Why I became a Vegetarian

The probability of a SRI investor being a vegetarian is higher than for non-SRI investors.  How much higher, I don’t know.  But it seems logical that SRI investors that are more aware of the bigger society and negative derivative effects from large farm factories, etc. would be inclined to abstain from eating animals.

Below is a transcript from a speech I gave at a local Toastmaster’s club:

Good evening fellow Toastmasters’ and guests.  Tonight, I’m going to talk to you, perhaps convince you, or even better, inspire you to become a vegetarian. 

In my personal experience, people are extremely sensitive about what they eat so I wasn’t sure about speaking about this.  I’d add “eating habits” to the list of taboo topics to bring up at a dinner party, like politics, religion and money.

But wait a minute…..EVERYONE lately seems to be talking about Trump, so then maybe I can talk about my eating habits.

Introduction:

As a background, let me give you a brief definition of a vegetarian and derivations of that:

·      Vegans:  don’t eat ANY animal products including dairy products

·      Pescetarian:  eat fish but no other meat

·      Ovo-Lacto:  don’t eat meat but eat eggs & dairy (that’s me)

·      Fruitarians: only eat fruits and nuts.  These are the hippies of the world

·      Also, some vegetarians don’t use animal byproducts (e.g., leather)

I started being aware of vegetarianism when I was dating a girl who was one.  For me, vegetarians were like other-worldly religions.  I knew that they were out there, but I never had to think about it.  My girlfriend was kind of preachy about it and her anti-American antics. 

One time we were on vacation in Poitou-Charentes, which is a beautiful region on the west coast of France that’s known for its oysters and mussels.  So while restauranting, I did my proper duty and ordered a plate of oysters.  As I was enjoying my freshly shucked oysters my girlfriend critically noted how if I looked closely I could still see them wiggling.  Needless to say, it was years later until I became a full fledged vegetarian (2010).  (Reminder:  Nobody likes being preached too!)

The process of becoming a vegetarian was easier than I expected.  What’s helped me become disciplined in many aspects of life is not becoming hung-up or guilty if I had wanted to eat meat on some days. 

Here is a list of pros/cons of why I am a vegetarian.

Positives:

·      You are saving countless lives of animals

o  When I first realized, as a young boy, that my dinner was once a living breathing animal, like our family cat.   I rationalized that they lived tranquil lives on pastoral farms, but in fact they lived in prisons called factory-farms.

o  I will not show you any gruesome photos.  That, my friends, is only a Google search away.

·      Your energy footprint declines substantially.  Here are some key facts from vegetarian.procon.org:

o  Over 10 pounds of plant protein are used to produce 1 pound of beef protein

o  It takes 2,500 gallons of water to produce one pound of beef and it takes only 220 gallons of water to make a pound of tofu.

o  Did you know that the livestock industry produces 18% of all greenhouse gases?  That’s more than all forms of transportation COMBINED.

·      You are more accepting and empathetic of others’ dietary restrictions

·      May prevent certain diseases

·       Helps keep down your body weight

·      Your skin even starts to look more “glowy”.  I’m starting to sound like a TV commercial…

·      TMI Alert:   Pooping becomes a lot easier and an overall smoother process

·      You give up fast-food almost instantly.  Few fast-food restaurants have veggie options.

Some drawbacks:

·      Everyone and their mother asks why you don’t eat meat

·      You come across as thinking that you are better than everyone else

·      Vegetarian restaurants can be pricey

·      There are some detrimental health effects if you don’t get enough B12 or protein

·      Choosing what to buy is a lot of work, but this burden is what it’s all about

o  When I good food shopping I have to read the labels carefully.  The same thing goes when dining.  I can’t simply order a French Onion soup because after doing some research I discovered it’s not just Onion and cheese.  It has a beef broth base.

