Amazing how Amy Domini's placing in the Time 100 Influential People has presented an opportunity to raise the level of discussion of SRI. You can hear Amy Domini and Ethical Investing Story aired: Tuesday, April 26, 2005 on Here & Now on NPR.
Of all the American things I love, from Ben & Jerry's to The Simpsons to Puget Sound, both NPR, and its TV cousin PBS, are true modern day treasures for Americans. Sad though that PBS has to pitch annually to its federal overseers for 15% of its budget, and to raise the remainder from its listeners. Can it be far from a subscriber model on Sirius or XM radio, available around the world?
As a South African I would differ with Ms Domini re the power of SRI to change events in South Africa. growing up there as a privileged middle class White African, I was aware how businesses thrived. Like with the recent experience in Serbia and Iraq - the only thing that sanctions achieve is to create a very powerful balc market, because at the end of the day, at the individual level, each of us is dominated by the demands of the market and the money that drives it.
Most of the abnormal society I discovered was not through the lack of certain goods, but in understanding the political and cultural history, the lack of international sport and cultural entertainment brands. It was more important to young SA that the Springboks could not tour, and U2 played in Mbabane and Harare not Durban or Cape Town (check their Rock 'n Roll Hall of Fame induction). Economic sanctions did play a role. But political and cultural sanctions deserve a major share of the limelight.
Good to see Tim Smith finds a mention again (see An Activist Returns to South Africa Published, Fall 2001) ! Still no acknowledgement of the role of KLD, even though Amy founded it with Steve Lydenburg and Peter kinder in the garage of the latter's married home in 1988! Things must really be bad for KLD-Domini relationship. It seems to me that more effort should be made to present the stories of Peter Kinder and to hear from Steven Lydenburg about the future of SRI. In comparison, the website gives ample attribution to KLD:
Creation of the Domini 400 Social IndexSMThe index was created by the social research firm of KLD Research & Analytics, Inc.(KLD). KLD began work on the Domini 400 Social IndexSMin late 1989. It started officially tracking the Index on May 1, 1990 and has monitored the Index's performance since then. The Index was created to fill four primary needs:
· To answer the question of whether social screening carries an inherent financial "cost";
· To provide a socially screened equity benchmark;
· To communicate the standards of mainstream social investors to corporations and the general public in a viable format;
· To provide the basis for a screened, indexed investment vehicle for investors.
· In creating the Index, KLD employed a combination of exclusionary and qualitative social screens.
2 points from Amy's discussion:
1. The simplification of the SRI question into the questions like those by Rev Sullivan in the early 1980's (the Sullivan principles) - for example, how many employees in senior positions in SA are not white - points to the classic simplification that all investors enjoy intuitively. This ties into the point from my blog 19 Apr: is the future of SRI in the "Dummies Guide" approach, simplifying so it can be understood quickly by hurrying and avaricious traders?
2. No mention of how companies choose to reflect the Domini stamp of approval. I have tracked two companies lately that reference the listing on the Dow Jones Sustainability Index and FTSE4Good, but not Domini 400. I wonder what better marketing of the brand could have achieved more? While clearly famous in the Boston area where Here & Now is presented, the plain distribution power of the media- and financial-information based indices is ultimately more persuasive in the marketplace, and frankly may have bigger brand power.
Wednesday, April 27, 2005
Monday, April 25, 2005
So you want to work in SRI in 2005?
Hiring a crop of talented interns for the summer has me wondering what advice I will give when asked the inevitable question: where should I launch my career? Having been in the roles of pensions consultant, pension fund vendor, investment manager, and now on the socially responsible research side of the business, I hope my answer is honest and valuable. I'll be quick to point out that SRI is only a half-step from being in a NGO, but the higher-risk, higher-reward clean technologies field may offer more. Or rolling out hybrids, up 81% last year according to CNBC this morning. There are 2 questions you should answer:
1. Do you actually want to manage money?
2. How do you feel about working in Europe?
My first question is: Do you actually want to manage the money?
Does the ebb and flow of the market and the investors who lean on you sound like the right fit? If you prefer researching and presenting the ideas, then the analysis side is your bets fit. Sometimes you may flow between the two roles, but most often the tracks and the qualifications lead in to parallel but separate paths.
In SRI in particular the majority of SR investment analysts are from non-financial backgrounds, as a quick review of the SIRAN listserv bio's can attest. On the money management side, a key requirement is that the investor has confidence in your "numbers" ability. Evidence of this comes in the form of the new Chief Investment Strategist at Trillium Asset Management here in Boston. Adam Seitchik joined Trillium Asset Management in 2004 as Chief Global Strategist for Deutsche Asset Management in London, where he led a team responsible for over £40 billion in client assets. He also has experience as an analyst and portfolio manager at Wellington Management, and was the Director of Strategic Research for John Hancock’s Investment and Pension Group. More SRI is going to demand an interpretation into a financial answer.
