Tobacco Investment Contingent Liabilities

Walking into Great Westerford this morning on a crisp sunny Cape winter morning I was surprised to find huddles of smokers grabbing a puff on the steps. A beautiful day, puffing away. But maybe not that much different than those who need their 'morning cup of Joe' to start their day. The human habit of smoking is a fascination: humans choosing to buy a product directly linked to disease - including my two sisters whose own grandparents died from lung cancer and cardiac failure linked to chain smoking. Help explain how this logic stacks up: tobacco is a non-nutritious agricultural industry product driving farmers to farm cash crops not nutritious foods for sale to multinationals to sell to humans as aspirational good living to smoke and will in time directly lead to negative health impacts. Any investor integrating ESG factors must be investing away from tobacco. One may make an investment case and an ethical case. Either way, it raises all the classic considerations in sustainable finance and responsible investment: 1. whose money is it, 2. what is best practice investment analysis, 3. are all the investment factors covered [including environmental, social and governance ESG factors] and 4. what time horizon is long term? The decision to invest in tobacco must be a litmus test for any work on ESG architecture. Is it being discussed by the large ICGN or smaller PRI at their annual meetings this week in Sydney? Bill Gates and Michael Bloomberg in January 2009 put some of their personal fortune [USD 50m] into combating smoking, but I wonder if their endowments have? Any investment practitioner who is tasked with integrating ESG factors sooner or later will be faced with a tobacco name in the portfolio holdings or investable universe. In South Africa this morning, longtime investment writer Ben Temkin, originally a stalwart at Financial Mail and now at Business Day, covered his position on BAT, British American Tobacco, cross-listed in London LON: BATS and on Johannesburg Stock Exchange. Check the BAT investor presentations here for their take on the contingent liabilities, or the lack thereof. Thank you for smoking.

BAT is considered a "blue chip" investment name for many years and a large part of the Rembrandt/Richemont/Remgro story that is now playing out again as the Rupert family heading the companies consider re-bundling what they unbundled. A Business Day reader who follows Ben's Private Investor column that offers some investment thinking and breaks down the investment opportunities of the day, challenged him on the "fundamentals" that a tobacco firm offers as an investment opportunity. The reader challenges Ben by saying he has a declared bias against investing in tobacco, that if the same numbers reflected the financials of say, a retailer, that Ben would be making different recommendations. In effect the reader is making an ethical case: investor should suspect looking behind the numbers. Perhaps Ben has had a tobacco-related illness cause personal tragedy, similar to a money manager of a multi-billion dollar shop just off Wall St leading a large fixed income team; who invited his staff to bring all investment ideas forward but never bother to bring forward a tobacco deal on account of losing a parent to tobacco-related illness. Knowing that the product of a firm is directly linked to ill health does create an ethical crisis for its business partners, including investors. How they choose to deal with the ethical dilema is their liberty to choose. The Independent's Warner stated it plainly in 2006 "Jeremy Warner's Outlook: Investing in tobacco may be unethical, but it sure is lucrative, as Gallaher bears witness". What was it about 2006, articles pitching the sector were also on MSN Up in smoke – should you invest in tobacco? By Richard Hunter, Head of UK Equities, Hargreaves Lansdown July 11 2006, Businessweek VIDEO "Investing in Tobacco Stocks: How to play it" and a real pearler from "Investment U" pitching why one should invest in tobacco despite the liability and regulation issues Tobacco Stocks: “Smoking” Out Investment Profits From A Blue Chip Titan November 2006. As you ponder what to invest your money in, enjoy some of the wry humour in Thank You for Smoking [2004]. And try not to grin at the catchphrase "Nick Naylor doesn't lie, he filters the truth"..!

The investment case is a lot closer to the ethical case than people think. If one invests, like Warren Buffett, in the firm for its business and long term prospects, how may one look past the product and its effects? Why invest in a sector or firm in a sector where the sector has a large negative exposure? Back in 1997 a public health professor at the top-tier University of Michigan in the USA pushed for major institutional investor TIAA-CREF to back away from tobacco "Vote on TIAA-CREF tobacco investment policy". Also at universities, activist students are a big headache for tobacco industry, being business types, future leaders, and able to see through pseudo-sophisticated arguments, illustrated by the 2004 article on Edinburgh students "Students stub out tobacco investment". A 2007 paper illustrated the irony for Australian pension funds in "Australian pension funds and tobacco investments: promoting ill health and out-of-step with their members", opening with some solid paragraphs:

Calls for institutional investors to divest tobacco shareholdings threaten the industry's share values, publicize its bad behaviour and label it as a politically unacceptable ally (Wander and Malone, 2006). In 1990, US tobacco control advocates began urging government investment and pension funds to divest tobacco stocks as a matter of responsible social policy (Wander and Malone, 2006). Tobacco companies fought hard to counter the divestment push and eventually only seven US states divested their tobacco stocks (Wander and Malone, 2006).

Since 2000, transnational tobacco companies have sought to regain the public's respect and investor confidence by embracing the principle of ‘corporate social responsibility (CSR)’ (Hirschhorn, 2004). The appearance of British American Tobacco in eighth place on a Corporate Responsibility Index for 2006 published by the St James Ethics Centre suggests the CSR strategy has been at least partially successful (Chapman, 2006). Investment analysts continue to describe tobacco shares as a good buy (Dubose Tomassi, 2006). Incredibly, as late as 2004, five leading US medical schools held shares in the tobacco industry (Wander and Malone, 2004). The scope of current pension fund investments in the tobacco industry is indicated by a 2006 estimate that smoke-free legislation in England could add up to £20 billion (US $35 billion) to UK pension deficits (Simpson, 2006).

The irony of seeing nurses smoking by the hospital exit is analogous to the news in June 2009 from Canada that health insurer investment arms are investing in tobacco, which the tobacco industry proudly reported and were defended by the Candian Finance Minister as reported by CBC in June 2009. It appears Nigeria has banned future investment in tobacco. Personal habits are sometimes at odds with the societal good, or even one's personal good.

Ben's column title "Contingent Liabilities Take Shine of BAT" in Business Day 16 July 2009 offers a gentler version of the danger. As he summarizes in his conclusion:

Before you are tempted to buy the shares, however, read [this is always a smart thing for investors to do!] the nine pages on contingent liabilities and financial commitments in Note 30 of the 2008 annual financial accounts [statements]. It is a terrifying horror story, and its possible financial implications on future earnings are not quantified.

