SAM, the Zurich based sustainability investing specialist, and Dow Jones Indexes, have announced that Seligson & Co Fund Management has signed a license for the Dow Jones Sustainability Asia Pacific Index (DJSI Asia Pacific). This is the first index fund worldwide to track this new benchmark. The DJSI Asia Pacific was introduced earlier this year to track the sustainability leaders within the developed markets in Asia Pacific. The index includes the 20% most sustainable companies out of the largest 600 stocks in the region by free float market capitalization. The underlying SAM assessment covers a variety of issues such as corporate governance, risk management, branding, climate change mitigation, supply chain standards and human capital. The analysis reflects the growing importance investors attribute to sustainability criteria around the globe.“We are delighted to expand our existing relationship with Seligson and to see them add our new DJSI Asia Pacific to their offering. SAM and Dow Jones Indexes launched this benchmark earlier this year as the complementary piece in our joint index range to cover all three major investment regions. Finland is an exciting market for sustainability investing and we are delighted to provide Seligson with the benchmarks to tap into this opportunity.” said Alexander Barkawi, managing director, SAM Indexes. Further information:
SAM:
Alexander Barkawi, Managing Director, SAM Indexes
Phone +41 44 653 1801, E-mail: alex.barkawi@sam-group.com

Seligson & Co:
Ari Kaaro, Managing Director, Seligson & Co Fund Management Plc
Phone +358 9 6817 8217, E-mail: ari.kaaro@seligson.fi

By deploying corporate philanthropy dollars to tackle pressing social issues directly though customized programs at UCLA, Wharton, INSEAD and others, Johnson & Johnson’s initiatives go well beyond your father’s executive education.  

One of these customized programs at UCLA gives leaders of community-based organizations specialized management training to manage more effectively and strategically. The tools and skills these leaders acquire are more critical than ever as they wrestle with today’s unprecedented challenges, which could threaten not just the organizations’ abilities to serve communities but their very existence. From HIV/AIDS leaders in Africa to directors of Head Start agencies across the United States, UCLA has partnered with Johnson & Johnson for nearly two decades to give community leaders, health workers and others a big dose of entrepreneurial skills to enhance their organizations’ operations and impact. This proven model could herald a new era at the intersection of business, B-schools and society.   “True philanthropy must go beyond writing a check to make sustainable impact,” says Conrad Person, Director, Corporate Contributions at Johnson & Johnson.  “The sophisticated management tools this partnership offers benefit the organization longer than any grant could.” This novel idea is one manifestation of Johnson & Johnson’s overarching approach, which could be called “corporate philanthropic nurturer,” thanks to its deep and broad involvement in the many programs it designs or supports. It identified UCLA early on as the right partner, given its renowned expertise in social enterprise, particularly via its Price Center for Entrepreneurial Studies.  “The people we train through these partnerships have had no formal management education previously, but each oversees the equivalent of a small business – complete with the frustrations that come with operating an entrepreneurial venture, such as how to expand, get resources, and professionalize staff,” says Al Osborne, Senior Associate Dean at UCLA Anderson. Partnerships currently underway include:   Founded in 1991, the Head Start-Johnson & Johnson Management Fellows Program – the only such program of its kind – provides intensive training annually for Head Start directors and now boasts more than 1,100 graduates. An outgrowth of the Management Fellows Program, the UCLA/Johnson & Johnson Health Care Institute, was created in 2001 to train Head Start directors to educate and empower parents to treat everyday childhood ailments like fevers, colds and earaches at home. To date, the program has reached nearly 27,000 families nationwide, saving Medicaid millions of dollars annually in decreased ER/clinic visits, and continues to expand.       

The UCLA/Johnson & Johnson Health Care Executive Program trains leaders of community-based health care organizations, such as clinics providing care to the uninsured. The program has graduated more than 400 health care leaders since its founding in 2002.        Since its 2006 inception, the Johnson & Johnson/UCLA Management Development Institute for HIV/AIDS has worked with African universities to provide rigorous in-country management training to more than 250 leaders from organizations in Kenya and Ghana devoted to the care, treatment and support of those living with HIV/AIDS. “As a result of their experience, participants reshape their organizations and improve the quality of the services they provide, translating to real, tangible benefits to peoples’ lives around the world,” says Osborne.