As Jeff MacDonagh at Loring Woolcott said to me at the Net Impact SRI panel at MIT recently, too few SRI analysts have CFA qualifications. Steve Lydenburgh mentioned his efforts to get more SR into the CFA curriculum. I have suggested finding the alternative qualification in Europe and pursuing them on the basis of their greater affinity and sophistication around SRI/sustainability issues.
That leads me to the second major question: do you want to necessarily work in the US?
If not, then why not follow the leading thinkers in SRI and move to Europe. The City of London, while having some paroxsyms about CSR as evidenced in The Economists's recent diatribe "The Good Company: A sceptical look st CSR" in January 2005 is far more involved in the CSR/SRI debate. Developments like the second generation of SiRi company formed from a network of SRI analyst firms across Europe and North America suggests that the industry is growing and developing. The London Stock Exchange has developed CSR data-gathering software London Stock Exchange to launch Corporate Responsibility Exchange. After all, France has mandated CSR be considered by companies in their reporting, the largest Dutch Pension fund ABP owns a stake of a leading SRI research firm, and the Greens are politically relvant in Germany while the UK has a minister level post for CSR or "corporate responsibility" as Nigel Griffiths, MP likes to call it Nigel Griffiths MP replaces Stephen Timms MP as minister with responsibility for CSR
28/09/04.
Your other option to change corporate behaviour is in - it pains me to suggest we need more of them - law!. If I was just now coming out of Law School and not 10 years ago, I would be carrying the bag for Eliot Spitzer, attorney general of New York and highly effective scourge of corporate malefactors. What he has achieved has been remarkeable, and yes, not without incident or controversy. It has just lately been interesting to see the pressure ratcheted up on him, including some pasty looking publisher of CEO Magazine on CNBC. I smiled as I watched him try to convince SqwuakBox's Mark Hains that Eliot SPitzer had done something wrong by doing his job and simultaneously announcing himself as candidate for NY Governor.
SRI or Corporate Law, those are pretty much your options. CSR seems too compromised right now, although I'm watching it carefully, especially the Investor Relations side. Only two important figures in personal finance were named to Time magazine's recent list of 100 most influential Americans; TIME's list of the men and women whose power, talent or moral example is transforming the world. One was Eliot Spitzer. The other was Amy Domini, a founding mother in socially responsible investing. "I never knew I had influence," she joked. "My son was very impressed because some rapper singer was in there. He couldn't believe I was in there with them." She founded the Domini 400 social index, the conscience-driven equivalent of the S&P 500, and a set of mutual funds that also bears her name. She now manages investments totaling about $2 billion. And much to the chagrin of KLD, failed to mention the pivotal role that KLD and its 2 partners had in launching both the industry and her role in it.
1. Do you actually want to manage money?
2. How do you feel about working in Europe?
My first question is: Do you actually want to manage the money?
Does the ebb and flow of the market and the investors who lean on you sound like the right fit? If you prefer researching and presenting the ideas, then the analysis side is your bets fit. Sometimes you may flow between the two roles, but most often the tracks and the qualifications lead in to parallel but separate paths.
In SRI in particular the majority of SR investment analysts are from non-financial backgrounds, as a quick review of the SIRAN listserv bio's can attest. On the money management side, a key requirement is that the investor has confidence in your "numbers" ability. Evidence of this comes in the form of the new Chief Investment Strategist at Trillium Asset Management here in Boston. Adam Seitchik joined Trillium Asset Management in 2004 as Chief Global Strategist for Deutsche Asset Management in London, where he led a team responsible for over £40 billion in client assets. He also has experience as an analyst and portfolio manager at Wellington Management, and was the Director of Strategic Research for John Hancock’s Investment and Pension Group. More SRI is going to demand an interpretation into a financial answer.
As Jeff MacDonagh at Loring Woolcott said to me at the Net Impact SRI panel at MIT recently, too few SRI analysts have CFA qualifications. Steve Lydenburgh mentioned his efforts to get more SR into the CFA curriculum. I have suggested finding the alternative qualification in Europe and pursuing them on the basis of their greater affinity and sophistication around SRI/sustainability issues.
That leads me to the second major question: do you want to necessarily work in the US?
