Reputations, Study Finds. – [COMMENTARY] “Google, Apple and Honda have earned reputations that far exceed their actual environmental, social and governance (ESG) performance, while UBS and Citi don′t get enough credit for their sustainability initiatives, according to a report by Brandlogic and CRD Analytics.” In regard to brand reputation, it seems that producing useful and attractive high demand products overrides ESG efforts. To be real winners, companies have to do both effectively! For ethical investors, it is always useful to look at brand reputations. They can be helpful in determining your investment holdings.
UBS, Citi Outperform Their Reputations, Study Finds, June 8, 2011, Environmental Leader, USA.

The 2011 Best 50 Corporate Citizens in Canada. – [COMMENTARY] “The prize of clean capitalism is the space race of the next decade. With Canada′s unparalleled combination of per-capita natural capital assets and stable pots of rock-solid big money institutions—and the 2011 Best 50 Corporate Citizens leading the way—we are uniquely poised to pioneer prosperous models that will enable us and our civilization to win this race against the clock. We have nothing to lose but our chains to a fairy tale whose time is up.” This report by Corporate Knights is worth reading for anyone interested in investing in Canada.
The 2011 Best 50 Corporate Citizens in Canada, June 2, 2011, Corporate Knights, Canada.

Bloomberg Launches Malaysian Foreign Currency Sukuk Index. – [COMMENTARY] “Bloomberg executives today announced the launch of the Bloomberg Malaysian Foreign Currency Sukuk [Islamic bond] Index (BMSSUTR), a non-ringgit denominated index developed in conjunction with Bank Negara Malaysia. The new Bloomberg index provides a global benchmark for the performance of sukuk bonds and the ability to track movements of foreign currency issues.” This index of Islamic of non-ringgit (Malaysian currency) currency bonds illustrates the growth and potential for Islamic bond issuance. This might be of interest to some ethical investors.
Bloomberg Launches Malaysian Foreign Currency Sukuk Index, June 7, 2011, press release, Bloomberg, Malaysia/Singapore.

$1.2trn Investor Group Asking For Alberta Oil Sands Monitoring. – [COMMENTARY] “A group of 26 leading global institutional investors with a combined heft of $1.2trn (€820m) in assets have entered the debate about a new oil sands environmental monitoring scheme in Alberta, Canada. The group, led by NEI Investments, has written to the co-chairs of the new Alberta Environmental Monitoring Panel, Howard Tennant and Hal Kvisle. They say the system should be ’beyond reproach.’” What they are calling for is right and should have been done years ago.
$1.2trn investor group in plea over Alberta oil sands monitoring, by Daniel Brooksbank, June 6, 2011, Responsible Investor, UK.

FaithShares Closing 4 Of Its 5 Faith-Based ETFs. – [COMMENTARY] “’After careful consideration, the Board of Trustees of the FaithShares Trust has determined to close and liquidate the FaithShares Baptist Values Fund, the FaithShares Catholic Values Fund, the FaithShares Lutheran Values Fund and the FaithShares Methodist Values Fund…’” This is unfortunate, as these were pioneer faith-based ETFs and seemed to be well marketed. To me, it indicates that even most religious Americans probably ’do not practice what they preach’–when it comes to investing!
FaithShares To Close Doors On Four ETFs, by ETF Database, June 6, 2011, reported by Business Insider, USA.

Environmental Investment Organisation (EIO) Launches Environmental Tracking Index Series. – [COMMENTARY] “The Environmental Tracking Index Series is a hybrid between traditional ’socially responsible investment’ and passive index models… [it ranks companies by carbon emissions] intensity and transparency.”

One mustn’t be misled here to think that the companies ranked most highly have necessarily the lowest relative carbon footprints. A company might have a very low carbon footprint, but not report it, and thus be ranked lower. Nonetheless, it is an interesting idea and could encourage companies to both reduce and report on their carbon outputs.
EIO index to reveal greenest companies, by Anuj Gangahar, June 5, 2011, Financial Times, UK.

SOP’s Judyth Piazza Chats With Ron Robins, June 1, 2011. I discuss the importance of personal values, ethics and spiritual development, for a successful career and life. To listen, click here.

’Fracking’ Becoming Big Issue At Oil & Gas Annual General Meetings. – [COMMENTARY] “Resolutions addressing hydraulic fracturing won substantial shareowner support at the annual meetings of major oil and gas companies last week. The resolutions, which call for increased transparency and risk management in an increasingly widespread drilling practice that has raised serious environmental concerns, gained 41 percent of the votes of shareowners at Chevron and 28 percent at ExxonMobil.”

Fracking and understanding its associated environmental problems have to be dealt with. Aside from the health risks, I’m increasingly concerned about disturbing the rock formations and the possibility fracking might cause earthquakes, as a recent report from the UK could indicate.
Shareholders Step Up Pressure on Fracking at Chevron, ExxonMobil, June 2, 2011, Robert Kropp, SocialFunds, USA.

Leave a Reply

Your email address will not be published. Required fields are marked *