·      People may view you as “not normal”

o  Definition of normal:  conforming to a standard, or the common type (“commoner”)

o  Noun: the average or mean

o  In Mathematics:  being at a right angle

Some of you may remember my first speech, the icebreaker, in which I described growing up in a “parochial” “small town” in the Bronx.  There, parochial wasn’t just the name of the catholic school I attended but a way of thinking.

I rarely questioned anything and was taught to be highly obedient to authority.  But then something magical happened when I became a vegetarian…  I starting thinking because I had to !

The process of identifying vegetarian ingredients in cookbooks, reading labels etc.., grew into questioning every page of my life.  It was like Peeling an onion to find the truth.  Since then, I’ve never looked back.  When I delve into an issue, I don’t just look at it from a right angle.  Instead, I look at it from all sides including secondary and tertiary affects.

Hmm…maybe I should have changed the title of this speech from Why I became a vegetarian to How becoming a vegetarian changed my life.

The Mexican Peso ("MXN"): arriba, arriba, ARRIBA !

Buenos Noches readers.  This article's purpose is to convince you why the Mexican peso (“MXN”) is going to rise against the almighty U.S. dollar.

Introduction:

As a background, we all know who won the U.S. Election.  The victory of Donald Trump was a seismic event in history.

• Stocks are rising
• Commodities and precious metals are stumbling 
• Bonds are falling                                                                                                                                                                                                                                                                                                                               
• The smell of inflation is back in the air
• And the U.S. dollar is within arms-reach of parity with the Euro

Together these changes in Capital Markets are called the “Trump Trade.”  One victim not just in the markets but in geopolitics, has been Mexico.  Mexico has been the “poster child” for everything that has gone wrong with the United States.  According to Trump, the NAFTA trade agreement has taken jobs away from hardworking Americans, resulting in a lower standard of living.  Did you know that 9 out of 10 cars produced in Mexico get shipped to the U.S. (data sourced from UBS)? And then there’s the issue of immigration.  Trump wants to keep Mexicans out.  How’s he gonna do that?  Well I think we are know that answer!

Despite haven’t become President yet, there has been a real fallout on the Mexican economy and the MXN currency.  With every tweet, the Peso keeps declining.  It is now conventional wisdom that the MXN will continue to weaken over the next year.

I don’t believe that to be the case.  While there’s the Trump Trade, and that’s powerful.  There’s also something called the “Madness of Crowds.”  This is when every one of us agrees on something whether or not it’s based on logic.  There have been examples of Manias in the past, of which some were based on faulty-logic.  They include:

·      Tulip mania (1637)

·      Roaring Twenties (1922-1929)

·      Dot-Com Bubble (1995-2000)

·      Real-Estate bubbles (2006-2009)

·      Bitcoin (present day)

Bubbles usually end badly.  The Trump Rally too, will bust. If this happens, it will be the end for the almighty dollar.  I would like to give you five reasons why the Mexican peso will reverse course and RISE against the U.S. dollar.

1.     First, is something called “selling on the news.”  This is a reversal of a market price which goes in complete opposite of what was expected.  One often sees this when a company’s share price declines after reporting excellent earnings.  This is due to the news already being factored into the share price.  Once Trump becomes President, I expect the Peso to reverse its downtrend if rise in earnest by First Half 2017 (think Cinco de Mayo).

2.     The U.S. economy won’t move from 2% GDP growth to 4% just because there’s a different guy in the White House. Running the U.S. government is not the same as running the Trump business empire.  You don’t just give marching orders and have your plan executed.  There’s a whole process to the process, with pushback from Congress, lobbyists, etc.  In fact, according to a WSJ survey of economists, 2018 GDP was upwardly revised by just one-quarter of a percent (to 2.4%).

