CSR, Profits ‘Closely Linked.′ – [COMMENTARY] “In the AFA [Adam Friedman Associates] survey, 88 percent of respondents cited company reputation as a factor in CSR decision-making. This was followed by the company′s competitive positioning and social consciousness, which 71 percent of respondents mentioned. Profitability (38 percent) and pending or existing legislation (32 percent) were determined to be motivating factors, according to Corporate Social Responsibility: Who′s Responsible?” With results like those in this survey, it’s clear why CSR reporting by public companies is becoming almost universal. CSR just needs proper standardization, independent verification and auditing, etc., all will happen in time.
CSR, Profits ‘Closely Linked,′ November 29, 2012, Environmental Leader, USA.

GMI Ratings Releases Second “Black Swan Risk List” Of North American Companies. – [COMMENTARY] “40 Companies with the Most Aggressive Accounting Practices and the Highest Risk of Major Drops in Share Prices.” To focus on aggressive accounting policies is a good one. Download list.
GMI Ratings Releases Second “Black Swan Risk List” of North American Companies, press release, November 26, 2012, GMI Ratings, USA.

“Believers In The Boardroom. Religious Organisations And Their Shareholder Engagement Practices.” This is an important read for all spiritually oriented investors.
Believers in the Boardroom. Religious Organisations and their Shareholder Engagement Practices, 3iG, Spain.

Greenpeace’s 2012 Guide To Greener Electronics. – [COMMENTARY] “This 18th edition of Greenpeace′s Guide to Greener Electronics evaluates leading consumer electronics companies based on their commitment and progress in three environmental criteria: Energy and Climate, Greener Products, and Sustainable Operations.” Wipro, HP and Nokia have the top three spots. HP today is involved in a major legal battle. The company has put aside $8.8 billion to deal with it.
Guide to Greener Electronics 18, November 2012, Greenpeace, The Netherlands.

CSR Tracking Tools Unreliable, Survey Finds. – [COMMENTARY] “Global Corporate Citizens, an eight-country survey of companies with revenue of over €100 million, found that 63 per cent have tried to quantify the financial contribution of CSR, compared with only 23 per cent in the 2010 edition of the study. This, coupled with the decline in confidence, indicates a lack of reliable reporting solutions that can deliver accurate data, IDC says.”

As investors become increasingly concerned with CSR/ESG factors in corporate reports, this could be a problem. CSR/ESG tracking is still very new territory for many companies. The results in this report are probably because many companies haven’t yet put into place appropriate and probably more costly, systems.
CSR Tracking Tools Unreliable, Survey Finds, November 16, 2012, Environmental Leader, USA.

US Sustainable And Responsible Investing (SRI) Assets Up 22 Percent In Two Years. – [COMMENTARY] “Sustainable and responsible investing (SRI) accounts for 11.23 percent of all assets under professional management in the United States at year end 2011. According to the report, $3.74 trillion out of $33.3 trillion of investment assets is held by individuals, institutions, investment companies or money managers that practice SRI strategies.”

More great news. In particular, mutual funds and alternative investment funds utilizing ESG doubled from 2010 to $641 billion. This shows retail investors are increasingly choosing ESG-ethical funds.
US Sustainable and Responsible Investing (SRI) Assets Up, press release, November 14, 2012, US SIF Foundation, USA.

UN-Backed Principles Of Responsible Investment (PRI) Initiative Concerned About Signatories Hedge Fund Governance & Strategies. – [COMMENTARY] “Many signatories have significant allocations to hedge funds and the PRI has a growing number of hedge fund manager signatories… This paper marks a first step in stimulating debate among PRI signatories and supporting asset owners to understand the implications of their hedge fund investments Our aim is to equip them with the information they need to reach their own conclusions about whether their approach is consistent with their commitments to responsible investment. [Quote by said Rob Lake, director of responsible investment at PRI].”

PRI is right. Signatories to UNPRI should abide by its ESG oriented rules. Hedge fund assets should not be exempted!
PRI launches discussion on responsible investment in hedge funds, press release, November 12, 2012, UNPRI, UK.

Egypt Plans To Increase Islamic Banking Assets From 5% to 35% Of All Domestic Bank Assets Within 5 Years. – [COMMENTARY] “The new Muslim Brotherhood government aims to boost the sharia-compliant share of total banking assets from 5 to 35 percent within five years. The potential is undoubtedly big. Egypt is predominantly Muslim and only 10 percent of the 80 million people have bank accounts. But the rise of Islamic finance in Egypt might be slow. Hosni Mubarak, the long-time former president, didn′t hold back Islamic finance, although he didn′t encourage it either.”