If not, then why not follow the leading thinkers in SRI and move to Europe. The City of London, while having some paroxsyms about CSR as evidenced in The Economists's recent diatribe "The Good Company: A sceptical look st CSR" in January 2005 is far more involved in the CSR/SRI debate. Developments like the second generation of SiRi company formed from a network of SRI analyst firms across Europe and North America suggests that the industry is growing and developing. The London Stock Exchange has developed CSR data-gathering software London Stock Exchange to launch Corporate Responsibility Exchange. After all, France has mandated CSR be considered by companies in their reporting, the largest Dutch Pension fund ABP owns a stake of a leading SRI research firm, and the Greens are politically relvant in Germany while the UK has a minister level post for CSR or "corporate responsibility" as Nigel Griffiths, MP likes to call it Nigel Griffiths MP replaces Stephen Timms MP as minister with responsibility for CSR
28/09/04.
Your other option to change corporate behaviour is in - it pains me to suggest we need more of them - law!. If I was just now coming out of Law School and not 10 years ago, I would be carrying the bag for Eliot Spitzer, attorney general of New York and highly effective scourge of corporate malefactors. What he has achieved has been remarkeable, and yes, not without incident or controversy. It has just lately been interesting to see the pressure ratcheted up on him, including some pasty looking publisher of CEO Magazine on CNBC. I smiled as I watched him try to convince SqwuakBox's Mark Hains that Eliot SPitzer had done something wrong by doing his job and simultaneously announcing himself as candidate for NY Governor.
SRI or Corporate Law, those are pretty much your options. CSR seems too compromised right now, although I'm watching it carefully, especially the Investor Relations side. Only two important figures in personal finance were named to Time magazine's recent list of 100 most influential Americans; TIME's list of the men and women whose power, talent or moral example is transforming the world. One was Eliot Spitzer. The other was Amy Domini, a founding mother in socially responsible investing. "I never knew I had influence," she joked. "My son was very impressed because some rapper singer was in there. He couldn't believe I was in there with them." She founded the Domini 400 social index, the conscience-driven equivalent of the S&P 500, and a set of mutual funds that also bears her name. She now manages investments totaling about $2 billion. And much to the chagrin of KLD, failed to mention the pivotal role that KLD and its 2 partners had in launching both the industry and her role in it.
Friday, April 22, 2005
NetImpactBoston has left the building!
35 professionals and soon to be professionals from all sectors joined Thrusday 21 April from 7pm at Le Zygomates to launch Boston's professional chapter of Net Impact. We had a fine turn-out. Even the barkeep, Jason, said he welcomes us back - presumably we add style to changing the world.
I secured a handful of Steven Lydenburg's newly published book Corporations and the Public Interest : Guiding the Invisible Hand http://www.amazon.com/exec/obidos/tg/detail/-/1576752917/qid=1114006057/sr=1-1/ref=sr_1_1/102-3141046-7787355?v=glance&s=books
as a freebie and we used as a "prize" for a business card draw. The winners (Mark, Kristen & Priya) were applauded. I have tried to drive value back to Steve by having the winners comment on www.Amazon.com; I will do the same.
Steve's book looks again at the issue of power handled from the boardroom and tools that investors, large and small, may apply to keep them accountable. The recent Business Ethics article (Spring 2005, CSR in the Cross-Hairs: A broad counter-attack against corporate reform is growing.(Could that be a sign of progress?) by Tracey Ramebert) pointed to the often vociferous attacks on activist shareholders - including Tim Smith of Social Investment Forum being sued for a 2003 "slander" of a company. In a rather belated recognition of what Robert Monks had identifed in the 1980's when reflecting on the influence of pension funds, the attack by Schwarzenegger’s ally, Grover Norquist of Americans for Tax Reform, made clear the attempt to break public pension funds into 401k's, is very deliberate. “Just 115 people control $1 trillion,” he said. “We want to take that power and destroy it.” Nationally in the USA, public funds control $2.7 trillion, with union-managed funds overseeing another $400 billion.
Now we try and get things solidified here in Bston. Anne, Erika and I will meet 9 May to plan the way forward. We need to sign up members in Boston, add members to the email distribution via NetImpactBoston@gmail.com and plan next steps. Our first next step is building a website and connecting to other NI professionals + final year MBA's in the Boston area.
We've opened the door for people with skills and strength to add. We could do with about 3 more to work with Anne, Erika and I to guide this ship along. The roles we may need include:
Membership
Technology
Community Outreach
Corporate Outreach
Events
Treasurer
Marketing
We really hope that this small be impactful chapter can help play a small role in fchanging the world. Maybe we can succeed in with NetImpactBoston, truly making us New Leaders for Better Business.