3.     Differences in real interest rates affect currencies.  The currency with the higher interest rates attracts more investments of which causes an increase in demand for investments denominated in that higher yielding currency. Mexico’s funding rate, for example is nearly double that of U.S 30YR rates.  It is true that a proportion of the higher rate is attributed to inflation, though the Bank of Mexico has aggressively raised rates (in each of its last three meetings) to nip it in the bud.  One can determine whether or not the difference in interest rates is affecting the currency by looking at forward currency rates.  Presently forward currency rates are slightly higher than present rates indicating traders expect to decline slowly.

4.     Oil prices are rising:  After plunging in 2015, oil prices rose 45% in 2016.  Oil prices are expected to remain elevated due to the Nov’16 OPEC agreement.  Mexico’s budget is highly dependent on taxes it receives from PEMEX, the national oil company. PEMEX provides nearly 20% of Mexico’s budget and 5% of exports (mostly to the U.S.). Oil is priced in USD so the net effect could be substantial.

5.     Purchasing Power Parity:  This is an economic theory that determines what the exchange rate should be based on a basket of goods of one country divided by a basket of goods from another country.  The Economist magazine popularized using the price of a Big Mac in one country over that of another country to determine the exchange rate.  Its index shows that the Mexican Peso is over 50% undervalued compared to the USD (and its data was before the U.S. election).

Factors working against a stronger Peso are the continuing Drug War in Mexico and risk to the Current Account surplus with the U.S.  According to the New York Times, in the first 10 months of 2016, there were 17,063 homicide cases in Mexico, already more than 2015’s total and the highest 10-month tally since 2012.  The Drug War has become an almost civil war on the country resulting not only in lost innocent lives but in lower potential economic growth.

Mexican’s trade surplus or Current Account could also hamper a strengthening Peso if Trump initiates trade tariffs onto Mexican imports.  Exports are typically good for the local peso as U.S. importers would have to convert their dollars in order to pay for the Mexican exports, hence more demand for pesos.  However, I believe import tariffs are doubtful as this could lead to a trade war with Mexico.

Conclusion:

The currency market is complex and not every factor I have stated to you will affect the Peso.  In summary, I believe the peso will rise due to changing investor expectations, slower U.S. economic growth compared to Mexico, higher interest rates in Mexico, a stronger economy in Mexico due to greater oil exports, and due to Purchasing Power Parity which shows that Big Macs cost just 50% of what they cost here in the U.S.  The peso will reverse its downtrend by 1H’17 – think Cinco de Mayo!

The next battleground for Socially Responsible Investing: PALM OIL

Introduction: 

Previously, I wrote about all the successes, both historical and modern, of SRI.  These included aiding the end of Apartheid in South Africa as well as shareholder activism that has been able to "nip in the bud" company wrong-doings before they became huge issues.  

Going forward, I believe the damage to jungles related to ever expanding Palm-Oil plantations is a large and growing challenge for SRI investors.

The Next Battleground:
The Palm tree is a beautiful, elegant species. Palm oil is made by extracting the oil from its fruit. Palm oil is considered more healthy than cooking (and baking) oils (and butter) that are commonly called "trans fats", but not as healthy as certain vegetable oils. However, it's much cheaper than other cooking oils and can also be used as a biofuel, lubricant and soap products. The Palm oil industry is growing rapidly and is said to be over $44bn. It may double by 2020 and triple by 2050 according to the FAO (United Nations).

The main issue is that countries (Indonesia, Malaysia, Thailand) are cutting down rain forests to plant palm trees. This has a three-fold effect by:

• endangering Orangutangs (and tigers) that live in the jungle. In the last 10 years, their population dropped 50% !
• increasing Green House Gases
• some of the lands have been used without consulting or compensating indigenous peoples
• some owners have also utilized weak employment practices including child-labor 

 

It has been difficult for investors to assess companies' use of palm oil due to:

• Palm oil does not need to be labeled
• Certified Sustainable Palm Oil is expensive and demand is lacking
• While most food companies use Palm Oil they are not required to disclose whether their oil is 100% certified sustainable.