Has the Time Come to Nationalize Struggling Banks? Yes, but Carefully

After a generation of increasingly relaxed regulation of the financial services sector, the very concept seems stunning: Nationalization of banks in Europe and the United States. But with many global banks still teetering on the brink of insolvency — even after rescue efforts that have included multi-billion dollar infusions of capital and other forms of assistance — a different view is emerging. A growing number of economists — including, most recently, Alan Greenspan — now argue that temporary government takeovers of the most deeply troubled institutions may be the only remaining solution.
http://knowledge.wharton.upenn.edu/article/2166.cfm

Responsible Investor reports: Fund tenders for global and Asian corporate surveillance mandates.The €250bn ($322bn) Norwegian Government Pension Fund is looking to hire research companies to act as SRI internet detectives and identify if any of the 8,000 companies it invests in could be breaching its ethical guidelines. The fund, one of the world’s most active responsible investors, has put out two market tenders for continuous web-based ‘surveillance’ – one for monitoring global internet sources in English and Spanish on all companies in the fund’s global portfolio, the second to look at Mandarin and English sources specifically regarding companies in the fund’s portfolio with head offices in China, Hong Kong, Taiwan and Japan. The fund says it wants the surveillance providers to gather evidence on companies in its portfolio that may be involved in activities that contravene its strict ethical guidelines. Earlier this month, Responsible Investor reported that the fund had blacklisted two new companies, Canada’s Barrick Gold Corporation and Textron Inc in the US, for breaching its ethical codes. The fund sold shares worth NOK1,248m (€140m) in Barrick Gold, the world’s largest gold producer, because of concerns about environmental damage at the Porgera mine in Papua New Guinea, which is run by Porgera Joint Venture, in which Barrick Gold has a 95% stake.  Textron was excluded for links to the production of cluster bombs.The closing date for the tender is March 3. Link to ethical council site

The internationally respected Network for Sustainable Financial Markets has just released a blueprint for fundamental changes to the Credit Derivatives market. The Network suggests that proposed changes will bring fairness and sustainability to what has been a dangerously opaque and, as a result, mispriced sector of the financial system.

Prepared by corporate governance and insolvency expert Dr. Janis Sarra, of the University of British Columbia Faculty of Law, and endorsed by respected investment professionals and academics who are members of NSFM, the paper recommends 10 immediate systemic changes to create targeted and effective regulatory oversight of the credit derivatives markets.

Presenting the paper on Monday in Washington D.C. to a joint Task Force of the World Bank and the International Monetary Fund on the current financial crisis, Dr Sarra said “While there have been a number of industry and regulatory reports on the crisis, reform proposals to date are too limited in their perspective, in some cases recycling strategies that caused the current crisis.”

She added: “Current reform efforts are in peril of failing to address the real causes of financial market instability.  Regulatory bodies have to think more creatively and systemically about the nature of their task, so that the financial market system can better serve its core purpose of creating long-term sustainable value.”

Five recommendations have been made in relation to point of purchase and sale, with a further five relating to the point of settlement and insolvency restructuring proceedings.

According to Dr Sarra, the aim of the recommended changes is to “ensure that, through the application of rules for transparency and for conduct, buyers are better able to understand and manage the risks of a particular derivative.”

“The proposed changes will ensure credit derivatives can more sustainably and fairly play their vital role as means for diversifying lending risk.”

Professor Sarra added “These recommendations are first steps towards creation of a fair and sustainable credit derivatives market.”

The current system has some perverse effects, said Dr Sarra. “For example, the offloading of risk can mean originating lenders lose any incentive to be duly diligent in the original lending decision. Even more seriously, a creditor can make a loan and then purchase credit default swaps many times the value of the underlying asset. Because the value they would get from settlement of the swaps is greater than the original asset, they then have an incentive to have the debtor company fail and be unable to repay the loan.”

“Implementation of the recommendations would offer immediate protection to investors and create new momentum for the rebuilding of effective, fair and sustainable capital markets.”

While some countries already require some parts of these recommendations, an internationalised derivatives market requires them to be consistently applied across major financial markets.

The recommendations are:

1. Information disclosure sufficient to make informed decisions must be mandatory, not optional.

Disclosure must include:
a. Any adverse risk in the underlying asset.
b. Any risk to the sellers’ financial health.
c. For public companies, how their credit risk has affected valuation of derivative liabilities.

2. Counterparties to credit derivative contracts and investors must have underlying material risks disclosed to them and have enforceable remedies where that risk has not been properly disclosed.

3. Credit rating agencies must meet a mandated due diligence standard

a. They should be required to disclose all fees associated with a rating.
b. Purchasers should have effective remedies against rating agencies and others that do not meet mandated standards.