Any investor must assess the opportunities for risk and reward from placing money in the ownership or lending of a going concern today, expecting to earn a higher rate of return than some base rate - say the rate of inflation or interest on a cash account. So any investor in a tobacco firm must take a view on the cash returns to the firm in the forthcoming period, or the market's opinion about that return, depending on whether they are basing on fundamentals or relative measures and technical market movements [if you're a trader, it's a matter of seconds, if you're a deep value investors, a matter of years]. That means assessing all the scenarios for the firm. Which include the huge public healthcare costs that are attached say, in the US. Part of the Bloomberg Initiative's purpose to fight tobacco in low and middle-income countries (focusing on 15 countries) is exactly to avoid the future healthcare burden in countries that cannot afford it, literally. The future "settlements" from the tobacco industry of course have created the conundrum where the state government has a vested interest in the tobacco firm thriving and earning cash returns, in order that the tobacco firm pays the settlement into the future. Federal and state legislators have a vested interest in keeping tobacco in business. These are the so-called "Tobacco Bonds", applied and rated by Moodys at state level. Government has a vested interest in cigarettes because of the large excise duties and taxes levied on them, effectively creating a chunk of reliable cash revenues that are hard for politicians to become un-addicted to [see The Red tape Chronicles spotlighting the taxpayers interest in smoking teenagers and made of US state securitization of tobacco settlements in "Ten years Later Tobacco Deal Going Up in Smoke from Nov 2008]. New York state Public Interest Research group [NYPIRG], one of the publicly funded think tanks, outlines the case for state-level divestment in the US [Tobacco Divestment in New York State] in fighting against NY funds invested still in tobacco. Many of these arguments apply in emerging and frontier markets like Brazil, Bangladesh, Malaysia, Sri Lanka or South Africa, which is why the Bloomberg Initiative targets such countries. NYCERS, the activist pension fund active in sustainability and ESG investment, remains invested despite stopping new investment some years ago. We have no view on the efficacy of the "black box warnings" that tobacco companies must slap onto the packaging. Pharmaceutical companies detest that stigma, and food companies have wriggled at the prospect that some of their marginally nutritious foodstuff could deserve the same. Some of the drive to capture the full costs of tobacco is reflected in the litigation and the global regulations to prevent marketing and sale [cigarettes are sold, not bought] that the World Health Organization Tobacco Free Initiative helped drive in the late 1990s under Gro Harlem Brundtland, the former head of the UN sustainable development commission that coined the sustainability definition in 1987:

"Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. It contains within it two key concepts:

1. the concept of 'needs', in particular the essential needs of the world's poor, to which overriding priority should be given; and
2. the idea of limitations imposed by the state of technology and social organization on the environment's ability to meet present and future needs."

It is hard to reconcile this thinking with investment decisions channeling cash today into tobacco, yes? Sustainable finance is about comprehensively assessing explicit and implicit risks and benefits of investments: not just the ones that firms choose to write about, legislators bother to regulate, and lawyers cannot slide past. The investment case is a lot closer to the ethical case than people think. Integrating ESG factors - what is the total lifetime lifecycle cost of tobacco production and sales to humans? - is part of the holistic investment playing field with no externalities that we think all investors should play on. No costs should pushed onto society, and hidden costs should be exposed. Once all the costs and benefits, risks and returns are fully priced in, go ahead, puff away: thank you for smoking.

Earth Hour Bright in Darkest Africa

8:30pm Saturday 28 March 2009 and NOT so dark at the bottom of Africa. Nor in Sydney nor London for that matter. Earth Hour South Africa, as the photo suggests, was looking a tad too bright! What change did we observe in our unscientific survey from Table Mountain overlooking the Cape Town CBD? The Cape Town provincial government and city offices were dark [yes, there may be other explanations than energy saving!]. The only visible change at 20h30 CAT [Central African Time] was the ABSA building logo going dark, perhaps because ABSA [JNB: ABSP] is now majority owned by Barclays [LON: BARC], and the degree of coordination was good.

What “beacons” kept shining vaingloriously under southern skies? From our perspective, not much about the city changed, with the amber glow of incandecent and the blu-ish light of neon strung around CPT as usual. After the speeches by African politicians and with South Africa representing Africa into the G20 and climate change negotiations heading to Copenhagen in December 2009, one hoped for major Parliamentary action. Underwhelming… What of the corporate players? Most easily spotted – there were others we did not spot – were some brands making the wrong statement in the African night sky:

• FNB [First National Bank], which uses an iconic African acacia as its corporate identity
• LG, the South Korean electronic goods manufacturer with the tagline “life’s good” which did trumpet its Earth Hour in Malaysia
  
• Southern Sun, on top of the Cape Sun, touted green credentials last October
  
• Nedbank, a billboard for the “green bank” storeys high downtown, which figures, because they had ZERO Earth Hour coverage on their busy wesbite.
  

Oops?! Nedbank [JNB: NED] must have been feeling awkward come Monday, what with having pitched their positioning on the JSE SRI Index in April 2008, hosting the Green Mining Awards, and being the bank with the affinity program for customers tied to WWF SA called Green Trust. Motivating a major global financial institution to action is a logistical mountain, as JP Morgan Chase Earth Hour PR illustrates in defining what it can and cannot do. Reminds me of the story from a mate in Corporate Responsibility at ANZ bank in Australia. As head of the Earth Hour project around 2007 she had plans in place to cut lights in the large ANZ [OTC:ANZBY; ASX: ANZ] headoffice building in Melbourne BUT could not get her facilities people to guarantee the huge neon signage crowing the building to go dark. Unperturbed, and in superb Aussie “can-do” fashion, she had on stand-by a colleague or two with a large hatchet and some rubberized boots! No way that light was shining at 8:30pm! One gets a sense for the drama watchng the video of Earth Hour Cape Town mayor Helen Zille doing the big switchoff, and the relief of "oh, it worked!". Things have moved on sufficiently that this year the ANZ-sponsored ANZ stadium, a major in Australia, voted to switch off its external branding lights. See the list of participating Australian banks.