A Wall Street Journal story highlighted  a 22 year old man from Bangladesh who was told that for $2,000 he could travel on a boat to Malaysia with good meals and drinks. He was conned by human smugglers that were essentially running a slave-trade.  Food was scarce, several migrants died from starvation, disease and beatings. The deceased stomachs' were slashed so they couldn't float, and they were thrown overboard. He was then sent to camps to work on the huge plantations of Felda for no wages. Felda is the leading member of certified Sustainable Palm Oil!  Hence, this will be an uphill battle!

What can you do:
You can, as I have, sign petitions supporting rain forests, as well as encouraging companies to disclose not only their use of palm oil, but their largest ingredients. Another practical approach is to eat whole foods, and shop at environmentally friendly stores such as Trader Joe's.


I'll leave you with some wise words from Mohandas Gandhi:

 "You must be the change you wish to see in the world.  It's the action, not the fruit of the action, that's important. You have to do the right thing. It may not be in your power, may not be in your time, that there'll be any fruit. But that doesn't mean you stop doing the right thing. You may never know what results come from your action. But if you do nothing, there will be no result.” 

Christmas Trees: What Would Jesus Do?

- by Maryann Khinda

 Courtesy of The Divine Life Society

 We are republishing this piece given the Christmas Season...

Is sacrificing trees for decoration rather than consumption ethically and morally responsible?  Is this act frivolous and wasteful?  Would Jesus approve?  Or are there hidden merits to cutting down Christmas trees?

In light of our socially responsible efforts, we would like to explore the pros and cons of purchasing a real vs. artificial Christmas tree this holiday season to see where the pine needles lead us.

 There are many views and thoughts on having a “real” Christmas tree. Besides the beautiful décor and terrific nostalgic smell, freshly cut Christmas trees provide additional oxygen and consume carbon dioxide in the immediate air of their surroundings.  As per Green America, Tree farms typically use barren un-farmable or rocky land to raise their Christmas trees and grow two trees to every one tree cut.  This is a sustainable method of using the land and a true benefit to having a “real” tree.

Ah, but the cons outweigh the pros.  Why do any trees need to be cut?  We are killing trees, living specimens, for a tradition...?  Here lies nothing but selfish human gain in the act of cutting down trees.  We bring these trees into our homes for a few weeks, decorate them and then use additional electricity to light them.  This is absolutely wasteful!  And not socially responsible?  After the holidays are over, the trees typically wind-up in landfills.  Most Christmas trees are brought from these mass tree farms that use pesticides.  These pesticides are in the air in your home.  If your pet drinks from the tree’s bowl, it could get sick.  Trees even breed mold, which is unhealthy to breathe and creates allergies.

We are not asking you to give up your tradition.  There are alternatives: the United Kingdom has found a unique method which we approve and give two thumbs up for as 100% sustainable – renting potted Christmas trees.  During the holiday season, customers can rent a potted freshly pruned and trimmed Christmas tree.  When the season is over, the tree will be returned and replanted until the next season.  Brilliant!  No waste!

There are also SERFs, Socially and Environmentally Responsible Farms, which raise organic Christmas trees.  Organic trees are free of harmful pesticides.  At this time SERFs are only common in the Northwest.  Please see their site for further details.

 

 If you must have a “real” Christmas tree this season, we strongly urge you to adhere to the many recycling efforts available.  Most local governments and municipalities participate in tree curbside pickups for compost and mulching.  If this is not available, there are other great ideas that are sustainable. Using your tree for firewood has mixed reviews – please make sure you do this correctly as you could ruin your chimney (see this page for details on the dangers).  There is always the easy option of throwing the tree into your backyard for your own composting.  This will, in time, improve your own garden.  Mother Earth News gives a few great suggestions:  in the winter, you can use the tree branches to protect your delicate garden and use the trunk as a post or bench.  You could also throw the tree in your lake or pond – the wildlife will thrive.