This will be most interesting to watch! In the next few years we could witness a massive ’sea change’ in banking towards Islamic banking and finance throughout the Middle East and all Muslim countries–at the expense of traditional western oriented banking and finance.
Egypt may struggle to meet Islamic finance target, by Una Galani, Reuters, published in the Kippreport, November 12, 2012, UAE.

AXA Demonstrates Success With ESG & Shows Others How It Can Be Done. – [COMMENTARY] “Cheap (lowest price to intrinsic value) companies with the best [ESG] scores returned 40%, whereas cheap companies with the worst [ESG] board scores returned -0.3% on an annualized basis.” AXA are doing some great work on integrating ESG into mainline portfolios. Fund managers who have as yet not used ESG or having difficulty implementing it into their analytical framework should review this report by AXA.
White paper: piloting ESG integration, November 2012, AXA Investment Managers, Europe.

What Motivates Corporate Managers To Make Socially Responsible Investments? – [COMMENTARY] “We find that larger firms, older firms, firms with greater free cash flow, and higher advertising outlays demonstrate higher levels of corporate social responsibility (CSR)… companies with stronger institutional ownership are less likely to invest in CSR… female CEOs, younger CEOs, and managers who donate to both Republican and Democratic parties are significantly more likely to invest in CSR… we find a strong positive connection between the level of media scrutiny surrounding the firm and its CEO, and the level of CSR investment.”

This is interesting research–and the findings make sense. It’s useful reading for ethical investors.
What Motivates Corporate Managers to Make Socially Responsible Investments? By Richard Borghesi, Joel F. Houston, and Andy Naranjo, University of Florida, November 2012, USA.

Europe′s Wealthy Warm To Sustainable Investments –Study. – [COMMENTARY] “Sustainable investments by Europe′s wealthiest investors has increased by nearly 60% over the past two years, compared to an 18% increase in overall European high net worth wealth over the same period. The findings comes from a study by EuroSIF, the European Sustainable Investment Forum, on High Net Worth Individuals and Sustainable Investment, created with the support of Bank Sarasin. Sustainable investments rose to €1.15trn compared to €729bn in 2009, reflecting persistent demand even in volatile markets, the study showed.”

Many, many more investors will be drawn to sustainable investments as climate change impacts everyday life.
Europe′s wealthy warm to sustainable investments –study, by Caroline Allen, November 7, 2012, Investment Europe, UK.

Responsible Investment Research Given Improved Quality Standard. – [COMMENTARY] “Global research on responsible investment has a new voluntary quality standard, with CSRR-QS today re-launched as ARISTA, complete with more detailed certification available to a wider range of products and services. The standard recognises organisations that ’incorporate the key principles of quality, integrity, transparency and accountability into their research processes’ and is currently run by the Association for Responsible Investment Services (ARISE).”

It’s a wonderful idea to have such a standard. The European Commission has helped in its creation.
Responsible investment research given improved quality standard, by Alex Blackburne, November 6, 2012, Blue & Green Tomorrow, UK.

ESG Rankings Show Bric Risks. – [COMMENTARY] “Sovereign debt issued by the so-called Bric economies of Brazil, Russia, India and China could be a riskier proposition than their credit ratings indicate, according to research by ING Investment Management. ING′s study of 85 broadly defined emerging markets looked at environmental, social and governance standards to gain a long-term view of those countries′ creditworthiness.” The big concern of ING was the historic instability of such countries.
ESG rankings show Bric risks, by Ellen Kelleher, November 4, 2012, The Financial Times, UK.

Socially Responsible Corporations With Heavy PAC Contributors Associated With Higher Stock Returns. – [COMMENTARY] “’Especially for smaller public companies, if the firm has been active in disclosing corporate social responsibility measures and if the individuals in the company are politically active, there′s a good chance you will do better in the stock market if you invest in that company,’ said Paul Griffin, a leading international authority in accounting and corporate disclosure and a professor at the UC Davis Graduate School of Management.”

This is an interesting finding–linking political action of executives with higher stock prices! And those in Democratic states do best.
Socially responsible corporations with heavy PAC contributors associated with higher stock returns, press release, November 1, 2012, UC Davis Graduate School of Management, USA.