Thursday, January 26, 2012

Light and wrong - from the current edition of the Economist

Sometimes the Economist gets it exactly right.

Corporate anonymity
Incorporation with limited liability is a privilege. It should not include anonymity
Jan 21st 2012 | from the print edition

LIMITED liability—a commercial venture that protects its shareholders from personal bankruptcy—is one of the greatest wealth-creating inventions of all time. The law allows companies to borrow money, to take risks and to make contracts as if they were people, but without the human beings who own it going bust if things go wrong, as they would in an unlimited partnership. Limited liability allowed Elizabethan adventurers to finance voyages to spice islands; it allows Silicon Valley technologists now to make similarly risky bets.

But limited liability is a concession—something granted by society because it has a clear purpose. It is unclear why in parts of the world anonymity became part of the deal. Efforts to withdraw that unjustified perk deserve to succeed.

In dozens of jurisdictions, from the British Virgin Islands to Delaware, it is possible to register a company while hiding or disguising the ultimate beneficial owner. This is of great use to wrongdoers, and a huge headache for those who pursue them. Anonymously owned companies can buy property, make deals (and renege on them), launch intimidating lawsuits, manipulate tenders—and disappear when the going gets tough. Those who seek redress run into baffling bureaucracy and a legal morass. Seeking real names and addresses means dealing with lawyers and accountants who see it as their job to shield their clients from nosy outsiders.

Attempts to change this have bogged down. The campaigners for reform are hardly anti-corporate zealots: they include the World Bank, the OECD (a rich-country think-tank), and an American senator, Carl Levin, who with the support of the administration has introduced a bill to rein in the antics of states like Delaware (and a bunch of others including Wyoming and Nevada). But progress is slow, with reformers stuck in an argument about who should pay the costs of clarity.

If you strip out the obvious self-interests of the jurisdictions that make money from hiding people’s identity, the main excuse offered is privacy. Hiding your identity can have honest commercial reasons: if everyone knows that Exxon Mobil, BP or another oil major is bidding for a patch of Texas, the price will go up. In some countries and industries revealing ownership is dangerous. Besides, many libertarians would add, private shareholders have the right to be just that.

Except that the rest of us are giving a limited company’s owners a perk. It does not seem unreasonable to ask who are the main recipients of this benefit (with, say, stakes above 5%). Legitimate concerns for owners’ safety, such as biotech firms hunted by animal-rights activists, are rare. In many more cases, such as Caribbean holding companies controlled by well-connected Russians, greater transparency is on the side of democracy and freedom. If the owners of an enterprise really want to preserve their anonymity, they can still opt for an unlimited option—but that will be their risk.

Reform ought to be simple. Anyone registering a limited company should have to declare the names of the real people who ultimately own it, wherever they are, and report any changes. Lying about this should be a crime. Some dodgy places will try to hold out. But anti-money-laundering rules show international co-operation can work. You can no longer open an account at a respectable bank merely with a suitcase of cash. Let the same apply to starting a limited company.

Tuesday, January 24, 2012

Impact Investing goes mainstream

By Adam Spence, Social Finance

Mark January 24, 2012 in your calendar as the date when impact investing went mainstream in Canada.

Today RBC, the largest of Canada’s Big Five (banks), has joined the growing ranks of major global institutions like Deutsche Bank, and national leaders like Vancity and le Chantier de l’├ęconomie sociale in demonstrating real leadership in impact investing.

The bank has just announced a $20 million commitment in an impact investing strategy that will include the creation of a new $10 million RBC Impact Fund and the allocation of $10 million from RBC Foundation’s assets into socially responsible investment (SRI) funds. It is the first initiative of its kind announced by a major financial institution in Canada.

When combined with the tremendous contributions of talent and financial resources from the TMX Group Inc., we have now fully engaged Canada’s largest financial institution and Canada’s largest exchange group to help drive the growth of impact investing in Canada.

What does this mean?

1. There has been a seismic shift of interest in impact investing in Canada.

Even two years ago, the work of impact investing or social finance in Canada was limited to trailblazers in the wilderness trying to do good work while convincing others of the potential of this approach.

After years of effort from a dedicated team at RBC, and many more years of field-building by the team at Social Innovation Generation (SiG), SiG@MaRS, the Canadian Task Force on Social Finance, the MaRS Centre for Impact Investing and others, we have taken impact investing from an interesting cocktail conversation to the top of the business agenda in the main boardroom of RBC Centre.

