UN Principles for Responsible Investment: 800 Signatories, $20 Trillion

By: Steve Schueth

According to newly updated information on the UNPRI website, there are now 803 signatories to the global Principles for Responsible Investment.  Of these, 208 are asset owners, 440 are investment managers, and 155 are service providers.

The Principles were launched in April 2006 by then UN Secretary General Kofi Annan at the New York Stock Exchange.  First Affirmative signed on in June of 2006.

“Reaching 800 signatories with more than 20 trillion dollars in assets after four years is a great achievement for the PRI,” UNPRI Executive Director James Gifford told Responsible Investor.

The Principles are designed to encourage the investment community to incorporate ESG issues into their investment framework.  Members declare:  “As institutional investors, we have a duty to act in the best long-term interests of our beneficiaries.  In this fiduciary role, we believe that ESG issues can affect the performance of investment portfolios (to varying degrees across companies, sectors, regions, asset classes and through time).  We also recognise that applying these principles may better align investors with broader objectives of society.”

With the growth the UNPRI has experienced in recent months, it is very possible that ESG / sustainable investing can grow to become the single biggest influence upon investment approaches and stock selection analysis in the 21st Century.

The UN Principles for Responsible Investment are pragmatic, voluntary, and aspirational.

Steve Schueth
President
steveschueth@firstaffirmative.com

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This entry was posted on Wednesday, September 1st, 2010 at 9:56 am You can leave a response, or trackback from your own site.

 

Natural Gas Drilling Method Poses Environmental Risks

By: Christie Renner

Oil and gas are fossil fuels—non-renewable resources made more than 300 million years ago. Since their supply is limited to what’s already in the ground, they will run out. As the global stock of fossil fuels diminishes, reaching the remaining reserves becomes more difficult. As we’ve seen with the BP oil spill, drilling—whether for oil or gas—is getting deeper and riskier.

Just as deepwater drilling for oil has been on the rise as a percentage of total oil production, drilling for natural gas is also becoming a more intensive industrial process. To get to natural gas reserves deep in the earth’s crust, companies use a process called hydraulic fracturing, or hydrofracking, a process whereby bedrock is cracked to release natural gas bubbles that can be captured and sold.

Investors are becoming increasingly concerned about the chemical fluids used in the fracturing process—mixes of water, particles, and chemicals that are injected into fissures thousand of feet below ground. What happens to these chemicals after the fracturing is done? Are they turning up in drinking water? A single well may use more than 40,000 gallons of fracturing chemicals mixed with every million gallons of water. Many wells in the Marcellus Shale in Pennsylvania and New York use several million gallons of water apiece.

The potential fracturing chemicals have to contaminate entire watersheds and aquifers could have devastating impacts on community health, farming operations, and investor returns. Good business practices often depend on effective regulation. And effective regulation must rely on sound scientific research. However, it’s difficult for scientists to study the potential hazards of toxic chemicals when chemical names and concentrations are kept secret. Thus, corporate disclosure is a critical first step.

The Environmental Protection Agency (EPA) embarked this year on a congressionally mandated study of the risks hydraulic fracturing presents to drinking water. But a study of this magnitude takes many years. While it’s better late than never, in the meantime, the industry is largely free to continue along with a business-as-usual mindset.

Green investors are demanding more—greater disclosure, better research, less toxic chemicals, and effective regulation. Communities have a right to know the life-cycle impacts of the chemicals companies are using in their watersheds, and shareholders have a right to know the risks to their portfolios. Some companies are stepping up, with Range Resources announcing in July that it will voluntarily disclose the chemical additives it uses in the Marcellus Shale.

According to the Energy Information Administration’s Annual Energy Outlook 2009, Natural gas extracted from shale by hydrofracking is estimated to contribute over 20% of the U.S. gas supply by 2020. While natural gas burns cleaner than coal or oil, it still releases methane, a greenhouse gas, and it is still a non-renewable resource. No matter how many improvements can be made in the safely of hydraulic fracturing, a transition to renewable energy remains critical to our economic future.

NOTE: Mention of specific companies or securities should not be considered a recommendation to either buy or sell that security.  For information regarding the suitability of any security for your investment portfolio please contact your financial advisor.

This entry was posted on Monday, August 23rd, 2010 at 9:58 am You can leave a response, or trackback from your own site.

 

Power of the Proxy

By: Steve Schueth

What gets measured gets managed.  When investors vote their proxies in support of greater transparency around environmental, social, and governance (ESG) risks and opportunities, we can send a strong message about what we would like to see companies measure and manage.