Another icon for sustainability best practice in Africa is Woolworths [JNB: WHL], the premium retail store. It was rated best in class for sustainability, and signed to the WWF water neutral initiative, has a sharp Eco-Efficiency award programme for suppliers, and forthcoming Woolworths Sustainability Index is yet to be posted at http://www.woolworthsholdings.co.za/sustainability/sus_index.asp. Woolworths Earth Hour activity hooked directly to employees at head office in CPT encouraging a big switch off AND offering a discounted CFL swap - up to five bulbs. Stores tried some ideas, but emails to customers only focused on the weeks' special deals, so maybe they missed an extra step to magnify impact. The WLH notice read:

Woolworths supports Earth Hour: For one hour, millions of people will switch off their lights across the globe in support of Earth Hour to raise awareness on saving energy. Saving energy is an important part of our Good business journey and we encourage all colleagues to participate by turning their lights off for an hour. Earth Hour is a World Wide Fund for Nature (WWF) initiative. On 24 and 25 March you can change your incandescent light bulb for an energy saving light bulb, courtesy of Woolies and Eskom. This will save you money and help to reduce energy usage. This is a small way for each of us to participate in our Good business journey. Woolworths is targeting a 30% relative reduction in energy usage by 2012. When: 24 and 25 March from 09:00 - 13:00 Where: Woolworths house, foyer. Please note that we can only exchange a maximum of five light bulbs per person. Remember to support Earth Hour on 28 March from 20:30 to 21:30. P Consider the environment - do you really need to print this email?

Earth Hour is one of those tipping point type efforts, the ones where a small item at the right point of leverage creates some kind of systemic change. Gladwell made it common jargon with business types early this century. Think of the first time you saw a cellphone that was more mobile telephony than brick or a music player as seamless as the second generation iPod. In the same category we recommend to you Nudge. The current thinking person's book – Nudge: Improving Decisions About Health, Wealth and Happiness [good timing, boys!] – relies less on regulation but suasion as a driver. Earth Hour, one of the better things to come out of Australia, aims to use just an hour as a window to a different future, highlighting the a raft of environmental issues by reversing the glaring trend to burn energy to light up the planet [roasting marshmallows as in Madam & Eve is optional!, see cartoon above]. WWF is the enviro NGO which is held in high esteem globally, is behind the idea since the Australian affiliate moved onto it in 2007. WWF helped popularize it in the US, Europe and Africa through local affiliates. Even Brunei joined in this year with mosques covering ecology in the Friday sermon. Brunei was the sixth largest per capita CO2 emitter in 2004, and always worth a punt in your geography quiz - Q: which continent is Brunei on? The first-ever OPL cohort covered Earth Hour in our review of international awareness and advocacy tools on the inaugural WWF One Planet Leaders programme in Switzerland in 2007/8. Earth Hour 2009 aims to "reach more than one billion people in 1000 cities around the world, inviting communities, business and governments to switch off lights for one hour at 8:30pm on Saturday March 28 and sending a powerful global message that we care enough about climate change to take action".

Chicago Tribune included some beautiful shots, see Bern cathedral after 8:30pm CET. The ultimate photo-op would not be darkness at night, a reversal of the classic artificial “world at night” photo from the NASA project to plot urbanization which we often use to describe systemic approaches and regional differences to sustainability+investment and sustainable development. That photo replaces thousands of words. It reflects the sustainable development footprint and challenge, as well as being useful to quickly pinpoint critical footprints for Sinclair & Company in SA, USA and Switzerland. It is a little harder to pinpoint Harare, for example. Earth Hour works on local time, so the rolling blackout kicks in according to international timezones [an arcane system worthy of another blog another day] from 8:30-9:30pm local time.


Things Go Bump in the Dark

Certainly the WWF and Earth Hour South Africa team had great marketing reach, and some big brand names as participants. In Cape Town, the iconic Table Mountain went dark – in the same way that peer emerging market major Brazil had the lights on the Christ statue in Rio de Janiero go dark - see some great photos and comments on GlobalVoices. Unlike the Sydney Opera lights apparently, bad form, Oz. Pop radio DJ Fresh on 5FM had some useful suggestions for the young and virile with a dark Saturday night hour to kill.

Even the most exclusive CPT eateries interrupted diners to explain the lights would be cut for the hour – but that’s never a problem where an extra candle as to ambience and the grill is gas-fired. In the streets the “grass-roots” approach in this emerging market as always relied on the lamppost signs strapped up pitching the idea, in between the election posters. Random support came through using the local Idols to spread the word, as the SA Property blog did. The Earth Hour Facebook group had 859,516 members, and blog Greenmarket covered the myriad other electronic marketing approaches [never did get the BB download though...] including photo stream on Flickr. With all this global coordination reminding me of the all-time greatest worldwide brand – Y2K – one wonders how the branding specialists will one day hence come to rate Earth Hour as a global brand?

The UN SG endorsed the effort [but here the earlier comment regarding public offices and darknesses echoes[!]] and one of the fine old twentieth century institutions, Baden-Powell’s Scouts had action at community level. But what difference does it make? As a global phenomenon it was open to interpretation. In South Africa the Mail&Guardian Thought Leadership blog [the editors feeling a little lofty the day they launched it, mmm?] the hopes were high, but Bridget McNulty’s view from Signal Hill matched ours from the slopes of Devils Peak: underwhelming. In the most environmentally-sensitive city on the continent. Check some of the Comments to Bridget's posting Earth Hour: A Little Underwhelming... which reflect the ambivalence to this form of social action, and in the contradictions in creating change which in itself uses energy. Even 1970s era environmentalists at National Post add some contra-wisdom.


Enter the Investors

My interest as always is to probe: where are the investors? No, one will never find a line-item for compliance with Earth Hour in the Green Century Mutual Fund from Boston, or the GS Sustain index from London, nor the RIAA certification. Not even in the WWF International’s own green investment product run from international headquarters by Chiew Chong, the Living Planet Fund, offered for sale as an OEIC out of Luxembourg to European clients. Australian industry website Ethical Investor posted the event, But a rough poll of some leaders in investing integrating ESG factors had at best an ad-hoc, personal approach, as opposed to a coordinated, strategy one would expect from sophisticated knowledge-based service industries. A simple list of investment/financial Earth Hour participants in Africa were:

• ABSA
• Coris Capital
• Coronation Fund Managers
• Discovery
• Investec
• Liberty Group
• Metropolitan
• Momentum
• Nedbank
• Old Mutual
• Sanlam
• Santam

The Earth Hour event juxtaposed timeously with the Principles for Responsible Investment [PRI] annual assessment submissions due 31 March 2009. As my experience reflected when working with the PRI annual assessment 100-odd questions on making the six principles of the PRI happen, it is easy to put up some aspirations with guidelines and waving a flag. Many of the PRI’s key signatories share the discomfort. It is much harder, but yet so much more impactful, to measure the outcomes and net impact of the driven behaviour. Earth Hour is just an event. But maybe it should be a line-item along with the other 100 questions for investors. It does at least offer the advantage over the 100 other data-points: complete transparency and immediate accountability in real-time. Inaction leading to reaction from consumers, observers, and investors, with reputation sensitivity driving future action.