This move reflects a significant seismic shift, with major players clearly speaking the language of this emerging sector. Today, Gordon Nixon, President and CEO of RBC, made the announcement:

“We have been waiting for the right moment to launch a program of this nature, and the moment is now. We are confident that our initial investment of $10 million in the RBC Impact Fund will not only spark entrepreneurship and innovation in Canada, but also catalyze similar investments from others in the business community. We are also proud to put our money where our values are by investing an additional $10 million of our own funds through the RBC Foundation in socially and environmentally screened funds.”

Gordon Nixon has just taken Gordon Gekko out to the woodshed.

We expect the tremor of the announcement to be felt all along Wellington, King and Bay Streets in Toronto. Look for others to follow suit in the months and year ahead.

2. There is an increase in the number of real investment dollars dedicated toward local, impact ventures in Canada.

We are now seeing real money flow into impact investing in Canada. In 2011, $284 million in debt and equity financing was raised for impact investing. Today’s $20 million investment gets 2012 off to a great start. Local entrepreneurs should be very excited about a new source of impact capital. The fund will finance impact ventures, including those that promote environmental sustainability, advance water resource management or provide opportunities for youth and newcomers to Canada.

3. Canada is getting ready for its leapfrog moment.

Antony Bugg-Levine, CEO of the US-based Nonprofit Finance Fund (NFF), and Jonathan Jenkins, CEO of the UK-based The Social Investment Business, have both spoken about Canada’s potential to leapfrog other countries in impact investing with a concerted effort. We can be global leaders in the movement to mobilize private capital towards solving our most pressing social and environmental problems.

Canada has seen leadership from the community sector, and through major foundations and respected institutions. Today, RBC is leading the way for mainstream finance to participate. Over the coming months, we will look to various levels of government and other corporate leaders to help lead this agenda.

It is going to be a big year. Kudos to RBC for their commitment to driving change.

Article courtesy of Social Finance.ca

Monday, January 23, 2012

Sustainalytics announces tech acquisition

ESG research firm Sustainalytics has announced the acquisition of information technology partner Share Dimension. Claudiu Tanasescu, founder and CEO of Share Dimension, and his seven-person software development team will join Amsterdam-based Sustainalytics, with Tanasescu also becoming managing director of the company’s Romanian office.

"Bringing Share Dimension on board makes perfect sense, having worked together to develop the Sustainalytics platform in recent years," said Sustainalytics CEO Michael Jantzi. "More importantly, the acquisition enhances Sustainalytics' technological capacity to present our insights to clients and support day-to-day responsible investment decision making."

"The entire Share Dimension team is extremely happy to join the Sustainalytics family," added Tanasescu. "It allows us to better leverage our skills to continue to improve the state-of-the-art Sustainalytics Global Platform and to assist our colleagues in fulfilling Sustainalytics' commitment to being trusted advisors to our clients around the world."

Monday, January 16, 2012

SRI Monitor Weekly News Update

Is sustainability now the key to corporate success?...read it now
Companies that adopted environmental, social and governance policies in the 1990s have outperformed those that didn't!!!

The Infinite-Planet Approach Won't Solve the European Debt Crisis...read it now
demanding but definitely worth reading when you have time to think it through

The perils of cleantech investing...read it now
The nuts of bolts of a venture capital investment

Sustainability-Minded Investing Makes Dollars and Sense...read it now
a debate between the Hip guy and the Vice guy

compiled with the assistance of Nick Searle

Wednesday, January 11, 2012

SIO to stick with SRI

Following an extensive review, the Social Investment Organization has decided to retain its name as well as the SRI brand.

“After surveying members of the SIO, the board believes that there is strength in the SIO name and in the SRI brand,” SIO executive director Eugene Ellmen said in a letter to members. “While many members feel that a change is in order, the board believes that SIO and SRI have good and favourable recognition by the industry, media and public.”

“While the brand SRI may not be perfect, it has good recognition, a growing following in the investment industry, and a proud history of achievement,” Ellmen adds.

The term “socially responsible investing” has fallen out of favour in recent years, with advocates instead preferring to use language such as sustainable investing and ESG.

Ellmen concedes there may be some benefits to a name or branding change, but says the board believes that the potential benefits do not outweigh the costs. “The real task at hand is to get out and communicate the industry’s achievements, rather than focusing on branding issues.”

To that end, the SIO will create a new logo and graphic identity for the organization, and re-design its website. In keeping with widespread international practice, the acronym SRI will be used to include “sustainable and responsible investment,” where appropriate, Ellmen says.

The SIO will also lead an effort by national SRI associations in other countries to develop common terminology and definitions as part of a global effort to prepare a harmonized international report on SRI in late 2012.