Responsible investment news and comment CCB 113

Comment by Megan DeYoung for August / September CCB 113.

Many companies waited with baited breath for SAM, in partnership with Dow Jones Indexes, to reveal the 2010 composition of the Dow Jones Sustainability World Indexes (DJSI). On September 9 when the announcement was made, companies were either patting themselves on the back or asking themselves why they didn’t make the cut.

Regardless of whether a company made DJSI, this is a time to become introspective, honestly assess gaps, and push for further improvement. DJSI gathers information from companies that is often not publicly available and has a comprehensive view about what makes a company a good investment; specifically robust processes and performance related to environmental and social as well as economic areas. This philosophy makes DJSI unique and an impetus for genuine strategic, long-term citizenship – not just another accolade.

Corporate responsibility practitioners often have difficulty getting the attention of the business units and helping connect the dots between what different areas of the company do and citizenship. DJSI helps spell out this connection in a meaningful way. Practitioners can leverage the DJSI questions to talk to various people in the business about actions like developing a new policy, including corporate responsibility in performance evaluations, and revising an emerging markets strategy.

As a company dives into specific activities, corporate responsibility teams are in charge of both pulling together all the various components which fall under the CR umbrella, and keeping in mind the company’s overarching strategy:
– Are we focusing appropriately on our biggest impacts?
– How effectively is citizenship embedded across our international operations?
– How strong is our measurement?
– Where can we improve our performance?
– How can we improve transparency?

In the months following the 2010 announcement, companies have an excellent opportunity to wave the citizenship flag internally. How many will grab this opportunity and run with it?

Megan is the Director of Corporate Citizenship’s US office. Contact her at megan.deyoung@corporate-citizenship.com to discuss strategy, community, consumer brands, reporting, and assurance.

Ethical Investment on the rise

The Investment Management Association’s (IMA) quarterly statistics issued on August 12 showed that net retail sales of ethical funds totalled £98 million in Quarter 2 2010. This is well above the average of the past four quarters and the highest net sales figure since Quarter 4 2007. Commenting on the IMA statistics, Adam Ognall, deputy chief executive of UKSIF, said ‘Investment in ethical funds has returned to levels not seen since the credit crunch took hold in 2007. It is a very positive sign that increasing numbers of investors want to make money and make a difference.’

Contact: Investment Management Association
www.investmentfunds.org.uk

SAM deepens cooperation with Dow Jones Indexes

SAM, the investment boutique focused on Sustainability Investing, is to deepen its eleven-year-old collaboration with Dow Jones Indexes by expanding its worldwide Sustainability Index offering. Under this joint marketing agreement, announced on August 18, Dow Jones Indexes will be responsible for calculation, marketing and distribution of the indexes including the European indexes, while SAM remains responsible for the component selections. As a result, SAM’s collaboration with STOXX Ltd., which had previously calculated the European STOXX Sustainability Indexes, has been terminated.

Contact: SAM
www.sustainability-index.com

Norwegian government blacklists Malaysian timber giant and Israeli firms

The Norwegian Ministry of Finance announced on August 23 that it has excluded two Israeli companies and one Malaysian company from the portfolio of the Government Pension Fund Global (GPFG). The Ministry decided to exclude Africa Israel Investments, Danya Cebus and Samling Global based on the Council on Ethics’ assessment that the companies are contributing to, or are themselves responsible for, grossly unethical activity. Africa Israel Investments is the parent company holding a majority stake in Danya Cebus, a construction company involved in developing settlements in occupied Palestinian territory. The Council on Ethics emphasized that construction of settlements in occupied areas is a violation of the Geneva Convention. The Ministry of Finance sold its shares in Samling because of evidence of systematic illegal logging and ‘extensive damage to forests and the environment.’

Contact: Norwegian Ministry of Finance
www.regjeringen.no

Responsible investors at heart of new integrated reporting project

Some of responsible investing’s best known names, such as APG, the UN Principles for Responsible Investment, Railpen and the International Corporate Governance Network, are involved in a new group looking at how to integrate ESG (environmental, social and governance) factors into corporate reporting. The International Integrated Reporting Committee(IIRC) was launched on August 2 by the Global Reporting Initiative and Prince Charles’ Accounting for Sustainability Project. It has the backing of top level figures in the accounting sector, corporates such as Microsoft and Nestlé, NGOs and academics.

Contact: International Integrated Reporting Committee
www.integratedreporting.org

Campaign urges investor action on oil companies unprepared for climate risks

Greenpeace and FairPensions launched a new campaign on 13 September, calling investors to ensure that oil companies identify and manage major risks, in the wake of BP’s Deepwater Horizon disaster. The campaign aims to enable individuals to ask questions through a new website at www.gobeyondoil.org and will involve a national advertising campaign. Greenpeace and FairPensions outline how there are worrying signs that oil companies will prove unprepared to deal with the challenges of global warming, with current strategies based on energy sector models which assume catastrophic climate change. For example, BP’s chairman at this year’s AGM used projections of oil demand based on an energy scenario which assumes no transition to a low carbon future and which experts say would result in a level of warming which would be catastrophic for the global economy. This has profound implications not only for BP’s own profitability, but also for the environment and energy security, with the potential to create a huge financial crisis that would destroy much of the value of pension investments.

Contact: FairPensions
www.fairpensions.org.uk

IN BRIEF

SAM and Dow Jones Indexes announce 2010 review results

SAM and Dow Jones Indexes announced the results of the 2010 annual review for DJSI on September 9. Following SAM’s largest global analysis of corporate sustainability leadership, 48 companies will join the DJSI World, while 46 firms will be deleted – resulting in a total of 318 index components. The largest additions (by free-float market capitaliSation) to the DJSI World include Standard Chartered, Morgan Stanley and ArcelorMittal while the biggest deletions (by free-float market capitaliSation) from this index are Toyota Moor, Royal Dutch Shell and UniCredit.

Contact: SAM / DJSI
www.sustainability-index.com