The other option is buying an “artificial” or plastic Christmas tree.  Artificial trees can be reused year after year, without waste as a whole, but these trees cannot be recycled further due to their iron and plastic structure (though there are other materials used, e.g., aluminum).  Also they contain PVC (polyvinyl chloride) and the production process may use a small amount of lead.  While the risk of lead poisoning is low, it increases as trees age. Though recent regulations have made trees safer.

In conclusion, we find freshly cut Christmas trees not to be as socially responsible as some of the alternatives, such as renting or purchasing potted or artificial Christmas trees.   As we like to present other opinions, Justmeans, a Sustainability website, did a write-up (Sustainability and Christmas Trees: Let's Get Real) not too long ago stating real trees are the way to go.  If you must have a freshly cut tree, please utilize one of the recycling methods above to retain some sustainability.  Happy Holidays!


Labels:
SRI, Socially Responsible trees, sustainability, Green Christmas trees. 

How Socially Responsible Investing Changed the World

Source: Nick Ut at the Associated Press

Recently a smug investor asked me, "What's SRI good for other than making one feel less guilty about living a fancy lifestyle." After hearing that remark, I was really angry repeating it over and over in my mind.

After several weeks I got to thinking, "maybe he's got a point.  I'm a limousine liberal not having really dirtied my hands in any good cause."

But first, a brief history and explanation.  SRI stands for Socially Responsible Investing.  SRI has had many names including:

• Ethical Investing
• Impact Investing

Historically, SRI was mostly about avoiding "sin stocks", companies that are involved with alcohol, gambling, pornography, tobacco and (nuclear) weapons.   But today's SRI isn't just about avoiding certain industries, but about investing in companies that are doing positive practices and having specific attributes (i.e., "best in class"). These practices fall under three areas, called ESG (Environmental, Social, Governance). Here, SRI has made substantial progress.

So, I started wondering, reading books, watching interviews and keeping up with headline news to determine if SRI was in fact doing some good in society.

Usually when an issue captures our minds, we contemplate supporting or opposing it through voting, how we act as customers (e.g., buy), or how we act as employees (e.g., strikes, unions).  Seldom do we think of our roles as investors.  The fact is, while we are intrigued by certain investments in companies like Tesla, most of us invest indirectly via mutual funds. So the link between companies and ourselves is broken.

I came up with a list of three important successes going back to the first example of modern-day SRI:

• In 1758, the Religious Society of Friends (aka "Quakers") prohibited its members from participating in the "slave trade."  Another religious order, the Methodists was highly influenced by John Wesley whose sermons said that your business shouldn't harm its workers or its neighbors.

• In 1972, the country was outraged by the photo of a 9 year old girl that had just been burned by Napalm, which is a burning agent.  This ignited a protest, placing pressure on its sole maker, Dow Chemical, to stop producing the chemical-agent. Napalm was only 1% of its revenues, as the company was known for Saran Wrap. While the company refused to stop making Napalm talent veered away from Dow and the company was vilified for years. The pictures also prompted Dr. Martin Luther King to go public with his opposition to the Vietnam War.

• In the 1990s, the world was appalled by Apartheid in South Africa. The movement against Apartheid actually began in 1960 after the Sharpeville massacre. In 1976, the UN imposed an arms embargo to the country. By the late 1980s and 1990s, investors including large institutions, divested all their investments in South Africa. That prompted businesses operating in South Africa to draft a charter to end Apartheid. And you all know the result...

• 2015: Modern SRI is quite different than in the past. There has been a huge increase in the quality of Governance at most corporations. This has given investors the ability to monitor corporate behavior almost "real-time".  This is done through proxy voting, oral dialogue, letter-writing, filing shareholder resolutions (usually a last resort) etc...At first glance, it appears that SRI hasn't had any "big-wins" since the 1990s, but in fact, investor activism has been so strong that few companies get to the point where there is a big issue to topple.

