Socially Responsible Investing

Operating Responsibly: A Conversation With Patsy Doerr, Thomson Reuters’ Global Head Of Corporate Responsibility & Inclusion

Screen Shot 2016-05-03 at 10.12.13 AM By Allie Williams Project ROI Corporate responsibility is moving prominently into the mainstream of business and can now be measured and tied to ROI, or return-on-investment. Attendees at CR Magazine’s COMMIT!Forum on October 21, 2015 were treated to a Project ROI report presentation, which was spearheaded by IO Sustainability, a research and advisory services firm, and the Lewis Institute for Social Innovation at Babson College. They make the case for the ROI of corporate responsibility (CR), both anecdotally and quantitatively. The Project ROI report is a true partnership between these entities and its sponsors, Verizon and the Campbell Soup Company. Each sponsor is also included in the analysis. The authors gathered the data and demonstrated a framework about what it really means for a business to be “responsible” while delivering both “value” and relevancy by integrating a connection between CR (also called corporate social responsibility and sustainability) and ROI.

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Healthy, Wealthy and Wise: Beyond GDP

Some true indicators of human progress are absent from today’s economy   By Meghna Tare and R. Paul Herman   In 2010, Carmen Reinhart and Ken Rogoff published a study “Growth in a Time of Debt” that became one of the most famous, most talked about economics papers since the financial crisis. In an era of economic recession, it answered a basic question everybody was asking: How much debt is too much? They had a number: 90 percent.   According to their study, countries above a debt-to- GDP ratio of 90 percent grew much more slowly than countries below this ratio. It was all glory for these two Harvard professors until a 28-year-old grad student and his professors published a startling finding: Reinhart and Rogoff had made a simple Excel error in one part of their study. The authors of the new critique also questioned other elements of the study and argued that, in fact, there is no healthy debt threshold.   Countries are ranked by GPD or GDP-per-citizen, implying that countries with higher rankings are doing better overall than countries with lower rankings.

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What If Science Changed The World?

Two scientific breakthroughs that are potential game-changers
By Jeffrey Whitford
Our company, a supplier to scientists around the world, posed this question – What if science changed the world? – to raise consciousness and to get people thinking about how science has and will help society address the critical issues of our time, such as those posed by climate change.
As we thought about the implications of the question, it became clear that the thematic foundation of our 2013 Global Citizenship Report should focus on how we enable our customers to change the world on a daily basis.
As our sustainability journey has matured, we have realized the greatest impact comes not from within our own walls, but in enabling our 1.4 million customers,
in more than 160 countries, to help accelerate the
global sustainability revolution with new scientific breakthroughs.

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Financing education for today’s families and tomorrow’s employees

Can muni-bond investors help your firm by helping school districts perform better?

By R. Paul Herman, Srdana Pokrajac and Judi Brown

Where is your future workforce coming from? Will it be local to your company or will you need to “import” talent? Are your employees’ younger children and teens today in the best school districts?

If you live in McCall-Donnelly, ID, Beverly Hills, CA or Sanger TX, your school districts are performing quite well, according to the scoring of education-related outcomes. But if you live near San Diego CA, Chino Valley CA or Lebanon OR, then your employees’ children may not be in the most compelling learning environments, comparatively speaking.

As education discipline and culture—and the associated constructive competition—is established early in life, these are important questions to parents, but also to corporate citizens.

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Engaging Employees via Sustainable 401(k) Investing

Rating sustainability of individual retirement holdings

By R. Paul Herman, Yelena Danziger and Judi Brown

Every time you drink one liter of Coca-Cola, you consume 2.12 liters of water—if you account for Coke’s production process. That ratio is more water-efficient than a beer, but it’s still more than double what you may expect. To ensure its long-term sustainability, global beverage leader Coca-Cola has committed to improving its water efficiency and, by 2010, replenishing 100 percent of the water used in its retail products. At year-end 2012, Coca-Cola has reduced water intensity 21 percent since 2004.