Earth Hour, as some beautiful photos attest, was no doubt a success. WWF has done well, and partly by not hogging the spotlight putting the issue above the WWF brand. It is obvious that the symbolism is not enough, as BusinessWeek suggests through it's guest commentator, with interesting Comments. Earth Hour points participants toward the major Copenhagen conference and the Species Report. It is but a moment, not even 10% of a day/night cycle. The next obvious anniversary date upcoming is Earth Day. More symbolism and action/inaction sure to follow. Like all ceremonies and rituals, sometimes useful for impact, but at least useful for planning the diary.

Will Earth Hour 2009 nudge the thinking further along the learning curve, and will the youth remember it when they next come to make investment decisions?

A thirtysomething trillionaire at the Zimbabwe Stock Exchange

A thirtysomething trillionaire. Like Wired Magazine predicted Bill Gates would be back in 1999 [you recall how that ended!]. I do not even know how many dollars or euros or francs or rands it took, but the smiling moneychangers at the Zimbabwe - Zambia border posts had more than a few. A trillion is 10.12, a lot of zeroes!

Hyperinflation is what happens when politics believe their own hype, and command the reserve bank and treasury to print money which is not backed by real assets. It ruined the Weimar Republic in Germany in the 1920s, and Latin America in the 1980's. With hyperinflation, confidence is wiped immediately, and the irresistible force of geometric compounding swamps calculators as each unit of currency becomes worth decimals of what it once did. Zimbabwe’s president has bankrupted his country. But being better educated and able to manipulate the levers of power, Mugabe no doubt has his wealth offshore. Not in Switzerland, too close to those who hold him accountable, and as of Friday, a less secret place to stash the cash. No, his money is allegedly further east, probably in Singapore, Malaysia or Kong Kong. But also embarrassingly, Mugabe may have cash in the Isle of Man and land in the UK, according to Harvard Kennedy School Professor Rotberg who has covered the ZIM corruption since 2007.

HK is where Mugabe's daughter is getting her degree. I have never met her and she may be the nicest person. Readers may recall that HK is where his wife allegedly took around USD50k cash - straight from the ZIM Reserve Bank - to go shopping, and where she managed to be famous for punching a photographer [the media is real outside ZIM]. The obliging HK administration declined to press criminal charges. Anyway, I am surprised Mugabe's daughter did not simply have her father order the university to issue her with one. But then, having driven past the University of Harare last week, one understands the head of state’s own family choosing to study elsewhere: it was impossible to see the campus buildings through the head high grass and weeds. Perhaps the student activists who reject the presence of the dictator’s child in class may create more of a challenge to “normal” than the is possible within Zimbabwe itself. If the university is anywhere decent, it will have more freedom of expression, and more accountability, than Zimbabweans have experienced in the past twenty years.

Like opinion polls to politicians or market prices to CEOs and their bankers, a currency’s worth is a relative score on the perceived health of a political economy. Which is why for the first time one may recall, the Chinese premier called upon the US to be fiscally responsible and to guarantee its good credit over the weekend around the G20 summit. Yes, the Obama USD 800 bn rescue package has a price tag, and the low interest rates and trillion-dollar spending will lead to a weaker dollar, just not today. The Economist has its own problems with it. SeekingAlpha website covered the hyperinflation effect for the US. The mighty Swiss france has become too strong for its banking and manufacturing industries, leading the Swiss to devalue their currency by intervening in the forex market. A short term strategy that “beggars-thy-neighbour”, but the CHF is small enough to slip by for now.

So where does “responsible investment” factor into the ZIM situation? In November 2008 when I visited London I recall a furore that Anglo and Barclays were making new investment into their ZIM country operations - ZIM Barclays does have the cleanest buildings. The ZIM regime is despised in a way I would think apartheid South Africa once was. But the convoluted and conflicted behaviour at a country level within the UN system, the lure of ZIM’s mineral wealth, and Mugabe’s “street cred” among African “liberation” politics including his ability to manipulate has kept him around way past his sell-by date. But how many country screens are excluding ZIM?

Few investment policies will even reference ZIM, partly because it is dwarfed by other major investable countries, and by its southern neighbour. Burma receives much more attention in the US, for example, with Chevron [NYSE: CVX] being targeted for action this shareholder season. 

The 2009 resolution seeks greater transparency on how Chevron evaluates its human rights impact, especially in high risk countries like Burma. It calls on the company to report on its criteria for investment, continued operations in, or withdrawal form specific countries. The annual meeting is expected to take place in May 2009.  The resolution was co-filed by the following institutions: Teamsters General Fund, AFL-CIO, Ms. Adelaide Gomer, The Maryknoll Fathers and Brothers, Mercy Investment Program, Newground Social Investment, Ursuline Sisters of Tildonk and the Unitarian Universalist Association. The International Trade Union Confederation (ITUC) and the International Federation of Chemical, Energy, Mine and General Workers' Unions (ICEM) have both endorsed this resolution, as has the Canadian Labour Congress (CLC). 

The unintended consequence of Mugabe bankrupting the country is that it makes a micro-point of any global emerging markets exposure at a country level. Investors into Africa probably only have indirect exposure to ZIM by holding firms that are still ticking over in the country [see Financial Mail’s breakdown of ownership in ZIM brands].


Buy or Sell ZIM?

The investment policy for investors that integrate environmental, social or corporate governance factors [ESG] is the appropriate place to look for the response at a macro level. Major institutional investors now consider ESG factors, and CalPERS has an explicit approach to emerging markets investment. Perhaps the most well-known advocate of ESG in global investment is the Norway Government Pension Fund – Global, with NKr2.275bn [Eu258bn, USD329bn] in AUM. The Norwegian Global Fund, a sovereign wealth pension fund created from North Sea oil revenues, has a investment policy explicitly outlining ethical factors, and practices investment by having an ethical council screen investment opportunities. International investors saw this in action in the pages of the New York Times and Wall Street Journal in 2006/7 when Norway flagged Wal-Mart for exclusion, generating some diplomatic activity, and raising the profile of the ethical council. It also made a useful Harvard Business School case study, Norway Sells Walmart.Later in 2008, the fund published a report on child labour: corporate governance, children and the environment remain primary key issues. In last Monday’s FTfm the fund's "thorny path" was highlighted.

