This Week in ESG and Impact Investing

Social Investors Launch Campaign to Halt Proposed Changes to Proxy Access Rules According to Portfolio.com , "Socially concerned investors groups say they won't stand by and see Securities and Exchange Commission chairman Christopher Cox crimp their right to demand company accountability on important issues like the business risks of climate change. The Social Investment Forum, the Interfaith Center on Corporate Responsibility and Ceres, a coalition of investors, environmental groups and others, unveiled a new web site to attract 500 institutions and financial professionals to sign a joint statement against proposed S.E.C. changes." As we noted earlier, "Those most directly impacted by the policy change are large in number but divided and unorganized. These include shareholder groups like the Interfaith Center on Corporate Responsibility, labor-related funds, fai...

SEC News and Enforcement Actions On August 9, 2007, the Securities and Exchange Commission "filed a civil injunctive action against former senior officials of Nicor, Inc., a major Chicago-area natural gas distributor, alleging financial fraud lasting from 1999 to 2002. The SEC's complaint alleges that former Chairman, CEO and President Thomas Fisher, former CFO and Executive Vice-President Kathleen Halloran, and former Treasurer and Vice-President George Behrens engaged in or approved improper transactions, and misrepresented Nicor's gas inventory in order to meet earnings targets and increase the company's revenues under a performance-based utility rate plan." On August 13, 2007, the Securities and Exchange Commission announced " the distribution of approximately $55.6 million in Fair Funds to more than 200,000 investors who were harmed by fraudulent market timing in certain Banc One mutual funds (One Group Funds). The Fair Fund resulted from a settled enfor...

In an August 3rd article titled "Do Gooders Do Well" on the Motley Fool website, Selena Maranjian noted our concerns about the GS Sustain Index and methodology, Goldman Sach's list of “companies from established industries, which have been selected by incorporating our proprietary Environmental, Social and Governance ( ESG ) framework into long-run industry drivers and returns-based analysis and valuation in order to pinpoint structural improvement and sustainable competitive positioning.” The article went on to say that " Of course, not every socially responsible investing advocate is anti-Goldman -- the Calvert Large Cap Growth Fund ( CLCIX ) recently had nearly 2% of its value invested in the company." (The stock is down 12.9% from 12/29/06 to 8/20/07. The S&P 500 is up 1.92% over the same period.) For the record, we are not anti-Goldman. We correctly listed factual data concerning ethical and diversity lapses at the firm, and tied these to their ...

According to the Winston-Salem Journal , "M and F Bancorp Inc. said yesterday (August 10, 2007) that it has agreed to buy Mutual Community Savings Bank Inc. and merge it with M and F’s bank subsidiary, Mechanics and Farmers Bank. The banks, both based in Durham, are two of the nation’s oldest black-owned financial institutions." We believe the merger is a positive development, and will insure that black banks remain a factor in North Carolina. We also note that this is the third transaction in the Black banking sector over the last 60 days.

According to the SEC, "Commissioner Roel C. Campos..announced that he intends to leave the Commission in a month's time and plans to return to the private sector. Currently serving his second term, Mr. Campos was first appointed by President George W. Bush and confirmed by the U.S. Senate as a Commissioner in August 2002." This follows the August 6, 2007 announcement that "Martin P. Dunn, Deputy Director of the Division of Corporation Finance, will leave the agency at the end of August to join O'Melveny & Myers LLP as a partner in its Washington D.C. office." We believe Mr. Campos and Mr. Dunn may have been implicated in, or administratively responsible for, the leak of a draft proxy access proposal ( SEC Proxy-Access Proposal Draws Fire from Investors. The Wall Street Journal. By JUDITH BURNS. July 11, 2007; Page D2 ). This leak led to concerns about the early and selective distribution of proposed public policies only to moneyed interest groups. We ...

Presbyterian Foundation cited for socially responsible investing According to The Presbyterian News Service, "The Social Investment Forum Foundation listed the Presbyterian Foundation as one of the leading United States foundations using social or environmental screening along with traditional financial analysis as criteria for their investment strategy. Other foundation leaders in social and environmental screening recognized include the United Methodist Foundation and the United Church Foundation." SEC News and Enforcement Actions On August 7, 2007, the Securities and Exchange Commission "filed financial fraud charges against First BanCorp, alleging that former senior management of the NYSE-listed, Puerto Rico-based bank holding company concealed the true nature of more than $4 billion worth of transactions involving "non-conforming" residential mortgages. Non-conforming mortgages have income verification and credit history standards that are generally more f...

The Washington Post reported yesterday that "government-chartered mortgage funding companies Fannie Mae and Freddie Mac .. shares rose on speculation that regulators may relax restrictions on their investments to allow them to pick up slack in the troubled market for home loans." We believe equity markets will trend to the downside until the end of 2007, but believe an increase in lending limits will be good, over the long run, for both mortgage and stock markets. We believe troubles at Fannie and Freddie allowed predatory lenders to enter the mortgage market in full force. While there is no question that Fannie and Freddie were hurt by their own fraudulent practices, large and small predatory lenders, using groups like FM Policy Focus as a shield and a proxy, were able to obtain a greater share of the profits being generated by an overheated home mortgage market. Significant profit increases depended, however, on an ability to engage in predatory practices. Given distrac...