2015 - 2020: The Next Battleground:
The Palm tree is a beautiful, elegant species and Palm oil is supposed to be a healthier oil compared to trans fats. However, ever expanding plantations are endangering Orangutangs, increasing Green House Gases as well as taken advantage of hungry workers.

In the next article, I will dig deeper into these issues.  But for now, I'll leave you with some wise words from Mohandas Gandhi:

 "You must be the change you wish to see in the world.  

 It's the action, not the fruit of the action, that's important. You have to do the right thing. It may not be in your power, may not be in your time, that there'll be any fruit. But that doesn't mean you stop doing the right thing. You may never know what results come from your action. But if you do nothing, there will be no result.” 

Here's an Interesting list of the most "Do-gooders" Athletic Companies

As a fellow runner, I often am asked if I know of any truly socially responsible running companies.  This is a difficult question due to the well-known supply chain issue of Child Labor.

This list does mention Adidas but the author had not verified the data. Still it is a good start.  It was a good surprise to hear about Under Armor as the company is performing fantastically and I often wondered about their ESG efforts.

In fact, the company is probably one of the best performing of all U.S. retailers with both strong revenue and earnings growth.  However, its stock-price gain of 865% over the last 5 years has elevated its Price/Earnings ratio beyond reason (and ahead of expected earnings growth).

Below is an except from the link to Nick English's article.

Green Bonds are Giving SRI a BLACK EYE

This article marks my website's first commentary on the fastest growing trend not only in social investing but ALL of investing.  No, I'm not talking about Enhanced Exchange Traded Funds.  In just the last five years, the emerging asset class of Green Bonds has come from nowhere, growing to $36.6bn (2014) outstanding.

A "Green Garage" courtesy of The Wall Street Journal

Climate Bonds Initiative (a leading London-based research organization in this area) thinks the market will more than double in 2015, to nearly $100bn after tripling in 2014 (see graph).  Total issuance reached $24.5bn year-to-date as of August 2015, so it appears that forecast is untenable. The total addressable market amounts to over $0.5 trillion.

Source: Climate Bonds Initiative, Barclays.

What is a Green Bond?
Green Bonds (aka Climate Bonds) are fixed-income instruments whose proceeds go towards a benefit to the environment.

Types
Green bonds are similar to other bonds. The main types are "Use of Proceeds", Project Bonds and Securitized Bonds. Use of Proceeds use either dedicated revenue streams as collateral backing the bonds, or are standard bonds which are backed by all of the issuer's cash flows. Project Bonds, as the name implies, are backed only by specific projects and not the issuer.  Securitized Bonds are asset backed vehicles that are specially-structured and designed

History
The evolution of Green Bonds is similar to what has been seen for early stage industries. The modern Green Bond "movement" began in 2007 when supranationals, mostly highly-rated banks (e.g., European Investment Bank) issued their first bond. Years later the market broadened to public finance/municipal entities and corporates. During 2014, a corporate name issued the first high-yield bond.  That year, 2014, was a key catalyst for Green Bonds as the market grew deeper and broader. It is very important for the Green Bond market to have corporates in the same manner that the junk-bond market propelled corporate financings during the 1980s (we'll leave Michael Milken out of this one!)

Proceeds by Issuer Type (source: Climate Bonds Initiative)

The U.S. Green Bond market
The U.S. took a back-seat during the Green Bond market's early years.  The Europeans have taken the lead due to their socialist nature (see chart below from Climate Bonds Initiative). Several European asset owners and investment managers have signed on to the United Nations Principles for Responsible Investment (PRI) initiative.  Furthermore, European governments have encouraged (via subsidies) socially responsible investing and green projects such as solar power, wind, etc.  Though recently, large liberal States (and cities) of California and Massachusetts have issued municipal Green Bonds.  Given the overall SRI movement in the U.S. and the influence of large pension finds (i.e., TIAA-CREF) corporate issuers are expected to become a larger contributor to the overall Green Bond market.