The easiest route is to disregard investment merits and divest immediately, and buy back quietly when the storm has passed. This approach only generates a better investment argument if the accompanying publicity will drag on the share price wherever it is traded. Shareholder activism is a public approach to have the company address the issue. A high profile investor when faced with a high profile problem may need to take this route – the Norwegian fund has addressed the costs of climate in a white paper in response to an NGO asking a pointed question. Environmental NGO Bellona recommended the fund exclude carbon emissions violators in a report to be submitted to Norway’s parliament 26 March. Shareholder activism is not limited to ESG factors, and in each year our experience at Sinclair & Company is that some have greater emphasis than others. In 2009, clearly executive pay has become the lightning rod – just ask Messers Goodwin or Liddey what their majority shareholders [UK or US taxpayers like you] think about fat cat salaries…

Shareholder engagement is an approach by investors “behind closed doors” approach less concerned with shareholder proxies but with suasion, and better explained in hindsight and ex-post facto. The most recent, 2007 SIF report identified increased activity in the USA covered through 31 December 2006. 

The average level of shareholder support for resolutions on social and environmental issues increased 57 percent from 9.8 percent in 2005 to 15.4 percent in 2007, a record high.  The total number of resolutions increased from 360 in 2005 to 367 in 2006.  Institutional investors that filed or co-filed resolutions on social or environmental issues controlled $739 billion in assets in 2007, a more than 5-percent rise over the $703  billion in assets counted in 2005.

Engagement works in smaller, clubby circles of capitalism, where the connection between investors and companies, and the professional circles they move in, is much smaller and the prestige of the matter carries some weight. Some of the more effective conversations have come where advisors put publicly combative parties in a room, and as people and professionals new ways forward were sought. The UK, Brazil or South Africa are examples of these smaller investment circles of influence.

The shareholder activism has practical challenges. Pauline Skypala in today’s FTfm covers the recent handwringing on shareholder rights at the UK's National Association of Pension Funds [NAPF] conference last week. NAPF has been a proponent of integrating ESG factors, and is a conference of investors with a longer-term perspective. The influential Lord Myners, himself renowned to be frank, had institutional investors expressing “a lot of this [corporate governance] is rubbish”. How long investors should stay invested, whether all investors offer the same direction to a company, and when to extract investors from a situation are all practical challenges of implementing an investment strategy that [correctly] integrates governance into the investment equation.

The momentum of actions that seek to target at the country level are unpredictable, and may succeed in direct relation to the publicity, not necessarily the weight of arguments. Tibet is overshadowed by China’s massive bulk. Burma continues to attract attention of human rights activists and the investors that map to that [see GES Investment Services' briefing on Burma this month, March 2009], while countries which also have poor human rights records may feature less. It is so that ZIM attracts almost zero attention in the US while the Sudan/Darfur issue has generated major student, media and investor action. Acolytes of the sage of Omaha, Warren Buffet, have heard him explain his position on China National Petroleum Corp. [HK:0135, CNPC] because of Sudan [see Marc Gunther's 2007 Fortune piece], and they may not even know where ZIM is on a map.

ESG research providers have made available screening products that are not expensive to build and easy to pitch which focus on countries or companies that fail criteria of certain international initiatives or agreements. EIRIS has country sustainability profiles and convention ratings, and Riskmetrics ISS Innovest offers sovereign ratings in their screening boutique. Companies' own dilemna on whether to stay or go is newsworthy material for the media: should they stay or should they go? Divestment is a fairly blunt instrument. Unfortunately for the average ZImbabwean, lovely people, their country does not warrant the attention of the world, despite the country being mis-managed into -40% GDP tailspin. Divestment is a dramatic tool, with much scope for collateral damage. The investment decision is the least of matters.

White London, Grey Davos, Green Cambridge

[SRI-Extra in 60secs > Snow falls on LDN and attracts some sustainability media thinking. Sort of. FA launches FAGreen in the US. Davos is WEF annual skiing vacation for politicos and financiers. Davos had better snow, and more hot air, but some pointed comments by Tutu and Putin. SA's Maasdorp covered impacts on Africa. Investment News suggests ESG is fast gaining acceptance in the US. Xshares launches Airshares. IFC-funded Who Cares Wins project closed with a summary report from OnValues, which included four recommendations for EM. IFC funded the project, and is active in ESG in investment in EM. Credit Agricole and Societe Generale merged asset management divisions. Obama says bank bonuses at this time are "shameful". MIT posts links to sustainability on campus, and at the B-school, MIT Sloan. GS]


Snow in London

Snow is dusting London and Paris this morning. It is enough snow to look beautiful, the sugar coating offering postcard photographers a once in decades opportunity. Fun at last for all those with Land Rovers. In Pennsylvania it's groundhog day [39% historical accuracy, 2009 predicts six more weeks of winter]. Funnily enough, a CNBC reporter jumped to make a climate change connection, CNBC Africa feed from Germany this morning's Business AM connecting a report on Lufthansa [Deutsche Lufthansa AG (ADR) (Public, OTC:DLAKY)] to the importance of sustainability in investment. I know aviation is a critical component, but that seems a bit of a reporter stretch, no? Maybe she could have connected to the Japan Airlines non-food biofuel-powered flight, that would have helped the segue a little [Japan Airlines Corporation (Public, TYO:9205)]. Here's hoping we will have smarter sustainability coverage from business journalists going forward, including a new on-line publication from Financial Advisor magazine, FA Green, launched by online editor Dorothy Hinchcliff. FA Green is targeted mostly at investment advisors in the US [see article on AirShares EU Carbon Allowances Fund (ASO) by Xshares, which rang the opening bell on 28 January]. The white snow will at least give our mates in the bleak City of London financial district something to look forward to, like building snowmen or a decent Calvin and Hobbes-quality snowball fight!