How could Coca-Cola more deeply focus all of its 130,600 employees towards an even faster reduction in water usage? By showing its 68,000 participants in Coke’s 401(k) plan the water-efficiency ratios in their own investment portfolios.

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Better World, Better Portfolios

New research reveals sustainable, responsible, impact-focused portfolios can outperform traditionalinvesting

By R. Paul Herman and Srdana Pokrajac

More than $220 trillion is invested globally across all types of assets – stocks, bonds, real estate and more. When selecting how to invest this money for a portfolio, we can attempt to follow, the Nobel-prize winning theories taught in MBA programs, and reinforced by the media, that the capital markets are “efficient.” In other words, all the information needed for investors to make sound, attractive decisions is widely available and is swiftly incorporated in the prices of those assets.

However, are the theories actually true? Or is real life investing not optimal?

One example of this not-seemingly-rational market behavior that has left many “traditional investors” in awe is perhaps the high valuation of companies such as Twitter or Facebook when they go public.

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Just how sound is shareholder-value primacy?

Rethinking shareholder and company value

By R. Paul Herman and Srdana Pokrajac

The debate around shareholder-value primacy heated up at the end of February when a representative from conservative think tank National Center for Public Policy Research (NPCCR) asked the Apple (Nasdaq: AAPL) CEO Tim Cook to commit to act only for the benefit of shareholder return on investment (ROI), expressing concern that Apple’s investments in renewable energy might jeopardize company and shareholder value.

NCPPR questioned the soundness of Apple’s membership in the Retail Industry Leaders Association (RILA), which supports sustainability initiatives and encourages its members to apply such views in their business operations.

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Audit Insomnia

Take a deeper look at the risks of auditing, and everyone will sleep better.

By Bill Hatton

What keeps your company’s auditor awake at night? Like most professionals, it’s most likely uncertainty–nagging concern that there isn’t quite enough evidence to support signing off on the audit.

What keeps company executives up? Probably something similar: The auditor might have missed something important, putting your company at risk of embarrassing re-statements—or worse.

Martin Baumann, chief auditor and director of professional standards, Office of the Chief Auditor, Public Company Accounting Oversight Board (PCAOB), says there are good reasons for everyone’s loss of sleep: Auditors may be too credulous.

“Lack of auditor skepticism is common,” Baumann says. “Due professional care requires professional skepticism; auditors need to find evidence that statements are free from material misstatements.

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Investing in non-profits, through people

How pro-bono and skills-based work help nonprofits.

By Daryl Brewster, CEO, CECP

Think about all the diverse industries across the globe delivering specialized services and products to customers, whether they are other businesses (B2B) or individuals (B2C). From food to fashion to financial services, companies are contributing something to meet the needs of millions of these consumers. They apply innovations and unique skills and resources to solve challenges and address opportunities. At the heart of these skills and resources are the companies’ employees, who bring their individual talents and creativity to bear each day on the things they develop.

Now imagine if companies were uniformly encouraging employees to apply those skills to solve community needs as well. Leading companies are looking at engaging with community programs not as charity, but as an investment in society where they leverage their skills and resources— employees, intellectual property, cash—to make a difference, and even create new markets.

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Green Bonds can benefit society — and investor portfolios

Green Bonds can benefit society — and investor portfolios

By R. Paul Herman and Srdana Pokrajac

CFOs and corporate executives courting those investors who are prioritizing sustainability in their portfolios now have a new type of financing to consider: Green Bonds. These new financial instruments seek both ecological and economic benefits.

In November 2013, Bank of America (NYSE: BAC) issued a three-year, fixed-rate $500 million Green Bond as part of the bank’s 10-year, $50 billion environmental business initiative whose proceeds will target alleviation of climate change, accelerate the shift to alternative energy resources, and spur energy-efficient economic solutions.

Showing the financial industry is getting serious, 13 major global investment banks committed to the Green Bonds Principles (GBP), a set of voluntary guidelines designed to assess issuances of Green Bonds for multiple types of investors: development banks, multilateral institutions, investment banks, and corporations.

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