Proxy voting is a frequently overlooked aspect of owning company stock.  Voting proxies can be empowering for clients, and offering assistance in proxy research can provide a competitive advantage for some investment advisors.

With the 2010 proxy season substantially behind us, green investors are celebrating victories on many fronts.  There have been dozens of successful dialogues and engagements, ESG related resolutions have fared well as vote counts have been tabulated, and we have seen the federal government come out in support of greater corporate disclosure on ESG issues.

More and more investors are waking up to the idea that sustainable and responsible investment criteria are critical indicators of reputational and financial risk.  Whether investors seek information regarding a company’s environmental impacts, climate change risk mitigation strategies, executive compensation policies, or any other number of issues—greater transparency is the common theme.

While most independent financial advisors have limited capacity to develop advocacy programs of their own, we can stay on top of the trends and become an information source and educator for our clients.  While roughly 30% of shares are held by retail investors, fewer than half of those shares are voted.

First Affirmative offers proxy voting for all clients based on a set of criteria that reflects the social and environmental priorities of most of our clients.  For investors wishing to vote their own proxies in line with ESG criteria, there are some new services available:  Moxy Vote offers free proxy research and allows registered users to actually vote their proxies and submit their votes online; Proxy Democracy also offers free research and will show you how various mutual funds are voting the shares held in their funds.

Collectively and individually, shareowners are finding ways to engage companies on the issues that are important to them.  Advisors who serve social investors have an important duty to either climb the proxy voting learning curve or refer their clients to appropriate outside resources.  One of the best ways to begin learning is to begin voting!

For the full length version of this article please visit:  http://www.fa-mag.com/component/content/article/5890.html?magazineID=2&issue=149&Itemid=125

NOTE: Mention of specific companies or securities should not be considered a recommendation to either buy or sell that security.  For information regarding the suitability of any security for your investment portfolio please contact your financial advisor.

Steve Schueth
President
steveschueth@firstaffirmative.com

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This entry was posted on Thursday, August 5th, 2010 at 1:30 pm Both comments and pings are currently closed.

 

Top CEOs Focus on Sustainability

By: Sara Laks

A recent survey by the United Nations Global Compact and Accenture, “A New Era of Sustainability,” found that a majority of today’s most influential chief executives recognize that sustainability is crucial to corporate success.  Over 750 CEOs were interviewed, making this the largest survey of top level executives on the topic of sustainability.  The understanding that sustainability—a reconciliation of environmental, social, and economic demands—is no longer a separate concern from profitability has made its way into the core decision making of mainstream corporate boardrooms.

The adoption of sustainable practice by top level executives has taken a major jump in recent years; a similar survey conducted in 2007 reported that only 50 percent of CEOs considered sustainability issues in corporate strategy and core practices, as compared to 81 percent in 2010.  According to many CEOs in the 2010 Accenture and UN survey, the economic downtown in the past few years has reinforced the logic of “going green” by raising the importance of cost efficiency and the need to reach new markets.  Corporate responsibility is required to regain the trust of stakeholders in the wake of the grave consequences of corporate irresponsibility.  With more scrutiny than ever by investors, CEOs believe that now is the opportune time to take a lead on responsible management of the impacts that their businesses have on society and on the planet.

Despite the momentum at the strategy level today, CEOs still face several barriers to full implementation of sustainability goals.  One of the major obstacles cited in the 2010 survey was the complexity of implementing across business functions (49 percent).  The level of interconnectedness of today’s business world necessitates applying standards of social responsibility and environmental sustainability to global supply chains and subsidiaries.

A lack of recognition in the financial market was identified as another hurdle.  Eighty-six percent of CEOs said “accurate valuation by investors of sustainability in long-term investments” is crucial.  Getting investors to be aware that sustainability is good for the bottom line is seen as a necessary step in reaching the tipping point for sustainability.

CEOs overwhelmingly testify that sustainable practice has tremendous value-add power in terms of cost reduction, risk reduction, and enhanced brand repudiation.  But the translation of this into traditional economic metrics has been slow, with fewer than 50 percent of respondents reporting that sustainability issues came into play in consultations with financial analysts.

Here is some good news:  54 percent of respondents said that fully integrating sustainable practice across the business would be a reality in less than a decade, while 81 percent saw this happening in less than 15 years.  And there is more good news:  91 percent of CEOs say their companies are working to employ new technologies to address sustainability issues, such as renewable energy technologies or developing greater energy efficiency.  Education and climate change were the most commonly cites challenges top executives face today to future success.  To most effectively tackle these global challenges, 78 percent of respondents said that companies should engage in partnerships with a variety of stakeholders to address sustainability issues citing examples of collaboration with NGOs, governments and suppliers.