Lost in Davos

The snowfall may even help the bankers feel like they were part of the Davos circle for a few hours. Davos is the name of the town of Davos-Klosters in Switzerland and the abbreviated title for the annual World Economic Forum [WEF] gathering of politics and business. In 2009 SA's Maria Ramos was co-chair. It is a fun ride if you like schmoozing and skiing, and attracts attention of discontents. Davos is organized by the World Economic Forum, a Geneva-based organization set up by a millionaire Swiss businessman in the 1970's, with a fantastic view of Lac Leman over the UN Palais across to the Jura mountains in France. Davos offers much content at low cost for the major media, especially business media, so it received much coverage. As was widely reported, the role of finance and investment was supplanted by politicians. It is something of a lost year. Obama had no economic heavyweights there. Archbishop Emeritus Tutu [photo above] offered an interesting session on dignity as only he could, BBC reported Tutu said:

"we worshipped in the temple of cutthroat competition, and so some cooked the books, because the treasure is so great"

Bankers were no doubt an endangered species, with not a sorry in sight [see AP writer Brad Klapper report, note Forbes's comment and Schwarzman's pitch for less regulation]. The Bloomberg interview of Putin on 25 January by the female Bloomberg TV Moscow correspondent, Ellen Pinchuk, was gripping TV. Putin's slap down of Michael Dell was legendary. Bloomberg reported:

In the question-and-answer session after Putin’s speech, Dell Inc. Chief Executive Officer Michael Dell said he was surprised by the prime minister’s warning about excessive state interference and asked Putin how Dell could help Russia develop its information-technology industry. “You know, the trick is that we don’t need help,” Putin said. “We’re not handicapped. The people who really need help are the poor, the disabled, pensioners, developing countries.”

The ruble dropped 3.5% after Prime Minister Putin's comments. Soon we will see the movie adaptation of the play Frost/Nixon, so maybe I am a little more attuned to the challenges of being the astute interviewer face-to-face with a powerful person in a powerful emerging market country. She did well to discover his favourite "guilty pleasure" is ice cream, ever since Prime Minister Putin was a kid. Lots of it, apparently, but no mention of Ben & Jerry's. So if I ever meet him in person, we have at least one thing in common! Of all the river of Davos reporting, I enjoyed the note in Business Times in South Africa by WEF Young Global Leader, Leslie Maasdorp, vice chair of Barclays Capital and ABSA Capital, who spoke on the impact of the global financial crisis on Africa. His comments on the importance of a multi-polar world was expected, and he makes the good point that no new architecture or scope has been sharply defined for a "new world order". January 2009 is the worst ever January on record for the Dow, and the "January barometer" [if January is down, the year is down] suggests this year will be pear-shaped. Financials are down 25% in the US for the year [that's just January, folks!]. While many may wish for a "fairer economy" just keeping economies going may overwhelm all other priorities. Questions about the limits of corporate governance still lurk, including this morning's FTfm. Investment News overstates the US paradigm, "Investing according to strict environmental, social and governance principles is fast gaining acceptance among U.S. investors" BUT the positive trend maps our experience and forecasts.


Who Cares Wins Signs Off

Most useful for sustainable finance was the 2008 report summarizing the work of "Who Cares Wins", which unfortunately we could not contribute to because of prior commitments. The series of WCW papers since 2004 funded by the IFC, the Swiss Federal Department of Foreign Affairs and hooked to the UN Global Compact, have been useful in raising the profile of sustainability. Some papers have been better than others but the wrapping of the WCW project with an explicit conclusion is excellent project management, and good governance in this sector. On the eve of Davos fellow ESG consulting shop OnValues, based in Zurich, published the report as "a significant component of the Initiative's sponsors' media strategy during and following the WEF Annual Meeting 2009 in Davos this week." See the IFC PR.

Though the current turbulence in financial markets may tempt investors and companies to think of ESG issues as ‘tomorrow’s problem’, we believe that urgent and wholehearted action is warranted not in spite of, but precisely because of the market dynamics observed in the past months. ESG integration is about investors and companies taking a longer-term view, acknowledging the full spectrum of future risks and opportunities, and allocating capital as if they themselves were the beneficial owner.

The concluding paper offered some useful thinking for work in Africa and other emerging markets regions. The authors posit that in order to improve ESG integration in emerging markets investment, which was a special focus area of the WCW Initiative based on the direction of the IFC which has an EM ESG team [see IFC EM ESG projects] in Washington DC, four recommendations are important:

1. Include ESG issues in regular company meetings and engagement activities
2. Perform a systematic review of the ESG exposure of investments in emerging markets
3. Consider collaborating with other investors in requiring minimum ESG disclosure standards from local legislators and exchanges
4. Consider the potential for small allocations to frontier markets not only to deliver attractive returns but also to establish basic investability conditions (such as custody, efficient settlement services, etc.) and management awareness of material ESG issues.

In discussions through February I hope for some reaction from colleagues in EM in the sustainability + investment space to the request for better information. There is much to reflect upon. Moving changes in institutional investment are reflected by Société Générale and Crédit Agricole merging their asset management businesses to form Europe’s fourth largest operator with EUR638bn [USD837bn] under management. CA Cheuvreux had some solid ESG research [see 22/12/2008 The Green Road Out of Red], as did SocGen. One hopes their research capabilities are strengthened, not seen as overhead to cut. The consortium of funders behind WCW reflects the costs involved in some of these initiatives, especially where they are global. WCW was more useful because it tapped into thinking on emerging markets [EM] although mainly from the perspective of investors into EM from Zurich, London or Paris than actual investors in EM. A good exception was having Investec's Hendrik du Toit covering frontier markets at the July 2007 event in Geneva at the Credit Suisse private bank, Rue de Lausanne 17. All these projects must be funded, in cash or in-kind. One often forgets that the multitude of organizations and initiatives around the world are competing for influence, for money to support their efforts, and private and public sector institutions to collaborate with them. It is competitive. But it is also much harder to figure out on a consistent basis which organizations are achieving what. There is no "marketplace" or "stock exchange" valuing the work of international organizations and NGOs.


Pay for Performance

Scoreboards may be tough to read. Scores change in seconds, like market prices. We struggled to watch from 1am central African time [CAT] this morning the biggest one day sports event in the world, the NFL Superbowl in the US. A great game, but none of the famous Superbowl TV adverts. Wrong zone. Markets are like sports fans in that they like clarity, like knowing which is the champion. The increase in fantasy leagues, the recruiting of traders using poker games, and HSBC sponsoring the Lions rugby tour to South Africa in 2009, are just some of the examples of the metaphor and parallels. Boston-based online paper CSMonitor had a good item connecting pay-for-performance of businessmen and the NFL athletes, many of whom are superbly overpaid. All market players are not rational however: all the money in the world could not buy superstar Brazilian footballer Kaka from Intern Milan to Manchester City [GBP107m, USD147m - yes, million!]. The efficient market hypothesisticans must have been spinning...

Pay guidelines are a key request of pitches to the Obama administration as they reconfigure the rules of the financial game for Wall St. Apparently President Obama was pretty pissed about the bonuses, calling them "shameful" on this Huffington Post video. I wonder what President Obama may achieve if he were to invite to a frank airing of views behind closed [oak] doors a bunch of bankers pulling bonuses while firing employees.