I secured a handful of Steven Lydenburg's newly published book Corporations and the Public Interest : Guiding the Invisible Hand http://www.amazon.com/exec/obidos/tg/detail/-/1576752917/qid=1114006057/sr=1-1/ref=sr_1_1/102-3141046-7787355?v=glance&s=books
as a freebie and we used as a "prize" for a business card draw. The winners (Mark, Kristen & Priya) were applauded. I have tried to drive value back to Steve by having the winners comment on www.Amazon.com; I will do the same.
Steve's book looks again at the issue of power handled from the boardroom and tools that investors, large and small, may apply to keep them accountable. The recent Business Ethics article (Spring 2005, CSR in the Cross-Hairs: A broad counter-attack against corporate reform is growing.(Could that be a sign of progress?) by Tracey Ramebert) pointed to the often vociferous attacks on activist shareholders - including Tim Smith of Social Investment Forum being sued for a 2003 "slander" of a company. In a rather belated recognition of what Robert Monks had identifed in the 1980's when reflecting on the influence of pension funds, the attack by Schwarzenegger’s ally, Grover Norquist of Americans for Tax Reform, made clear the attempt to break public pension funds into 401k's, is very deliberate. “Just 115 people control $1 trillion,” he said. “We want to take that power and destroy it.” Nationally in the USA, public funds control $2.7 trillion, with union-managed funds overseeing another $400 billion.
Now we try and get things solidified here in Bston. Anne, Erika and I will meet 9 May to plan the way forward. We need to sign up members in Boston, add members to the email distribution via NetImpactBoston@gmail.com and plan next steps. Our first next step is building a website and connecting to other NI professionals + final year MBA's in the Boston area.
We've opened the door for people with skills and strength to add. We could do with about 3 more to work with Anne, Erika and I to guide this ship along. The roles we may need include:
Membership
Technology
Community Outreach
Corporate Outreach
Events
Treasurer
Marketing
We really hope that this small be impactful chapter can help play a small role in fchanging the world. Maybe we can succeed in with NetImpactBoston, truly making us New Leaders for Better Business.
Wednesday, April 20, 2005
Make Your Career (& Life) Make a Difference
Great Socially Responsible Investing panel today presented by Net Impact student chapters, met at MIT Sloan jointly hosted by Bason College and The Fletcher School of International Law & Diplomacy Make Your Career (& Life) Make a Difference. Tim Smith (Walden/SIF), Jeff McDonagh (Loring Woolcot Coolidge/SIRAN), Steve Lydenburg (Domni CIO/author) and moderated by Patricia Roach (US Trust New York). We covered some good ground on misconceptions on SRI, current & future challenges and career paths into SRI.
Two of the interesting questions covered the ability to sell research, and the opportunity for Venture Capital (VC) funds in the SRI context. I look forward to more discussions.
The vibe for Thursday's launch of NetImpactBoston - the professional chapter for NI in Boston at Le Zygomates. You can email to us for more
Two of the interesting questions covered the ability to sell research, and the opportunity for Venture Capital (VC) funds in the SRI context. I look forward to more discussions.
The vibe for Thursday's launch of NetImpactBoston - the professional chapter for NI in Boston at Le Zygomates. You can email to us for more
Tuesday, April 19, 2005
Is Less More
Where is the sweet spot for SRI information to investors?An intriguing paper out from sustainable investment specialists on the quantitative team of Geneva-based private bank Pictet & Cie presents an argument tha " Less Can Be More..." (Christoph Butz, Pictet & Cie, March 2005). The paper is controversial, but honest enough to offer a foreword by Phillipe Spicher, Executive Chairman of SiRi Company (the consortium of SRI research firms which includes KLD in the US). The foreword sets the intrigue as Spicher references "an honour and a challenge" before pointing out "I cannot fully subscribe" to the arguments Pictet make. What is the storm in a teacup?
SiRi's comments are important because of the role they play as the most global SRI house. SiRi Company Ltd. (Sustainable Investment Research International) was launched in November 2003, after having served as an informal network between leading analysis companies for socially responsible investments in eleven countries: Sweden, Germany, Switzerland, Italy, the Netherlands, Spain, Belgium, the United Kingdom, Canada, Australia and the United States. Together, the SiRi Companies have over 100 analysts, which makes SiRi Company Ltd. the world's largest independent analysis group within SRI. Through the partnership in SiRi, independent local expertise on the world's most important financial markets is made available. KLD cover the USA.
