Beyond Meat initial public offering (IPO) share price soars over $80 from $25 surprising everyone and encouraging offerings that could excite ethical and sustainable investors. Learn how to find animal-friendly investments. UN agency PRI says socially responsible investing (SRI) should wake up to modern slavery. Unilever better investment over Johnson & Johnson says sustainability analyst.
Transcript & Links May 10, 2019
Hello, Ron Robins here. Welcome to my podcast Ethical & Sustainable Investing News to Profit By! for May 10, 2019. Presented by Investing for the Soul. investingforthesoul.com is your site for vital global ethical and sustainable investment resources.
Now to this podcast. Again, for any terms that are unfamiliar to you, simply Google them!
Also, you can find a full transcript, live links and sometimes bonus material at my podcast page located at investingforthesoul.com/podcasts
Many of you listening are interested in ESG or SRI bond and fixed income investments. And with good reason. A recent article titled, Largest 10 Socially Responsible Fixed Income ETFs, by Todd Shriber of ETF Trends, reviews two leading funds in this space. They are the iShares Global Green Bond ETF (on Nasdaq GM: ticker BGRN) and VanEck Vectors Green Bond ETF (on the NYSEArca: ticker GRNB). These bond funds have great pedigrees.
However, the article’s title might suggest the review is of ten SRI fixed income ETFs and that’s a little misleading. Concerning the ten listed—but not reviewed—I wouldn’t put them in the same category as the two funds examined in the article.
The SRI credentials of the ten listed are mainly that they invest in government securities and blue-chip company bonds. Of course, governments fund all sorts of things that ethical and sustainable investors might argue aren’t socially responsible. And even though blue-chip companies such as Apple are frequently top SRI holdings, their bonds aren’t usually going directly to fund green projects.
Whereas, the iShares Global Green Bond ETF and VanEck Vectors Green Bond ETF specifically fund projects and activities related to environmental and social concerns.
Well, I can’t resist the temptation to not talk about the great Beyond Meat initial public offering! It came out at $25 on May 2 and has traded over $80 since then. For a good review of what the company is and what it faces regarding competition etc., see this MarketWatch post, Beyond Meat goes public with a bang: 5 things to know about the plant-based meat maker, by Ciara Linnane.
Quoting Ciara, she says, “The maker of the Beyond Burger, which is sold at Whole Foods and restaurant chain TGIF, among others, priced its initial public offering at $25 a share… raising at least $240 million at a valuation slightly shy of $1.5 billion.” Close quote. Now at $80 a share Beyond Meat has a staggering market valuation of about $5 billion!
I’m delighted to see this offering, as one of the most important things we can do to slow down carbon emissions and climate change, is to reduce our consumption of meat. However, some climate researchers are skeptical about the net benefit of highly processed vegetarian and vegan offerings on the climate.
That this IPO went so well is a testament to the fact that even many conservative financial types are recognizing there’s money to be made in climate change. However, I suspect that most of the interest probably comes from younger investors.
Furthermore, this could indicate the beginning of a thrilling era for new investment offerings that ethical and sustainable investors can get excited about!
Obviously, the underwriters significantly underestimated demand for Beyond Meat’s shares. When IPOs triple in price right after being launched it means that the issuer—the company—could have gotten far more for their shares. Though Beyond Meat is probably happy, they’re probably unhappy that they could’ve raised double or triple of what they got!
So, Beyond Meat is an exciting short-term play but with so many competitors to its products over the medium to long-term, it’s not obvious it will be a winner yet.
For a good review of what Beyond Meat’s success means for two burger chains offering vegan burgers, see this post, titled, Tim Nash’s sustainable stock showdown: battle of the burger chains, Corporate Knights, Canada. Admittedly this review is of the Canadian market, but it has bearing on the US and other markets too. Of course, Americans or anyone can invest in the Canadian stocks of the burger chains mentioned in that post.
After a great review, Mr. Nash finalizes his recommendation as follows, and I quote, “A&W Food Services of Canada (which has no corporate connections to A&W’s American locations) is obviously a much smaller company than Restaurant Brands, but… with a higher dividend and a lower beta, A&W provides a nice mix of income and growth potential. The chain is the clear winner.” Close quote.
