Deloitte Report Encourages Companies To Incorporate ESG Measures. – [COMMENTARY] “Deloitte released its research report, ’Disclosure of Long-Term Business Value: What Matters?’ providing an in-depth look at how companies are determining environmental, social and governance (ESG) materiality and some of the challenges managers face. The report suggests that sustained and superior performance depends not only on maximizing traditional financial metrics, but on leveraging ESG performance.” More good news on the ESG front–and encouraging to ethical investors as well.
Determining Environmental, Social and Governance Materiality Is One Key to Sustainable, Superior Performance, Deloitte Report Suggests, press release, March 28, 2012, USA.
Stock Exchanges Support Corporate Sustainability Reporting. – [COMMENTARY] “A report released today, ’Sustainable Stock Exchanges: A Report on Progress’, has found that a majority of stock exchanges remain committed to promoting greater corporate responsibility on sustainability issues but are restricted in the actions they can take… Written by Responsible Research, today′s report seeks to capture the progress on promoting corporate sustainability by surveying 27 of the largest exchange entities across the world′s markets.”
This report is noteworthy when it refers to how restricted the stock exchanges are in regulating sustainability reporting. Stock exchanges compete for business (listings), thus many companies gravitate to the exchanges with the least regulations. This is a call for global cooperation on corporate sustainability reporting. I believe such coordination will happen in the next few years.
Aviva Investors: Stock Exchanges Support Corporate Sustainability Reporting, press release, March 27, 2012, AVIVA, UK.
Investors Press US Shale Oil Drillers To Control Flaring. – [COMMENTARY] “Investors representing $500 billion in assets are pushing energy companies in the shale oil rush in North Dakota and other states to disclose the amount of natural gas they burn – a practice they see as a wasteful financial risk.” This burning, needless to say, is also bad for the environment. As the world becomes increasingly intimate with the mammoth scale of global warming and climate change, expect sustainability and ESG to play an ever-increasing role in investment analysis–and stock values!
Exclusive: Investors press U.S. shale oil drillers to control flaring, by Timothy Gardner, March 28, 2012, Reuters, USA.
Among Millionaires It’s The Younger Ones Who Most Favour SRI. – [COMMENTARY] “Half of Millionaires age 44 and younger say societal implications are an important investment selection factor, according to our latest quarterly study on the attitudes and behaviours of affluent investors. (Millionaires are defined as having a net worth of $1 million to $5 million, not including primary residence.) Young Millionaires are more likely than their older peers to make socially responsible investments. About 40 percent of baby boomers and 30 percent of investors age 65 and older identify social responsibility to be a key investment criterion.”
This is good news for the future of SR-ethical investing, as we all know that young people are our future.
Young Millionaires drawn to socially responsible investments, by Adriana Reyneri, March 27, 2012, Millionaire Corner, USA.
63% Of Global Socially Conscious Consumers Are Under 40, Says Nielson Survey. – [COMMENTARY] “Consumers in Asia Pacific (55%), the Middle East and Africa (53%) and Latin America (49%) are more willing to pay extra for products and services from socially-responsible companies than consumers in North America (35%) and Europe (32%). According to Nielsen′s survey, the highest concentration of socially-conscious consumers is in the Philippines, where 68 percent of respondents are willing to pay extra for products, while the lowest concentration is in the Netherlands, where 21 percent of respondents indicated a willingness to spend more.”
Most people believe that it’s young North American and European consumers that are most willing to pay more for sustainable products. Yet, this survey says it’s the young people in the Asia-Pacific region that do so! Ethical investors could checkout the green companies they invest in to see where they market their products.
Nielsen Identifies Attributes of the Global, Socially-Conscious Consumer, press release, March 27, 2012, Nielson Holdings N.V., USA.
Canada’s 2012 Globe Award Winners Include Unilever Canada, Royal Bank of Canada, & Canadian Tire. – [COMMENTARY] Awards were for environmental and sustainability actions of these companies.
The 2012 GLOBE Awards Winners, March 22, 2012, Canada.