Pictet suggests "current sustainability research is at a crossroads". Sustainability covers investment research looking to the fundamentals of a firm and how the environmental and social and corporate governance factors demonstrate whether the company has the ability to exist into the future with a business moidel that can succeed in a world of diminishing resources and increasing social demands.
Pictet points to companies' "questionaire fatigue" suggesting that too many questions are being asked of firms, questions that add nothing new to an analysis, and may instead introiduce noise to analysis. They push for retaining "a few relevant indicators", while admitting "we do not pretend to have found the holy grail ...fully-fledged research methodology". They want to "through the first stone" in the debate.
The argument about a marginal cost vs marginal utility of information makes for a neat economic underpin to their argument. Intuitively the concept is appealing. It is reasonable to expect that as more information is discovered and presented, the cost of reaping that information starts to outweigh the utility of that information, paired with the actual value of that information in informing the decisions.
Pictet has a dig at analysts, suggesting the educational foundation is weak and the ongoing evolution of curricula is poor, that few have the experience, and may well be replaced by students and/or sophisticated software! I agree that this new field has attracted many non-financial types, but I do not think they are educationally weak. Firstly, the pool has partly to be explained by the rigid thinking of the financial analysis students and frankly the blinders that any SEE factors have some impact on analysis or a place at the table. Secondly, as SRI research analysts evolve in small firms fighting for legitimacy, the ability to glide while upping the education of analysts is not necessarily a viable opportunity. Thirdly, with the same mobility as financial analysts and portfolio managers, as SRI firms try to differentiate, they have not resolved how to develop talent without empowering competitors because they may not have the cash incentives to hold onto the analyst after they have been so well trained. In terms of moving educational standards forward, I have opened discussions with CFA Institute, the home of the CFA designation and the leader in investment accreditation. They were decidedly cool. I am currently seeking other accredited investment standards bodies to engage in discussions, mindful over the flop that followed the drive to "Certified MBA" while aware of the success of the "Six Sigma blackbelts".
From a methodology point of view, Pictet points not just to the cost of generating this information, but how it is used by investors. Pictet suggests that because the information is aggregated into some rating which can then be implemented into one rating, inflating the number of indicators diminshes the weight of any one of them. This fight for survival should be replaced by an increased experimentation with weightings and by knocking off superfulous ratings.
Pictet went about looking at the Automobile and Aviation industries in more detail and leaning heavily on their quantitative/statistical roots they look at different proxies for proxies, coming to factors like fuel efficiency and job creation as markers that they feel generate sufficient utility of information. While their analysis is interesting, they dodge the dichotomy produced by their "job creation" proxy as giving the best indicator for sustainability (at least over three years) but the failure in financial markets, and walk away with a shrug of " of course, much more research is needed to confirm or refute this finding".
I like the idea of the average fuel consumption of a car manufacturing firm as being its best indictor - the senstitivity of Detroit to US Federal minima for miles per gallon signal that this may be a material signal. But I am unconvinced on the job creation proxy.
In Pictet's search for "a more pragmatic and practicable proxy for a company's sustainability performance by way of specifying sector-specific key impact factors" remains more lost than found. Intriguing, some good concepts, but as a business leader I would not change my SRI analysis on these grounds. Yet!
SiRi's comments are important because of the role they play as the most global SRI house. SiRi Company Ltd. (Sustainable Investment Research International) was launched in November 2003, after having served as an informal network between leading analysis companies for socially responsible investments in eleven countries: Sweden, Germany, Switzerland, Italy, the Netherlands, Spain, Belgium, the United Kingdom, Canada, Australia and the United States. Together, the SiRi Companies have over 100 analysts, which makes SiRi Company Ltd. the world's largest independent analysis group within SRI. Through the partnership in SiRi, independent local expertise on the world's most important financial markets is made available. KLD cover the USA.
Pictet suggests "current sustainability research is at a crossroads". Sustainability covers investment research looking to the fundamentals of a firm and how the environmental and social and corporate governance factors demonstrate whether the company has the ability to exist into the future with a business moidel that can succeed in a world of diminishing resources and increasing social demands.
Pictet points to companies' "questionaire fatigue" suggesting that too many questions are being asked of firms, questions that add nothing new to an analysis, and may instead introiduce noise to analysis. They push for retaining "a few relevant indicators", while admitting "we do not pretend to have found the holy grail ...fully-fledged research methodology". They want to "through the first stone" in the debate.
The argument about a marginal cost vs marginal utility of information makes for a neat economic underpin to their argument. Intuitively the concept is appealing. It is reasonable to expect that as more information is discovered and presented, the cost of reaping that information starts to outweigh the utility of that information, paired with the actual value of that information in informing the decisions.