Now, for ethical and sustainable investors interested in the animal-friendliness of their investments, read this article by Meredith Jones of MarketWatch, titled, Opinion: Here’s how to check the animal-friendliness of your investments. Quoting her, she says, “It’s easy to check which individual stocks are ‘cruelty-free,’ but you can’t yet invest in a vegan investment index.” She offers several ways to checking which investments are free of animal-related products and testing.
If you’re interested in finding more organizations that can help you in this endeavor, check-out my Investing for the Soul sites’ pages Environmental Organizations & Resources and Organizations Promoting Corporate Ethical, Social & Environmental Responsibility.
Turning to a completely different aspect of investing, let’s talk about separately managed accounts at financial institutions compared to owning a portfolio of ETFs. Now separately managed accounts aren’t for everyone as they usually require a sizeable investment. However, if you meet the threshold they could be better for US investors than ETFs, says Johny Mair at ThinkAdvisor.
Mr. Mair says in an article titled, ETF vs. SMA: Which Is Better for Sustainable Investing? That, and I quote, “SMAs are ideal for values-based investing as they allow investors to actively screen for certain product areas (e.g. oil, tobacco), or ‘bad actors’ that they deem antithetical to their values. They also allow for more specificity, e.g. designating a certain percentage of revenue from carbon emissions to be included in one’s portfolio.
Furthermore, because SMA investors directly own the underlying securities, they can opt to play an active shareholder role, working to impact corporate behavior through voting proxies or shareholder resolutions.” End quote.
Of course, for those who might not have the means for an SMA—or even for those who do—check out my DIY Ethical-Sustainable Investing Pays Tutorial. There, in 1-hour you can get a handle on how to easily and very cheaply put together your own personal values-based profitable portfolio—nonmatter its size.
In looking for companies we all want to know about their ESG ratings. However, you might not be aware of which ESG rating firms are good. Well, a new report reviews the various ESG rating services. Go to this recent post in IR Magazine, headlined, ESG Ratings – A look at the ESG ratings landscape. Register at the bottom of the page to download the PDF report.
Ethical and sustainable investors are concerned with many issues, but one that they might not have thought of and which is still a global problem is modern slavery. Fiona Reynolds, head of the UN’s Principles of Responsible Investment (PRI), says that ‘“There are a lot of ESG conversations around climate change … but it is interlinked with modern slavery,’ Reynolds told the Thomson Reuters Foundation in an interview. ‘We see many climate migrants and refugees who end up vulnerable and at risk of being trafficked,’ she added.” Close quote.
Another quote from the article states, that, “The U.N. estimates that some 40 million people are trapped in modern slavery, from factory jobs to forced marriages.” End quote. Perhaps it’s something you might ask the companies you like who might have the potential for such involvement.
The Reuters post is by Kieran Guilbert and titled, ‘Look for the laggards’ – investors told to target modern slavery.
Lastly, another good comparative analysis by Tim Nash at Corporate Knights for ethical and sustainable investors has the title, Tim Nash’s sustainable stock showdown: Johnson & Johnson vs. Unilever. He says, and I quote,” With thousands of J&J cancer lawsuits pending, you might want to freshen up your portfolio with a cleaner company… J&J and Unilever are companies with very similar financial profiles, but, in my view, Unilever’s brand is thriving while Johnson and Johnson’s is deteriorating.”
For decades, J&J has a been a favorite investment for ethical investors—but not so much anymore as Mr. Nash’s post makes clear. Yet, most ESG funds still have it in their holdings. Check your holdings and see. Perhaps you still like J&J for other reasons. However, at the very least, these lawsuits and the negative publicity surrounding them is proving costly to the firm’s bottom line and stock price.
So, these are my top news stories for ethical and sustainable investors over the past two weeks.
Again, to get all the links or to read the transcript of this podcast and sometimes get additional information too, please go to investingforthesoul.com/podcasts and look for this edition.
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