January 2013

RIRA, India′s Sustainability Forum, Goes Live. – [COMMENTARY] “RIRA–India′s Sustainability Forum–was officially launched on the evening of January 29th. The project went live at a compact event at Mumbai, India attended by the Founders: Bloomberg, IDFC, GIZ, MCX- SX and YES Bank; Other Members: Penn Schoen Berland, Solaron and KPMG; prospect members, partners and other stakeholders.” It’s wonderful to see an ethical investing forum take root in India! Congratulations to RIRA.
RIRA, January 29, 2013, Mumbai, India.

RepRisk Announces The Most Controversial Companies Of 2012. – [COMMENTARY] “Over the past 12 months, RepRisk has detected news on thousands of companies across the globe in relation to their environmental, social and corporate governance (ESG) risks. This report analyzes documented controversies, both fact and allegation, related to the 10 firms that received the highest Peak RepRisk Index 1 in 2012. The information has been taken from a wide range of sources analyzed by RepRisk including newspapers, news sites, NGO and governmental sites, blogs and social media.”

Among the top ten are Samsung Group, HSBC Holdings PLC, and Reebock International Ltd. This report is a useful read for ethical investors.
The Most Controversial Companies of 2012, January 2013, RepRisk AG, Switzerland.

Divesting From Fossil-Fuel Companies Is Unlikely To Harm Endowments, Report Says. – [COMMENTARY] “An analysis released on Tuesday by the Aperio Group, an investment-management firm that offers its clients a ’socially responsible index,’ among other investment strategies, found that while divesting from fossil-fuel companies does not necessarily add value to a portfolio, it does not subtract value from it either, and it increases the risk to investors at such a modest level as to be negligible.”

This data is most useful–not just for educational endowments–but for all fund managers and investors! But what’s not in this study is the potential for future financial and stock price risk for carbon-based producers due to environmental degradation caused by their activities and the consequences of climate change itself on them.
Divesting From Fossil-Fuel Companies Is Unlikely to Harm Endowments, Report Says, by Lee Gardner, January 29, 2013, The Chronicle of Higher Education, USA.

$13.6 Trillion Invested Sustainably Globally, Says Report. – [COMMENTARY] “The report finds that, globally, at least US$ 13.6 trillion worth of professionally managed assets incorporate environmental, social and governance (ESG) concerns into their investment selection and management. This represents 21.8 percent of the total assets managed professionally in the regions covered by the report, conclusively showing that the sustainable investment industry has significant scale in the global arena. The Global Sustainable Investment Review 2012 is a collaboration of the Global Sustainable Investment Alliance (GSIA), as well as non-member organizations AfricaSIF.org and SIF Japan and is the first report to collate the results from the market studies of regional sustainable investment forums from Europe, the US, Canada, Asia, Japan, Australia and Africa. Sustainable investment information was not available from the Latin American regions, which do not yet have an organized sustainable investment forum.”

What I’m really happy about is that the various country and regional social investment organizations now have a common way of compiling the data–and the data is impressive!
Global Sustainable Investment Review 2012, January 2013, Global Sustainable Investment Alliance.

UK: Three-Quarters Of Independent Financial Advisors (IFAs) Get Requests For Ethical Investment Options. – [COMMENTARY] “Seventy-three per cent of independent financial advisers (IFAs) get requests for ethical investment options from clients, according to a Blue & Green Tomorrow survey of the industry. Just over half (51%) say they got the same amount of such requests in 2012 as they did in 2011, with 10% getting more and 13% getting less… although these advisers also report that it is a minority of their total clients (1 in 9) who ask about it.”

Yes, this is good news. However, on a proportional basis, IFAs still aren’t putting client funds into ethical investment vehicles: only about 2-3% of retail fund assets are in ethical investments. Obviously, UK-CFAs aren’t fully responding to client wishes. It’s the same situation in most other developed countries.
Three-quarters of IFAs get requests for ethical investment options, by Simon Leadbetter, January 24, 2013, Blue&Green, UK.