Pictet has a dig at analysts, suggesting the educational foundation is weak and the ongoing evolution of curricula is poor, that few have the experience, and may well be replaced by students and/or sophisticated software! I agree that this new field has attracted many non-financial types, but I do not think they are educationally weak. Firstly, the pool has partly to be explained by the rigid thinking of the financial analysis students and frankly the blinders that any SEE factors have some impact on analysis or a place at the table. Secondly, as SRI research analysts evolve in small firms fighting for legitimacy, the ability to glide while upping the education of analysts is not necessarily a viable opportunity. Thirdly, with the same mobility as financial analysts and portfolio managers, as SRI firms try to differentiate, they have not resolved how to develop talent without empowering competitors because they may not have the cash incentives to hold onto the analyst after they have been so well trained. In terms of moving educational standards forward, I have opened discussions with CFA Institute, the home of the CFA designation and the leader in investment accreditation. They were decidedly cool. I am currently seeking other accredited investment standards bodies to engage in discussions, mindful over the flop that followed the drive to "Certified MBA" while aware of the success of the "Six Sigma blackbelts".
From a methodology point of view, Pictet points not just to the cost of generating this information, but how it is used by investors. Pictet suggests that because the information is aggregated into some rating which can then be implemented into one rating, inflating the number of indicators diminshes the weight of any one of them. This fight for survival should be replaced by an increased experimentation with weightings and by knocking off superfulous ratings.
Pictet went about looking at the Automobile and Aviation industries in more detail and leaning heavily on their quantitative/statistical roots they look at different proxies for proxies, coming to factors like fuel efficiency and job creation as markers that they feel generate sufficient utility of information. While their analysis is interesting, they dodge the dichotomy produced by their "job creation" proxy as giving the best indicator for sustainability (at least over three years) but the failure in financial markets, and walk away with a shrug of " of course, much more research is needed to confirm or refute this finding".
I like the idea of the average fuel consumption of a car manufacturing firm as being its best indictor - the senstitivity of Detroit to US Federal minima for miles per gallon signal that this may be a material signal. But I am unconvinced on the job creation proxy.
In Pictet's search for "a more pragmatic and practicable proxy for a company's sustainability performance by way of specifying sector-specific key impact factors" remains more lost than found. Intriguing, some good concepts, but as a business leader I would not change my SRI analysis on these grounds. Yet!
Friday, April 15, 2005
The Body Shop back into the rinse of CSR
The 2005 Ceres Conference "Building Equity, Reducing Risk" presented current examples of efforts by companies to improve their web-based reporting. In Thursdays last session, the persevering few were able to act as the most intimate of user-groups for Gap, Baxter International and GM as their respective officers presented their CSR/sustainability reports.
Rikke Jarvad Netterstrom is ethical policy manager at The Body Shop. The Body Shop International Plc is a retail franchise with an established network of franchisees that own and operate approximately 70% of TBS stores worldwide. It has an (overshadowing) presence of a founder Anita Roddick who is regarded as a leader in SRI, but recently suffered a stagnant business phase. TBS Franchisees and their business partners are required to live up to the values of The Body Shop International Plc as described in our trading charter and mission statement. Franchisees are also expected and encouraged to participate in global values campaigns.
While halting sustainability reporting seven years ago due to disinterest, TBS has revised the approach going back to reporting in Oct. 2003 Body Shop finances go back to ethical roots. The revised site is trying to figure out:
1. How to drive traffic to the sustainability site and who the audience is
2. What the audience wants
3. How to stay fresh and relevant without costing an arm & a leg.
Apparently still in beta format, we were not able to see the new website. It is interesting to know how the revised site and its role will fit TBS targets for 2005-2006 year for their many franschisees (although the US stores were bought back)
1. Review all ethical policies hierarchy and indicate franchisee responsibilities - Feb 2005
2. Consult franchisees on the development of global KPIs on our values performance - Feb 2005 3. Develop and offer a "service package" on values (e.g. training, publications, values for a), in consultation with franchisees - Feb 2006
4. Explore and consult with franchisees on appropriate Franchisee governance system, e.g. elected advisory committees/boards or Ombudsman function - Feb 2006
Until we see the new site with its indicators for demonstrating performance, the US specific site references the approach of bringing the SR factors directly to the consumer at the point of sale. The current US site references the current campaign against violence in the home. TBS Australia offers the direct link of CSR to business model with the (self-reported) national in-store survey during June 2004 which led to donating $1 to state/territory domestic violence support organisations for every completed customer survey received by TBS Australia. Based on an updated web page TBS reported 3844 customers returned surveys in 2004 resulting in donating $3844 to refuges around Australia. TBS Australia is "one of very few companies in Australia to conduct a stakeholder-driven social auditing process that is independently audited and publicly disclosed". In 2004 TBS Australia commenced their fourth auditing cycle which will be published in May 2005.