In closing, an anecdote from another fine dinner in CPT on Friday. An architect was speaking about how climate impact is 70% caused by the built environment, and that developers will only look at economic cost/benefit-positive sustainability items. Apparently developers do not even care about longer term trade-offs, just the math until the sale to the property owner/manager. More reality from the frontlines on the challenges of getting longer term thinking into investment decisions. Seems like the Green Building Council has many yards to go in the industry. The conversation had me reflecting on my last lecture at MIT Sloan, their business school, back in December 2008 as well as meeting with a cross-disciplinary team at MIT focused on making sustainability happen on campus in Cambridge MA. Even when the thinking is advanced, and smart people are moving, putting basics together across different silos is a change management challenge of note. But MIT is making some good progress. See multimedia links were made available this week including Sustainability: Greening MIT's Campus and Beyond and the Professor heading up the B-school's efforts, Prof Sarah Slaughter, who has an engineering background, here speaking on sustainability. MIT Sloan are moving forward with some case studies for teaching sustainability + investment with Sinclair & Company in 2009. The title of Prof Sterman's lecture on the Sloan Review is about right: A Sober Optimist's Guide to Sustainability.
SRIX.GS

***
Who Cares Wins [WCW] events and milestones include reports for download at http://www.ifc.org/ifcext/enviro.nsf/Content/Publications_SustFinance:

• 2004 Annual Event; 'Who Cares Wins: Connecting Financial Markets to a Changing World'
  
• 2005 Annual Event; 'Investing for Long-Term Value'
• 2006 Annual Event; 'Communicating ESG Value Drivers at the Company-Investor Interface'
  
• 2007 Annual Event; 'New Frontiers in Emerging Markets Investment'

Blood-Tainted Milk in China and Country Contradictions

[SRI-Extra in 60secs This past week [some] culprits in the tainted milk scandal in China were sentenced to death. The tension between doing good business and the right thing is real, settled in court and in the press, sometimes in death. The toxic milk powder scandal killed at least six children and sickened nearly 300,000 last year. What makes it a little awkward is that NZ-based mega-dairy Fronterra owns 43% of Sanlu. Human rights do impact business, and a Bill of Rights is a key component. In the USA the Centre for Science in the Public Interest will sue Coca-Cola [NYSE: KO] for claims on VitaminWater health benefits. Further exploration on forming an AfricaSIF reaffirmed the two classic challenges faced elsewhere in the world, 1. definitions of ESG, and 2. the matter of priorities of ESG. Ranking the issues of sustainability will differ from country to country, or city to city, company to company. FTfm covered GS Sustain and Sarah Forrest’s team in London, the GSAM Africa marketing person is in JHB this week. The Economist this week raised the Norwegian profile in their "Norway and the environment briefing, Binge and Purge” where they reference Oslo as “[h]ome to a green-minded people and government, Norway exports the dirty stuff to the rest of the world. The result is a contradiction”. Statoil does have 7.8kg carbon emission footprint per barrel versus industry average of 19kg, 37% of global average. At least Norway has been active since 1991, and is switching to cap-and-trade to offer a material and measurable drawdown of emissions. South Africa’s minister of finance, Trevor Manuel, gives the annual budget shortly, and one may make suggestions directly to his website Tips for Trevor. The Danes signed a wind power agreement in South Africa. FT released annual MBA ranking with Wharton on top. Today’s Business Day "Management Review” included two articles on climate change and sustainability, but the content was unfortunately stale. GS]

Blood-Tainted Milk in China and Country Contradictions

Business failure has drastic consequences. Greedy executives, incompetent managers, self-interested workers, any of these may break down the fair play of good business. The tension between doing good business and the right thing is real, settled in court and in the press, sometimes in death. This past week the culprits in the tainted-milk scare in China were sentenced to death. I wonder what sort of moral dilemma that creates for the social investment advocates in the US who rose up in alarm at the China-sourced milk scandal, who probably do not support the death penalty in their human rights approach. Principles will always be tested in practice. Obama has been smart to stay flexible. The news reports with photos of anguished parents struck a cord this week: the photo documentary at the constitutional court of death penalty in South Africa in 1985 seemed eerily similar to the newspaper photos from China. The toxic milk powder scandal killed at least six children and sickened nearly 300,000 last year. The legal trials target executives from the Sanlu dairy group and city officials accused of allowing the sale of milk adulterated with melamine or for covering up the scandal.

Steps to control melamine are being sorted by the centrally controlled economy. What makes it a little awkward is that NZ-based mega-dairy Fronterra owns 43% of Sanlu. The ructions on the event, and the death penalty, has caused political tensions in Kiwiland, despite the demands for the death penalty from affected parents. Pursuing the one company does certainly smack of victimization because 22 companies are implicated. Apparently, Fronterra was also a bit tardy in getting the info to US regulators in Washington DC as NZ bloggers report, see the timeline from BBC. Ah, the joys of being from a progressive country, like Fronterra, but owning a major stake in a company in a semi market-based system, like China. No word on the consumer alarm from September 2008 rolling into better labeling or food security upgrades outside of the blame-chain. No word on the next Fronterra sustainability report. The trials in China will continue. The sad reality is at least the bosses are accountable. More deadly than another banker being bumped for his greed, so maybe John Thain fired from Merril Lynch this week by Bank of America's Ken Lewis should breathe a sigh of relief. After forgetting to identify big losses, the anecdote about corporate excess - a million dollar office makeover at MER in Manhattan midtown in the midst of a meltdown - just helped make bankers look out of touch. Still. CNBC reports you can pick up some on Craigslist now!

SRI-Extra will cover more nutrition issues in 2009, including in the USA where Centre for Science in the Public Interest will sue Coca-Cola [NYSE: KO] for claims on VitaminWater health benefits, the lawsuit contending that the marketing for Coca-Cola VitaminWater product is 'deceptive' and makes 'unsubstantiated claims'. KO purchased VitaminWater maker Glaceau in 2007 for USD4.1 bn as they raced to catch up with Pepsi's non-carbonated soft drinks brands business, and counteract a poor nutrition profile of their brand portfolio.

Conversations in Johannesburg, Sandton and Cape Town over the past week have furthered the understanding of the opportunity [or not] for an African Sustainable Investment Forum, an AfricaSIF. It has reaffirmed the two classic challenges faced elsewhere in the world:

1. definitions of ESG, which cover sustainability, climate change, and which environmental, social and corporate governance [ESG] factors; and
2. the matter of ESG priorities, how climate change stacks up against say, jobs for under-employed, or houses versus human rights issues.