4. Central exchanges need standardized, transparent trading procedures and consistent standards of conduct and disclosure. That should include:

a. Credit documentation being made public through public registries or similar vehicles.
b. Credit default swaps being publicly reported, including trading and position recording by dealers.
c. A requirement that either a portion of exposure be left on the originating lender’s balance sheet, or that there be a mandatory seasoning period where the lender is required to hold the risk before it can be resold or repackaged.
d. Regulators facilitating the development of best practice standards for over-the-counter derivatives, including counterparty credit risk management, oversight, liquidity management and netting.

5. Where a derivative holder has no economic risk in a loan because it has fully hedged that risk, regulators should mandate that this be disclosed before the holder can precipitate insolvency or other proceedings.

6. If a company is being restructured, there must be mandatory disclosure of the amount of debt that has been hedged by creditors that wish to exercise their rights to participate or vote in the restructuring.

7. A court considering a restructuring plan should be required to take into account the real relative economic interests at stake, as distinct from the interests suggested by the face value of claims that are in fact protected by credit default swaps.

8. Insolvency restructuring legislation should be amended so that credit derivatives can be stayed for a period on the same basis with any other creditor, allowing the court to exercise oversight of the clearing process in a measured way that assists with the risk management aspects of the products and slows the speculative market.

9. Create timely periods for creditors to make claims against the insolvency company, to ensure that debtors can avoid a continually revolving door of credit default swap settlements. Given the internationalized nature of derivatives, these claims bar dates need to be made uniform across different jurisdictions.

10. Finally, a central clearing facility for multiple credit derivatives should be created, with regulatory oversight and transparency.

NSFM is an international, non-partisan network of finance sector professionals, academics and others who see the need for fundamental changes to improve financial market integrity and efficiency.

The NSFM has been formed to bring the insights of theory and practice to bear on the need for a more stable and inclusive financial system, one that will harness the innovative capacity of the financial sector for maximum economic, social and environmental good.

NSFM aims to look at the underlying causes of financial market instability and on development of fundamental reforms.

The paper released today is the first of a series of papers the network is publishing in coming weeks towards the design of a better and more sustainable financial system.

Complete paper available from http://www.sustainablefinancialmarkets.net/

Contacts:    Dr Janis Sarra  - sarra@law.ubc.ca – phone +1 604 947 2071

A few thoughts from Sally Blinken, a former deputy NY State Attorney General who directed numerous public corruption and charity investigations and enforcement actions.  Ms. Blinken is now a litigation partner with Venable LLP in New York.

The Madoff investigations added a new wrinkle late last week as New York Attorney General Andrew Cuomo served subpoenas on 15 separate universities, family philanthropies and non-profit institutions that had been investors with Bernard Madoff’s asset management business.  Among those hit with document requests were Bard College, New York University and New York Law School.

Even though the organizations may have lost more than $100 million in the Ponzi fraud allegedly carried out by Mr. Madoff, questions of due diligence have been raised about relations between some of the non-profits and J. Ezra Merkin, whose own investment funds were active feeders into the Madoff funds.

Mr. Merkin, the former chairman of GMAC, served on the boards of several prominent NY institutions that invested substantially with Madoff, including Yeshiva University, where he was a trustee and headed its investment committee.

Some are wondering why the non-profits - some of whom are bringing their own civil lawsuits against Madoff - would be handed formal subpoenas.

“It seems clear that the Attorney General is taking a serious look at potential conflicts of interest between Mr. Merkin and the institutions he advised, especially those where he served as a director,” Ms. Blinken said.

“Prosecutors are probably trying to learn whether Merkin disclosed his ties with Madoff before actively placing investments on behalf of the foundations and other institutions - and to what degree those ties were known, or perhaps even ignored, by other directors and fiduciaries of those non-profits,” Ms. Blinken added.

She noted that investigators will likely take a close look at minutes of board meetings and other documents showing how investment decisions were made.   “That includes what information Merkin shared on management fees and also allocation figures showing what portion of their investment with Merkin’s three separate funds were being placed with Madoff,” Ms. Blinken noted.

“At the very least, the probe is casting a bright light on the investment policies and protocols in place at some of New York’s leading academic institutions and non-profits,” Ms. Blinken said.

During her seven-year tenure with the AG, Ms. Blinken served as special counsel in the Public Integrity Bureau under Mr. Cuomo.

Sally G. Blinken, a partner in the Commercial Litigation and Nonprofit Practice Groups of the New York office, has seven years experience working in the office of the New York State Attorney General and ten years as a commercial litigation associate specializing in trusts and estates litigation.

We are facing 2009 with optimism that my long-predicted demise of “casino capitalism” is opening huge opportunities!  We find large constituencies in many countries who see these opportunities to

• reform global finance to serve people-centered sustainable development
• restore real productivity in homegrown, local, living economies
• reform monetary policies
• reduce greenhouse gas emissions and restore ecosystems
• accelerate the growth of the green economy and create new jobs

as I outlined in my keynote December 1^st at UNEP’s launch  of their Green Economy Initiative in Geneva (read more).

