Tuesday, June 7, 2011

Investing in a world without oil

Portfolio 21 is a unique investment management firm based in Portland, Oregon.  I recently wrote a book chapter reviewing their business practices for the upcoming book "Investing in a Changing World", to be published by Wiley in late 2011.  It is such a fascinating approach to investing that wanted to share some excerpts from my interview with Portfolio 21 Director and Co-Founder, Carsten Henningsen.

What sets Portfolio 21 apart from many investment managers that I’ve come across is that they apply the principles of The Natural Step and The Global Footprint Network to their investment process.  As a result, Portfolio 21 does not invest in any mining, oil or gas stocks. Not one.  And it still performed relatively well compared to its benchmarks.

Wednesday, March 30, 2011

Democratizing Canadian Corporate Governance

The Ontario Securities Commission (OSC) recently posted a notice seeking feedback on some key shareholder democracy issues: slate voting for directors, majority election of directors, and shareholder voting on CEO pay ('say on pay').  Why are these issues important?  Well, imagine if you couldn't directly vote for your Member of Parliament, but had to vote for a group of members, including some candidates that you support, but some that you don't?  If you were dissatisfied with your representative, there would be no way of voting that person out of office without voting against the entire group.

Currently, some companies in Canada still adhere to slate voting for boards of directors.  This means the owners (i.e. voters) are forced to vote against the whole slate if they are dissatisfied with only one member.  It is totally inefficient.  Some companies also continue to allow directors to be elected even if they do not receive majority support from the shareholders.  This is an outdated practice that needs to be changed.  And finally, CEO pay has been outpacing the salary of the average citizen and in some cases has no bearing on corporate performance.   Allowing shareholders to vote to approve the CEO's pay check every year helps establish greater corporate accountability, and helps link executive compensation practices to shareholder expectations and corporate performance.

Here is my short but sweet submission calling for the OSC to strengthen corporate governance standards in Canada:

Friday, March 25, 2011

The Great Divestment Debate

I recently gave a keynote speech to the British Columbia Teachers' Federation Social Justice Committee on the topic of Pensions & Ethical Investing.  One of the issues I talked about was the issue of divestment and negative screening.  Its a controversial topic that often gets a lot of attention, and so I thought I would share some of my thoughts which I outlined in my speech.

I find that often when we talk about responsible investing, people get stuck on the issue of divestment.  They think that the ONLY way you can take a stand on an issue and be a responsible or ethical investor is by dumping your stock in the company in question.  This is problematic because divestment is positioned as a very black and white issue, when in fact there are many shades of gray.  There are many strategies available to responsible investors - such as ESG Integration, positive screening, and shareholder engagement (see my previous blog The ABCs of ESG for more information on these strategies).

Monday, February 28, 2011

CEO Pay and Political Lobbying Top the Proxy Agenda

Last week I participated in the 2011 Proxy Preview webinar hosted by As You Sow and the Sustainable Investments Institute (SI2). There are some interesting topics on the agenda this year, so I thought I'd give you a preview of the proxy voting trends for 2011.

For the beginners, first thing is first, what exactly is proxy voting?  Proxy voting is an important tool for investors to exercise the rights and responsibilities that come with owning shares in a company.  Every year, shareholders of publicly traded companies get to vote on key issues such as the election of directors, appointment of auditors and other corporate governance matters.  Shareholders also vote on shareholder proposals, which are simply formal requests submitted by fellow shareholders asking companies to take an action, or adopt a policy. Voting on environmental, social and governance (ESG) shareholder proposals sends an important signal to companies about what issues are important to investors, and can often help focus a company's attention on critical improvements it needs to make. 

Thursday, February 17, 2011

SIO zeros in on barriers to growth

This post first appeared as a Guest Blog by Eugene Ellmen on SRI Monitor.

With an annual budget of less than half a million dollars and a staff of three, the resources of the Social Investment Organization (SIO) are limited. Yet the needs of the SRI industry are considerable. There is significant retail demand and growing institutional interest SRI, but there is also a stubborn lack of awareness by key gatekeepers. This problem is proving to be a major barrier to industry growth. As the industry’s trade association, the SIO has a mandate to identify these barriers, and to advance solutions to overcome them.

In its most recent annual strategic plan, the SIO Board identifies these barriers in terms of three key stakeholder groups; the public and financial industry stakeholders, the institutional sector and the retail sector.