Ranking the issues of sustainability will differ from country to country, or city to city, company to company. Creating jobs trumps climate change as an issue. The survey of responsible investment in Peru in 2009 by Liliana at Duke University Fuqua Business School will offer some fresh facts to compare with the study in South Africa in 2007 with Neil [good news is he has just been appointed actiing director of the UNISA Center for Corporate Citizenship]. Balancing sustainability across a voting society raises many challenges. The question of definitions raised in SRI-Extra last week also had resonance in the FTfm coverage of GS Sustain and Sarah Forrest’s team in London. The question tends to make fund managers splutter, but in recent months, advocates of sustainable investment have been able to point to clearly unsustainable investment strategies, and indeed an unsustainable global financial system, as proof they are not just posturing. Sidenote: The Economist or FTfm page may throw up the latest Toyota advertisement campaign, AIM: zero emissions. Do you also think the people as trees is a little wierd in the photograph, something does not look right, yes?.

Constitution Hill

The SA constitution and its Bill of Rights was the freshest in the world when launched in 1996. 20-something rights are enshrined, including social and political rights. A visit to the Witwatersrand and the Constitutional Court on Constitution Hill with a fellow LLB from University of Natal [UKZN] helped illustrate the conundrum. The fine, architectural-award winning Constitutional Court complex was built on the remains of a notorious prison not far from the University of Witwatersrand or from the headquarters of SAPPI [SAPPI Ltd/JNB/SAP]. But on a typical summer blue sky and cumulus cloud afternoon, the parking lot with its head-high weeds and empty lot reminded me of a forlorn municipality office somewhere in Kwazulu-Natal, or a university during the summer break. Where were all the visitors? And why did the entrance to this most important component of democracy and the rule of law look worse than any of the world-class shopping malls along Oxford Road toward Sandton City? One wonders if the Constitutional Court should not have been added as an appendage to a shopping mall in a busy center to offer more foot-traffic, and bring the crux of the legal system to the people it is designed to empower? More people of every economic class were buying something to drink that afternoon, than visiting this iconic institution. No word on a listing of citizens’ duties to help make them the enshrined rights happen, starting with making the site more user-friendly, and picking up trash. Sadly, picking up after oneself is not just an SA problem, even Obama’s celebration was blighted by refuse left behind.

Country Contradictions

The Economist this week raised the Norwegian profile in their Norway and the environment briefing, “Binge and Purge” where they reference Oslo as “[h]ome to a green-minded people and government, Norway exports the dirty stuff to the rest of the world. The result is a contradiction”. The title alarmed me: sounded like my weight-loss program [which is a little behind schedule post Christmas 2008]. The Economist does offer some pithy reminders of what Norway has been doing since instituting a carbon tax in 1991, spending money on climate change mitigation technologies, including a novel one using fresh and saltwater. The Norwegians have even done a test on the merits of bridges versus mountains to assess the carbon impacts: bridges work best for over water, tunnels for under mountains. The pension fund divestment according to an ethical policy in 2006 led to a Harvard Business School case study Norway Sells Wal-Mart that I use at Kenan-Flagler Business School, although I am developing a more articulate example with University of North Carolina-Chapel Hill and MIT Sloan in 2009.

Statoil [StatoilHydro ASA/OSL/STL] does have 7.8kg carbon emission footprint per barrel versus industry average of 19kg, 37% of global average. But The Economist drives on the point similar to Bush’s White House, pointing out contradictions in making a positive action toward addressing environmental issues because the logic model is not buttoned-down and perfect. They attempt to offer some balance. The Economist article's online reader feedback forum matches some of the colourful language and comments in other media online around the world. It illustrates the power of the online version over the print version, although I remain solidly a hardcopy adherent, in solidarity with all the newsprints out there, including the New York Times saved by wealthy Mexican Carlos Slim last week.

Norway is switching to cap-and-trade to offer a material and measurable drawdown of emissions. This should make interesting reading for South Africa’s minister of finance, Trevor Manuel, a few weeks before his next budget [last year he pitched a carbon tax]. And Trevor may be listening. In a demonstration of Mr Manuel’s open-door policy and comfort in his shoes after ten years, one may make suggestions directly to his website Tips for Trevor. The most noteworthy or bizarre - or both – often are referenced in his speech, since 2001.

Activity in wind this week included further coverage of the Danish support for wind in South Africa, and treaties being signed. It is a fine profile for the Danish Wind Industry Association, worth EUR 4,7bn in 2007 to the Danes. Noteworthy in light of my comments last week about relative power of government ministers, the SA representative was the Minister of Energy & Minerals. The Darling wind farm is still in-between days. Jon mentioned that he came back from a hammering kitesurfing session the other day, but the windfarm blades were not moving…

World Rankings and Advertorials

FT released the 2009 FT MBA ranking. I prefer the recruiter driven WSJ version. The world’s top financial MBA, Wharton at the University of Pennsylvania dropped a note in the inbox, covering a trip to Antartica as part of a leadership program, Penguins, Leadership, and Thinking about the Planet. Prof Erik Orts of Initiative for Global Environment Leadership [IGEL] program tried to make the environment connection, and as expected, purchased carbon offsets [142mt through the Wharton Leadership Program Office. The group did not have a cakewalk, which is good, because hardship, physical hardship, is a powerful teaching tool. The Ghandi exhibit at Constitution Hill explained that Mahatma Ghandi made comments about how he achieved what he did in South Africa and then India were made possible after physical pain and isolation cleared his thinking. Every good cycle must have helped me, especially the ones that hurt the most.

The big accounting and consulting firms are moving strongly in the climate space, it certainly makes for a fertile consulting area in an era of shrinking consulting fee hours. The effort in the space is important, but perhaps the practice may be conflicted. Today’s “Business Day Management Review” included an article by the chartered accountants body president pitching “businesses must consider climate change in a strategic way and integrate sustainability into long term plans”. Of course, the media had to title it “Eco Warriors outlook will help the bottom line”. “Climate Change requires concerted action now” by Ajen Sita, head of assurance for Africa sub-area, Ernst & Young, unfortunately, has content so advertorial, it has the E&Y writer referencing CDP data from 2006, when CDP was in 2008, and CDP South Africa for the second year. Pretty weak reflection on BD, Wits and HBR all of which collaborate on the media item.

SRIX.GS