Ethical Investors Step Up Focus On Tax Avoidance. – [COMMENTARY] “Growing anger at aggressive tax avoidance by big business has prompted ethical investors to consider shunning shares in companies that don’t pay their fair share of tax… reports that big companies like Apple (AAPL.O), Google (GOOG.O) and Vodafone (VOD.L) pay minimal taxes in some big markets have sparked public protests in Europe and the United States.” Very few ethical investors are taking this viewpoint to-date. It certainly has some merit, but remains to be seen how far this goes.
Ethical investors step up focus on tax avoidance, by Tom Bergin and Sinead Cruise, January 20, 2013, Reuters, UK.

Canadian Socially Responsible Investment Assets Up 16% Since 2010: New Report. – [COMMENTARY] “The Canadian SRI Review 2012, released today, shows that assets managed under sustainable and socially responsible guidelines in Canada grew by 16% between June 30, 2010 (the effective date of the last report) and December 31, 2011. By comparison, total assets under management grew by 9% in the same time period. The report shows that total assets managed under SRI guidelines is $600.9 billion, up from $517.9 billion. At $600.9 billion, this represents 20% of assets under management in the financial industry, up from 19% of the market in 2010. The two areas that showed the most growth are in the pension fund sector and impact investing.”

These results demonstrate continuing mainstream acceptance for SRI/ESG/ethical investing approaches in Canada. Also, the fact that SRI assets are growing faster than the growth in conventional assets is highly encouraging!
Canadian socially responsible investment assets up 16% since 2010: new report, press release, January 17, 2013, Social Investment Organization (SIO), Canada.

Australian Ethical Fund Top 2012 Performer. – [COMMENTARY] “The latest fund performance survey by Mercer shows the Perpetual Ethical Fund is the best-performing Australian fund, with a return of almost 40 per cent over 2012.” This is a great accomplishment. Like most ethical funds, financials are a big holding. I see that financials make up 36% of its portfolio.
Perpetual Ethical Fund tops performance as share funds rebound, by John Collett, January 16, 2013, Brisbane Times, Australia.

UNPRI: ESG Critical To Private Equity Dealmaking. – [COMMENTARY] “Two-thirds of corporate buyers of private equity portfolio companies said that poor performance on environmental, social and governance (ESG) factors impacted their willingness to buy the company or prevented the entire deal, survey results by the United Nations-backed Principles for Responsible Investment Initiative has found. The PRI commissioned PricewaterhouseCoopers… The results showed that over 80% of companies had reduced the valuation of an acquisition target or not gone ahead with a deal because of poor performance on ESG factors, while 75% said poor performance in this area had prevented a deal from taking place.”

This is great news. It demonstrates how ESG analysis is going mainstream. The case for including ESG in investment and portfolio selection is so obvious. It’s difficult to understand why some people still oppose it.
UNPRI: ESG Critical to Private Equity Dealmaking, by Paula Vasan, January 11, 2013, Chief Investment Officer, USA.

Left Leaning Investors Invest Less In The ’Sin’ Stocks. – [COMMENTARY] “Managers who donate to Democrats underweight (relative to non-donors or Republican donors) stocks that are deemed socially irresponsible. (e.g., tobacco, guns and defense, natural resources, and firms with low KLD scores). This effect is approximately one-half of the underweighting observed for socially responsible (SRI) mutual funds.” Though it’s interesting to see this type of analysis, the findings don’t surprise me.
Left Leaning Investors Invest Less In The ’Sin’ Stocks, by Lisa Mahapatra, January 7, 2013, Business Insider, USA.

Climate Institute Selects Australia’s Local Government Super Fund Of NSW As World’s Top Green Retirement Fund. – [COMMENTARY] “The superannuation fund for 90,000 current and former NSW council employees, Local Government Super has been named the world’s No.1 ’green’ retirement fund, after collecting a swag of awards for its sustainable investment strategies in the past few years. LGS, which manages $6.5 billion in funds, was deemed to be the best fund in a survey of 300 big retirement funds by the Climate Institute’s first global asset owners disclosure project.” Congratulations to the Super Fund of New South Wales for their dedication to sustainability and for their performance.
Super fund tops sustainability poll, by Harvey Grennan, January 8, 2013, The Sydney Morning Herald, Australia.

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