For SRI analysts the real test of relevance will be in the quality and quantity of CSR indicators and the authentication of whatever reports are made by a third party.
Wednesday, April 13, 2005
The peak of Mt Kilimanjaro as it has not been seen for 11,000 years
Sad news from my home continent. Hemingway's feted Mt Kilimjaro is getting buck-naked. I remember hearing an Australian professor from Wharton speaking to our ELP associates class last year reference the Great Barrier Reef being GONE by 2050 - in his lifetime. It shocked me into paying attention. It has got the attention of hikers, even as first reports of it in 2002/3 including in National Geographic created something of an express to get people to the top and back. Certainly in South Africa it became much more popular even de rigeur amongst the Johannesburg professional set.
Maybe this can bring it home hard for people I come into contact with. At least the saddest news gives me an solid start to my presenation to young MIT & Babson College students this Tuesday "A Spring Symposium: “Make your Career (& Life) Make a Difference”. I am hoping I can deliver to the students the real life - secrest of my success - type look at the world inside, a bit of humour, and a way to open doors.
Some of my comments will rest on the current goings on at Nestle'. After some scathing comments on the merits of CSR, Thursday sees the vote coming with the pressure from the Swiss Pension Funds grouping aiming to prevent the CEO from taking the vacating chair. Ethos - Swiss Investment Foundation for Sustainable Development and five other shareholders (collectively Ethos Group) have submitted this proposal to amend Nestle's articles of association to include a clause that "The Chairman cannot simultaneously hold an exclusive function within the executive management." Two groups, including a Swiss investment fund, Ethos, and ACTARES, a group of smaller shareholders campaigning for ethical business practices, have announced that they intend to submit motions to ensure the two posts remain separate. ISS has backed the pension funds ISS Supports Nestle Shareholder Proposal to Split Chairman and CEO. Ethos chief Dominique Biedermann said he was expecting about 20 percent of votes in support of the move. Two other groups representing institutional investors reportedly were lining up behind the call.
In another demonstration of the impact of Corporate Governance and the ongoing small size of SRI pension funds, the Nestle' affair has garnered headlines, but may likely not impact the vote. It does keep the glare on. Nestle' has not been doing everything right, including (according to SRI Media) suffering two boycotts recently over matters such as selling of baby milk formula to the developing world, where hygiene standards made breast milk safer, and its alleged involvement in Coco slavery where tenant farmers are deliberately kept in a state of constant debt.
Together with the top-to-bottom attention on Nestle' and the way it does business may yet have some effect. I wonder what other delgates to the 2005 Ceres Conference, "Building Equity, Reducing Risk" tomorrow will have to say. I'll have thoughts from the conference Thursday evening.
Maybe this can bring it home hard for people I come into contact with. At least the saddest news gives me an solid start to my presenation to young MIT & Babson College students this Tuesday "A Spring Symposium: “Make your Career (& Life) Make a Difference”. I am hoping I can deliver to the students the real life - secrest of my success - type look at the world inside, a bit of humour, and a way to open doors.
Some of my comments will rest on the current goings on at Nestle'. After some scathing comments on the merits of CSR, Thursday sees the vote coming with the pressure from the Swiss Pension Funds grouping aiming to prevent the CEO from taking the vacating chair. Ethos - Swiss Investment Foundation for Sustainable Development and five other shareholders (collectively Ethos Group) have submitted this proposal to amend Nestle's articles of association to include a clause that "The Chairman cannot simultaneously hold an exclusive function within the executive management." Two groups, including a Swiss investment fund, Ethos, and ACTARES, a group of smaller shareholders campaigning for ethical business practices, have announced that they intend to submit motions to ensure the two posts remain separate. ISS has backed the pension funds ISS Supports Nestle Shareholder Proposal to Split Chairman and CEO. Ethos chief Dominique Biedermann said he was expecting about 20 percent of votes in support of the move. Two other groups representing institutional investors reportedly were lining up behind the call.
In another demonstration of the impact of Corporate Governance and the ongoing small size of SRI pension funds, the Nestle' affair has garnered headlines, but may likely not impact the vote. It does keep the glare on. Nestle' has not been doing everything right, including (according to SRI Media) suffering two boycotts recently over matters such as selling of baby milk formula to the developing world, where hygiene standards made breast milk safer, and its alleged involvement in Coco slavery where tenant farmers are deliberately kept in a state of constant debt.