The bottom line here is that responsible business is good business and that those who remain slow to recognize this alpha value will fall further behind their competitors.  It’s now coming straight from the top; the global economy is in transition to a new business model that will reward companies that embrace sustainability as a competitive advantage.

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This entry was posted on Friday, July 9th, 2010 at 8:40 am Both comments and pings are currently closed.

 

High Demand for Base Camp SRI New York

By: Sara Laks

The one-day BaseCamp SRI scheduled for June 16th at the Lighthouse Executive Conference Center in New York is expected to sell out.  This is the first time we have had such high demand for this event—further indication of the growing interest in sustainable and responsible investing.

The New York BaseCamp agenda reflects some of the most pressing issues of the day.  For example, the session titled, “Have the Recent Gulf Oil Spill and Coal Mine Disasters Enhanced the Prospects for Improving Corporate Transparency?” will discuss responsible investing in the context of the recent BP and Massey Energy disasters.

Catastrophes such as these are clear evidence that safety and environmental issues are material considerations for all investors—or should be.  As more and more investors are waking up to the idea that sustainable and responsible investment criteria are critical indicators of reputational risk, can we use these debacles to convince the regulators to require more, badly needed disclosures?

Another New York BaseCamp session will focus on portfolio performance.  Can socially conscious investors really make money while directing investment capital in more positive, healthy, and transformative ways?  Of course they can.  In this session, we will review the data that support the assertion.

The next BaseCamp SRI event will be held on July 15, 2010 at Ray’s BoatHouse in Seattle, Washington where we are also expecting a capacity crowd.  The momentum generated by the five 2010 BaseCamps (San Francisco, Portland, Denver, New York, and Seattle) will carry us through to the Summit Camp November 16-18 in San Antonio, just prior to the 21st annual SRI in the Rockies Conference.

Summit Camp is designed specifically for licensed investment professionals who work with or wish to work with socially conscious individual and institutional investors.  Summit Camp will offer education, insights, leadership training, and multiple opportunities to network, share experiences, and compare notes with like minded investment advisors from all over the country.

With demand as high as it’s ever been, we anticipate that this year’s Summit camp may also sell out.  So please start making your plans to join us this November in San Antonio!

Sara Laks
Assistant to the President
saralaks@firstaffirmative.com

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This entry was posted on Friday, June 11th, 2010 at 10:34 am Both comments and pings are currently closed.

 

Investors File Record Number of Climate Change Resolutions

By: Christie Renner

Increasing numbers of investors are successfully engaging in dialogue with companies on the risks of climate change. When engagement is unsuccessful, some investors are filing shareholder proposals to be voted on at company annual meetings.

Very few investors attend the annual stockholder meetings of the companies in which they hold shares. Most investors who want their voices heard in the company board room vote their proxies. Any shareholder that meets certain requirements can place a shareholder resolution on a company ballot to raise awareness about a particular issue among a wider base of the company’s shareholders.

The 2010 proxy season has seen a record 95 climate-related shareholder proposals filed by investors at 82 U.S. and Canadian companies. According to the Investor Network on Climate Risk, this represents a 40% increase over the number of climate-related resolutions filed last year and demonstrates the increasing concern investors have about climate related risks to their investments.

First Affirmative co-filed five of the resolutions on the list, including resolutions requesting that RR Donnelley adopt a sustainable paper purchasing policy, that Aqua America produce a sustainability report, that Kroger assess and manage climate risks to its supply chain, and that JPMorgan Chase review its implementation of the Carbon Principles. (The resolution filed at JPMorgan Chase has been withdrawn following successful negotiations.) First Affirmative also co-filed a resolution filed by the California State Teachers’ Retirement System (CalSTRS) at ConocoPhillips requesting a report on the environmental damage that would result from expanding oil sands operations in Alberta, Canada’s boreal forest.

In January of this year, the Securities and Exchange Commission (SEC) issued interpretive guidance for companies on what they should report related to climate risks and opportunities. This SEC guidance reflects a growing recognition that climate change may pose significant business risks for many corporations and significant opportunities for others. Most importantly, the SEC is acknowledging that investors need to know about climate related risks and opportunities.

In early March, 56 treasurers, comptrollers, controllers, institutional investors, and asset managers representing $2.1 trillion in assets, sent a letter to the SEC showing their strong support of the Commission’s new guidance. Read more about the SEC guidance on First Affirmative’s blog, or read the official document.