29 UN Global Compact Member Companies Failing To Deliver CSR Reports. – [COMMENTARY] “For the fifth year, a coalition of signatories to the Principles for Responsible Investment (PRI) are pressuring companies to fulfill their stated commitments to corporate sustainability reporting. The investors, from 12 countries and with more than $3 trillion in assets under management, have identified 29 companies that are members of the UN Global Compact (UNGC) but ’have failed to produce the mandatory annual report that communicates their progress on corporate sustainability.’”
This type of peer pressure is good. Unfortunately, the non-compliant companies aren’t named in the associated press release, so they can’t be publicly scorned.
29 firms fail to file promised sustainability reports, by Robert Kropp, March 21, 2012, GreenBiz, USA.
Investment Banks Produce Best ESG Research, Says Research By Integrity Research Associates. – [COMMENTARY] “Asset managers plan to increase spending on research analyzing the environmental, social and governance performance of publicly traded companies, according to a recent study. Investors ranked ESG research produced by investment banks more highly than independently produced research.” Though Mercer a few weeks back indicated that only about 9% of managed portfolios truly incorporated ESG in their portfolio design, they did indicate that ESG was growing in importance. Integrity’s survey is further vindication of that.
Investment Banks Top Independents in ESG Research Survey, March 15, 2012, Integrity Research Associates, USA.
Ethisphere Publishes Its 2012 Winners. – [COMMENTARY] “Each 2012 honoree — including U.S. industry standard-bearers like Cisco, Ford and Timberland, and smaller international firms like the Ethical Fruit Company (UK), Tokio Marine Holding (Japan) and the Panama Canal Authority — was chosen for promoting ethical business standards and practices by exceeding legal minimums for compliance, introducing innovative ideas that benefit the public and forcing their competitors to follow suit.”
I think it is a good list, but the preponderance of US companies on the list makes me wonder how deep is their research since European and Japanese companies report more widely on CSR matters and appear to take ESG more seriously.
Ethisphere Institute Unveils 2012 World’s Most Ethical Companies, press release, March 15, 2012, Ethisphere Institute, USA. See winners list.
The Goldman Ethics Fuss. – [COMMENTARY] I’m both astounded and somewhat bemused by the media frenzy surrounding Greg Smith’s critique of Goldman Sachs’ ethics. I didn’t even bother commenting on it myself yesterday because after what we experienced in 2008/9, I believed that everyone knew Wall Street and many bankers’ ethics were atrocious anyway! After all, the respected 2012 Edelman Trust Barometer finds public trust in banking and finance the lowest of any industries.
Yet, despite the anger, the public refuse to appoint politicians who will aggressively tackle the real ethical issues in the financial system. The reason: the public knows that to do so means they’ll take a financial hit! For instance, ethical practices should require marking assets at market values on balance sheets. On that basis, it’s likely that a huge swath of the US banking and financial industry would be insolvent and the public forced to take mammoth losses.
Until Mr. Joe public improves upon their own ethical conduct, putting ethics above financial gains or losses, we’re unlikely to see much change among politicians or in the financial and banking industries. That’s why I don’t see what all the fuss is about.
Green Energy Continues to Grow. – [COMMENTARY] “All together, solar PV, wind and biofuel markets expanded by 31 percent last year to $246 billion globally, according to Clean Edge′s 11th annual edition of Clean Energy Trends 2011, a wrapup of key green-energy indicators. The expansion caps a five-year run during which these markets have grown by roughly a third each year.” The outlook for green energy improves as oil prices move higher.
Despite naysayers, green energy keeps growing, by Adam Aston, March 14, 2012, GreenBiz, USA.
SEC Expected To Rule On Conflict Materials In 2012. – [COMMENTARY] “Rules being written into the Dodd-Frank Act intended to crack down on the use of ’conflict minerals’ mined in the eastern Democratic Republic of Congo will also impact Canadian issuers trading in the United States.” 60% of the world’s mining finance originates in Canada. So if you invest in mining, what happens in the USA is relevant to mining finance and operations in Canada.
SEC rules on conflict minerals expected this year, by Jennifer Brown, March 10, 2012, Canadian Lawyer Magazine, Canada.
