Impact investing—funding that supports efforts that both improve the social good and deliver a reasonable ROI—just got a big boost from the Ford Foundation. In the largest commitment of its kind by a private foundation, Ford is committing $1 billion from its $12 billion endowment over the next 10 years to mission-related investing.
From the Editor
“In our view, the health care industry is now currently embarking on a radical “Copernican Revolution.” So says an article in MedCity News. You remember Copernicus—he’s the one who proposed a model of the universe that put the sun, not Earth, at its center. The thesis of the article is that a similar paradigm shift is underway in the healthcare sector, one that puts the patient-customer at the center rather than the provider.
BlackRock, the world’s largest money manager with total assets of $5.1 trillion, is changing its investment strategy, driven by technological innovation. The firm is reducing its actively-managed equities business in which portfolio managers serve as stock pickers in favor of computer models that inform indexed investments via data and algorithims.
In 2004, at an event at the Center for Investigative Reporting in Berkeley recognizing the 50-year career of Frank McCulloch, a pioneering investigative journalist, I asked the honoree what was holding back wider recognition of environmental issues. With typical ex-Marine, investigative reporter bluntness, he said: “The case hasn’t been made to the public.” Since then, there has been a media tsunami of information about the environment, "making the case," but clearly, progress has been partial.
The administration is proposing to eliminate business regulations to accelerate economic growth. The Financial Choice Act of 2016 aims to dismantle the Dodd-Frank Act, which wrote into law new governance rules in reaction to the financial crisis of 2008.
The 2017 rankings for national “happiness” have been released, and the ratings prove that economics play a major part in scoring that quality. The report, published by the UN Sustainable Development Solutions Network, defines national happiness as “the proper measure of social progress and the goal of public policy.” Countries were rated on factors from freedom to health, from good governance to income. The Number One spot went to Norway.
The Ethisphere Institute has issued its annual list of the “World’s Most Ethical Companies” for 2017. “Ethical” is a term you’ll hear more in the UK and EU, as in Ethical Performance (our UK/EU web site) and the Institute for Business Ethics, a UK research and consultancy firm that reviews the journalistic case studies we publish in our Best Practice publication.
Recent news about solar power has been mixed. Some reports tout its increasing adoption and job growth, others express concerns about an uneven market and the uncertain future for subsidies. Here’s some decidedly upbeat news.
US companies are moving toward an increasingly concentrated market and are scooping up a larger percentage of profits, according to research summed up in the Wall Street Journal. “Twenty years ago, the US had more than 7,000 public companies; today, it’s less than 4,000.” In 1996, “the 25 companies in the S&P 500 with the highest net profit margins earned a median of just under 21 cents on every dollar of sales.
Autodesk, the software company, has published a special edition of Redshift, its publication “dedicated to telling stories about the future of making things in the architecture, infrastructure, construction, and manufacturing industries.” The current issue of the downloadable booklet, How 7 Companies Do Good Well, expl
Regulatory rollbacks, along with proposals to cut the budget of the regulating EPA by 24% and its staff by one-fifth, have energized values-driven investors. Since the November election, ESG investors have put $383 million into ESG stock funds, according to EPFR Global, quoted in a recent Barron’s article. Barron’s says ESG factors “could prove especially useful in evaluating companies if the administration rolls back regulation.” Transparency could be another issue.
How is mandated CSR working in India? In 2013, it became the first country to require CSR from corporations with revenues of more than $130 million in the form of giving two percent of their profits to charities.
Can you identify the area of finance that assumes as a basic principle “the just, fair, and equitable distribution of income and wealth?” If you guessed Islamic finance, you’re right. What's more, global Islamic finance in predominately Muslim countries throughout Africa and Asia now represents $1.9 trillion in assets, according to ImpactAlpha. This treasury was acquired through asset-based financing of tangible assets and communal risk sharing.
The good news in the European Commission’s “Second Report on the State of the Energy Union” has almost been lost amid the angst over the future of the European Union.
US retailers are concerned about a potential “border adjustable” tax that could dramatically affect business. CEOs and executives of Target, Best Buy, Gap, J.C. Penney, Walgreens Boots Alliance, Autozone, Jo-Ann Fabric, Craft Stores, and Tractor Supply, among others, have met with President Trump to argue that a tax on imports under discussion by the House would cause serious damage to their bottom lines. The retailers believe that the proposal would result in a rise in prices for US consumers, according to the Wall Street Journal. Mr. Trump’s position on the idea is not clear.
As socially responsible investing grows in popularity, experienced investors are looking deep into the details of investing in values without sacrificing performance. A recent article on Seeking Alpha by TDP Research outlines an investment professional’s experience with SRI, including a description of some very detailed criteria. One tip: this advisor focuses on stocks included in a handful of exchange traded funds, including the MSCI KLD 400 Social ETF.
Prominent conservatives have issued a call for a carbon tax to address climate change.
Here’s the good news: women and minorities have achieved the highest level of seats yet on Fortune 500 boards: 31%, according to the latest edition of a study that has tracked board diversity for the last six years. Thirteen years ago, that percentage was 28.8%, which underlines the slow rate of progress.
President Trump's immigration order has caused a dramatic rise in the number and kind of businesses that have issued statements about values. The shift includes companies that have rarely, if at all, made declarations about public policy. The tech sector, notably globalist and peppered with founders and CEOs who are immigrants and/or refugees, took the lead: Google, Apple, Microsoft, and Facebook spoke up. Expedia, Amazon, Uber, Lyft, eBay, Etsy, Starbucks, and Airbnb also piped up.
When India passed the Companies Act in 2013, a law that required large companies to spend at least two percent of their average net profit of the past three years on CSR activities, the jury was out on whether a CSR mandate could produce results. Now, the numbers for 2016 are in—and they’re encouraging. Spending rose by 22% over the previous year; total FY ‘16 spend was over $2 billion, a rise of $368 million. 1,505 companies—30% of the 4,887 firms listed on the Bombay Stock Exchange—met the standard for mandatory spending.