Another forecaster of the demise of “casino capitalism” is Nassim Taleb, author of The Black Swan with whom I have been corresponding on the need for the Nobel committee to de-link from the Bank of Sweden Prize in economics.  See his interview with Charlie Rose here.

Warmest Holiday Wishes to you all

Hazel

Ethical Markets Media, LLC

PO Box 5190, St. Augustine, FL  32085; Phone 904/829-3140,  Fax 904/826-0325

Visit www.EthicalMarkets.com  for the latest commentary on the crisis on Wall Street.

The holiday gift that everyone loves to hate may be just the thing to “re-gift” on Facebook this holiday season, providing support for those in need.

Two-pound fruitcake bricks will be given away through a PayPal application built on Facebook Platform by Tony Hawk, Jimmie Johnson, Yao Ming, Nicole Richie and Joel Madden, Ben Roethlisberger, and Fall Out Boy — to benefit their favorite charities.

Recipients will be invited via a personal video to contribute through PayPal to the charities and “re-gift” the fruitcake to friends and family all across the world.
The celebs sent out 10 virtual fruitcakes, the time-honored gift that no one wants, to ten friends on Facebook with a video message urging them to give back through PayPal or to simply re-gifting the fruitcakes to their friends for free to drive more awareness.

Everyone who re-gifts is featured on a map of the world that lets you track the fruitcake’s voyage around the globe – and you can see how much money each fruitcake has raised.

http://apps.facebook.com/regiftthefruitcake

Academy Award®-winner Matt Damon and WaterPartners’ Executive Director Gary White held a Fundraising Gala together with the ONEXONE Foundation on October 23 in San Francisco to raise awareness of the drinking water crisis and other critical health issues impacting millions of children around the world.   Celebrity guests included Carlos Santana, David Arquette, and seven-year-old piano prodigy Ethan Bortnick. The gala featured storytelling, live and silent auctions, as well as musical performances by Grammy® Award-winner Wyclef Jean, Josh Groban and the world-renowned African Children’s Choir.

“I want people to know that these problems can be solved, that it’s not impossible and it can be solved in our lifetime,” said Damon.  “If we don’t do it, the outlook for the world is extremely bleak, and if we do, it will be truly wonderful as this is about the world that we’re leaving behind for our kids.”

Water-related diseases are the leading cause of death for children under the age of five, and over one billion people in the world lack access to safe drinking water.

“Lack of clean water contributes to disease, poverty and conflict, but the problem is not too big to solve with a partnership of resources and expertise,” said White, executive director and co-founder of WaterPartners. “We are working with similar-minded organizations such as ONEXONE so that eventually everyone in the world will be able to take a safe drink of water.”

About WaterPartners

WaterPartners is a highly respected 20-year-old U.S. non-profit 501 (c) (3) with a mission to provide safe drinking water and sanitation to people in developing countries. WaterPartners fills a key role in addressing the water crisis worldwide. WaterPartners has transformed thousands of lives with access to safe water and sanitation in eight countries - Bangladesh, El Salvador, Ethiopia, Honduras, Guatemala, India, Kenya, and the Philippines. WaterPartners’ vision: the day when everyone in the world can take a safe drink of water.  Visit www.water.org for more information.

About ONEXONE

ONEXONE is a unique umbrella organization that partners with talented and dedicated NGOs to implement specific programs that align with its mission statement – the alleviation of suffering of children locally and globally – and important programs targeted toward health, education, self-esteem and dignity.  Through its ongoing campaigns, the ONEXONE foundation is committed to supporting, preserving and improving the lives of children at home and around the world.  Please visit www.onexone.org for more information.

From Denny Hatch’s e-newsletter:

Take a gander at this paragraph from a Wall Street Journal story by Robin Sidel on Oct. 20, 2008:

AmEx recently slapped a $1,100-a-month spending limit on John and Monica Bell’s platinum AmEx charge card. The reason: AmEx customers who pay with plastic at the same places where Mrs. Bell shops and have the same mortgage lender have poor repayment histories, according to a letter sent by AmEx.

The couple pays $450 a year for the card which promises “no pre-set spending limit.” The couple routinely spent $5,000 a month that’s $60,000 a year and has never been late with a payment.

If the data goons are allowed to start treating blue-ribbon American Express Platinum Cardmembers like chronic deadbeats, what will happen to the rest of us?

The excess of zeal that fueled the subprime real estate debacle has turned into an excess of fear.

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