Study Says SRI Funds Might Be Less Concerned About ESG Issues Than Conventional Funds! – [COMMENTARY] “We cannot find strong evidence of differences between conventional and socially responsible mutual funds. In particular, the calculated risk tolerance parameters describing the real portfolio composition best show that socially responsible mutual funds may be even less concerned about the ESG-scores in the preference functional than conventional funds.”
Well this is interesting. No doubt a lot of SRI fund managers and ethical investors will want to review this research. Personally, if you can do it, I’ve always favoured an individual stock portfolio reflecting one’s own personal values.
Is socially responsible investing just screening? Evidence from mutual funds, by Markus Hirschberger, Ralph E. Steuer, Sebastian Utz, and Maximilian Wimmer, Humbold University, March 2012, Germany.
Women More Likely To Make Green Investments. – [COMMENTARY] “Environmentally responsible or ’go green’ investments have a greater appeal among women investors, who are more likely than men to align their financial goals with their personal values, according to the latest research from Millionaire Corner. Nearly 42 percent of women – compared to less than 27 percent of men – say they are ’very likely’ or ’likely’ to make environmentally responsible investments, according to our February survey of 1,150 investors.”
This is unsurprising to me. However, it would be great if these women and men indicating their interest in sustainable investments actually followed through on investments linked to environmental and corporate sustainability. Stock prices would then reflect an even greater premium for companies applying sustainability to the activities than they do now.
Women Investors “Go Green,” by Adriana Reyneri, March 8, 2012, Millionaire Corner, USA.
Private Equity Firms See Pressure To Engage Responsible Investment Policies, Says PricewaterhouseCoopers Survey. – [COMMENTARY] “According to the report by PwC, 88% of buyout firms expect investors to pay more attention to responsible investment in the next five years, but half of the respondents still lack a policy on environmental, social and governance issues.” This is more good news for ethical investments. As investors increasingly recognize that companies exhibiting superior ESG performance perform better in the stock market, it’ll create a circle of positivity for ethical stocks.
Investors urge buyout firms to keep pace with ESG, by Ayesha Javed, March 7, 2012, Financial News, USA.
Ernst & Young Faults Companies On Quality Of Sustainability Reporting. – [COMMENTARY] “the growth of reporting is limited, if not undermined, by the tools companies are using to produce them. ’Based on our survey responses, those tools remain rudimentary, even primitive, compared with those used for reporting on financial measures.’ When asked to name the tools used to compile their sustainability reports, companies cited spreadsheets, centralized databases, emails and phone calls as the principal tools, with about one in four (24%) using packaged software.”
It’s good that an accounting firm has compiled such a report and demonstrated the need for much greater rigor in corporate sustainability reporting. To improve on this situation, securities regulators, governments and stock exchanges, have to request that all sustainability reports meet certain reporting standards. Further, that these reports be audited by qualified or licensed CSR/ESG auditors who provide an opinion as to the quality and meaningfulness of the sustainability information and data presented. Yup, just like for financial statements!
Will sustainability reporting ever grow up? By Joel Makower, March 6, 2012, GreenBiz, USA.
European Central Bank (ECB) Urged To Examine How Polluting & Environmentally Damaging Investments Might Pose A Systemic Risk. – [COMMENTARY] “In an open letter to Mario Draghi, president of the European Central Bank and chair of the European Systemic Risk Board, a coalition of experts, investors, NGOs and universities have urged the ESRB to investigate how the European Union’s exposure to polluting and environmentally damaging investments might pose a systemic risk to the financial system and prospects for long-term economic growth.”
A similar proposal was recently made to the Bank of England, and they seemed to respond positively to the suggestion. Of course, with companies who demonstrate superior ESG standards exhibiting better financial and stock performance, one would think the banking and financial community would take the above recommendation seriously. Let’s hope so.
European risk board urged to investigate environmental investment, by Stephanie Denton, March 1, 2012, Insurance Insight, UK.
City Of London Farsight Awards For Best Ethical Investing Study To Responsible Research. – [COMMENTARY] “Winner of The Farsight Award 2011/12: Responsible Research for their report ’The Future of Fish in Asia.’”
Responsible Research receives the Farsight Award 2011/12, March 1, 2012, press release, Z/Yen Group Limited, UK.