Together with the top-to-bottom attention on Nestle' and the way it does business may yet have some effect. I wonder what other delgates to the 2005 Ceres Conference, "Building Equity, Reducing Risk" tomorrow will have to say. I'll have thoughts from the conference Thursday evening.
Thursday, April 07, 2005
Morgan Stanley: who holds the power; Schwab's missing institutional business...
The Morgan Stanley fracas is an opportunity to investors from SRI and Corporate Governance backgrounds to watch the heavyweights fight and reach for tools of shareholder activism. CEO Phillip Purcell is being bumped around by MS alumni who are pressing for a return of ousted ex-President Robert Scott. Yesterday's meeting was packed
As WSJ's Alan Murray pointed out "Corporate America is Getting Rocked Just Like It's 1789" (WSJ 5 Apr A2) it is not clear who is running MS. This CEO star Purcell is finding that sometimes just when you think you're leading, you're really only going for a walk alone. Murray points to the power "the board of directors that should take the reins of power from an autocratic CEO. But the MS board continues to give public support, as well as lavish compensation, to Mr Purcell's lavish compensation." Murray dismisses the employees - there are only so many who could walk away. He identifies the all-powerful, obdurate hedge funds as holding real sway. As investors, they ask very pointed questions, as Scott Sipprelle of Copper Arch Capital did and wrote a letter. Seems when hedge funds get involved, people on Wall Street listen.
Where are the pension funds in this? After smarting from the political power-play at CALPERS last November, maybe trustees are being a little more cautious. This Sunday is the start of the Council of Institutional Investors - mainly big public pension funds - and it will be interesting to see what voice they find. Tied to the debate of who should elect board members, I'm hoping it will be interesting. Phyllis Plitch at DJNewswires (Board Selections Spark a Backlash, 5 Apr) reported on the storms brewing at Caterpillar and Gannet where shareholder activists want a switch to majority voting AND the power not just to withhold but to propose and vote for alternative directors. The union investors are pressing for it. Ed Durkin, director of special programs for the United Brotherhood of Carpenters and Joiners of America, is quoted as saying both institutional and individual investors want it. Durkin says unions have sent resolutions to 80 companies to date this year.
Referencing "institutional" or "individual" investors, Charles Schwab's op-ed in Tuesday's WSJ "May We trade Through" makes for an interesting self-assessment of his business. He describes Schwab as "my business is focussed exclusivley on individual investors and the investment advisors who serve them". The question? What happened to Schwab Institutional?! Is this an admission that the venture to the corporate side has lost its way?
As WSJ's Alan Murray pointed out "Corporate America is Getting Rocked Just Like It's 1789" (WSJ 5 Apr A2) it is not clear who is running MS. This CEO star Purcell is finding that sometimes just when you think you're leading, you're really only going for a walk alone. Murray points to the power "the board of directors that should take the reins of power from an autocratic CEO. But the MS board continues to give public support, as well as lavish compensation, to Mr Purcell's lavish compensation." Murray dismisses the employees - there are only so many who could walk away. He identifies the all-powerful, obdurate hedge funds as holding real sway. As investors, they ask very pointed questions, as Scott Sipprelle of Copper Arch Capital did and wrote a letter. Seems when hedge funds get involved, people on Wall Street listen.
Where are the pension funds in this? After smarting from the political power-play at CALPERS last November, maybe trustees are being a little more cautious. This Sunday is the start of the Council of Institutional Investors - mainly big public pension funds - and it will be interesting to see what voice they find. Tied to the debate of who should elect board members, I'm hoping it will be interesting. Phyllis Plitch at DJNewswires (Board Selections Spark a Backlash, 5 Apr) reported on the storms brewing at Caterpillar and Gannet where shareholder activists want a switch to majority voting AND the power not just to withhold but to propose and vote for alternative directors. The union investors are pressing for it. Ed Durkin, director of special programs for the United Brotherhood of Carpenters and Joiners of America, is quoted as saying both institutional and individual investors want it. Durkin says unions have sent resolutions to 80 companies to date this year.
Referencing "institutional" or "individual" investors, Charles Schwab's op-ed in Tuesday's WSJ "May We trade Through" makes for an interesting self-assessment of his business. He describes Schwab as "my business is focussed exclusivley on individual investors and the investment advisors who serve them". The question? What happened to Schwab Institutional?! Is this an admission that the venture to the corporate side has lost its way?
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