Note: Mention of specific companies or securities in this blog should not be considered a recommendation to either buy or sell that security. For information regarding the suitability of any security for your investment portfolio please contact your financial advisor.

Christie Renner
First Affirmative Financial Network
christierenner@firstaffirmative.com

This entry was posted on Monday, April 12th, 2010 at 8:16 am Both comments and pings are currently closed.

 

BaseCamp Conference Series Kicks Off in San Francisco March 23rd

By: Steve Schueth

On March 23, 2010, First Affirmative Financial Network will kick off a series of BaseCamp SRI events for investors and investment professionals who work to direct the flow of investment capital in responsible, sustainable, and transformative ways.

The five-city series starts in San Francisco on March 23rd, with subsequent stops in Portland on April 20th, Denver on May 12th, New York on June 16th, and Seattle on July 15th. The 2010 BaseCamp SRI series will culminate with the Summit Camp to be held the JW Marriott Hill Country Resort & Spa in San Antonio, Texas on November 16th. The Summit Camp will precede the 21st annual SRI in the Rockies Conference that begins on the 18th at the same location.

Whether it’s called responsible investing, sustainable investing, or green investing, there are many ways for investors and investment advisors to devise more positive, healthy, transformative investment strategies. A day at BaseCamp SRI offers information you can put to use the very next day.

As the producer of the annual SRI in the Rockies Conference, the premier annual gathering of the sustainable and responsible investment industry in North America, First Affirmative is uniquely positioned to assist in the professional growth of socially conscious investors and the financial professionals who serve them. We have structured our regional BaseCamps to offer insights about critical and controversial global issues that responsible investors most care about. BaseCamp SRI is designed to help participants:

  • Understand the valuable resources available to socially conscious investors and their investment advisors,
  • Articulate the concept of combining social responsibility with investment performance, and
  • Provide in-depth information on important issues that can affect investment decisions, portfolio risk, and profit opportunities.

BaseCamp participants pay a nominal $20 per person entry fee, which is waived for subscribers to First Affirmative’s 2010 Member Services Program, or for anyone bringing a qualified participant to the event. More information about attending a 2010 BaseCamp is available at http://basecampsri.firstaffirmative.com/ or by contacting BaseCamp Coordinator Danielle Burns at danielleburns@firstaffirmative.com.

BaseCamp SRI is an excellent destination for advisors and planners who want to get to the top of this growing market. There’s no need for anyone to go solo and, to continue with the climbing metaphor, the view from the summit is magnificent!

Lunch will be served, thanks to the support of sponsoring organizations: Calvert, Pax World Investments, Green Century Funds, Folio Institutional, Calvert Foundation, MMA Praxis Funds, and Parnassus Investments.

Steven J. Schueth
President
steveschueth@firstaffirmative.com

This entry was posted on Friday, March 19th, 2010 at 11:18 am Both comments and pings are currently closed.

 

 

Call for Agenda Proposals, 2010 Conference

By: Steve Schueth

Each year at the SRI in the Rockies Conference, participants have the opportunity to mix and mingle with thought leaders from inside and outside the sustainable and responsible investment industry who are working to direct investment capital in more healthy, life-affirming, and transformative ways.

The annual search for outstanding sessions and speakers for the premier SRI industry conference has begun. We encourage you to consider submitting a proposal for this year’s conference agenda (agenda RFP).

Deadlines for submission to the Agenda Committee:

     Plenary Session/Speaker Proposals:  January 29, 2010

     Breakout Session Proposals:  February 12, 2010

SRI in the Rockies has twenty years of experience hosting speakers from all over the world who share their expertise with the passionate, creative, pioneering investment professionals who make up the SRI community. Help us make the 21st annual SRI in the Rockies Conference the best ever!

You can follow these links to view the conference agendas from 2009 and 2008.

We hope to see you at the 21st annual SRI in the Rockies Conference, November 18–21, 2010 at the JW Marriott Hill Country in San Antonio, Texas.

Put SRI in the Rockies on your calendar NOW.

Questions? Contact Krystala Kalil, Conference Coordinator at 888-774-2663 / Krystala@SRIintheRockies.com.

This entry was posted on Monday, January 4th, 2010 at 1:44 pm Both comments and pings are currently closed.

 

Best Wishes for a Happy, Healthy and Prosperous New Year

By: Steve Schueth

Best Wishes from SRI in the Rockies 20091224

This entry was posted on Thursday, December 24th, 2009 at 10:02 am Both comments and pings are currently closed.

 


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