At this time, the only investment vehicle that focuses in Green Bonds is a mutual fund called Calvert Green Bond (CGAFX). The fund has underperformed, partially due to its high front load (3.7%) though it has underperformed other funds too. It invests 90% of its assets in the U.S. and has an effective duration (maturity) of 5 years.

Recently, Ameriprise Financial subsidiary (Columbia Threadneedle) opened a new muni fund called Columbia U.S. Social Bond Fund which utilizes ESG criteria.

Where do we go from here
The Green Bond market was born in Europe, broadened in the U.S. but it will reach escape velocity in Asia.  During 1Q'14, Toyota Motor Corp. issued the market's first ABS, backed by auto leases. The proceeds were earmarked towards electric vehicles.  Despite its $1.8bn size, the Japanese market will pale in comparison to the tidal-wave of Green Bonds emerging in China, according to a study conducted by The Intl. Institute for Sustainable Development.

Anyone that has ever visited China or ran the Beijing Marathon could see for themselves that pollution is a BIG problem.  Some observers say environmental costs may be as high as 10% of GDP.  Consequently, the Chinese State Council announced plans to grow a corporate Green Bonds market as part of its Five-Year Plan. There are several drivers that are expected to quicken this pace including:

• High levels of household savings
• the movement away from Shadow-Banking towards transparent markets
• limited financing for small and medium-sized businesses
• Urbanization and its affect on public health
• High foreign investor demand
• Large infrastructure programs that are Green Bond friendly (see below)

Transport, primarily rail, will be a dominant way of reducing emissions in China, according to the IEA. Despite declining rates of rail investments here in the U.S., China recently added 6,000 km of high-speed rail track - which is double the ROW.

Beijing Marathon'14 (Reuters)

Green Standards Need to be Refined Yet Again
There are several standards that define what exactly (or not so exactly) a Green Bond is. The most popular are the Green Bond Principles and Climate Bonds Standard.  There are also Green Bonds indices in which investors can determine if a particular bond is an index component. Both sets of standards are evolving and voluntary. The Climate Bonds Standard was developed by the Climate Bonds Initiative. It is very focused on Green Bonds from solar and wind companies and needs to be broadened to other industries such as transport, water, agriculture, etc.  The Green Bonds Principles were developed by the ICMA and represents over 50 large financial institutions. It is a set of Best Practices for determining what is a Green Bond as well as the process of issuance, management of proceeds and reporting. The Green Bonds Principles were updated on March 27, 2015.  I read them and thought I had mistakenly read the executive summary as they were too general in scope.

When Green Bonds go Bad
There are several ways a Green Bond could turn ugly.  For example, bond proceeds may be diverted from their original noble cause towards activities that are not green. Green-proceeds may also be loosely-tracked and mixed with an issuer's other bond proceeds.  Reporting may not be transparent enough and assurances may not be objective or from a reputable third-party.  While the above risks are valid, I believe they could be lessened over time. But there is an even greater overarching issue...

Is Green Bond investing really Socially Responsible Investing?
The short answer is a resounding No!

Socially Responsible Investors seek to purchase those companies that are practicing ESG (Environment Social Governance).  These are companies that are striving to reduce their carbon-footprint, treat their employees (and community) well, and become more transparent. Few companies attain five-stars in all three letters, so investors emphasize certain areas.  But overall, SRI asset managers tend to judge the whole company.  The website Socially Responsible Investing, for example, focuses on how companies treat their employees because I believe if you don't treat your own well you will never treat society well either. Others focus on companies with a mixed track-record that are progressing towards social responsibility. Apple under Tim Cook is a good example of this.  Again, these asset managers are focusing on the merits of the whole company.

The overriding problem with Green Bond investing is that any company (or municipal) could issue such a bond so long that its proceeds go towards benefiting (i.e., less harm) the environment.  With this type of definition, I cannot see a case that a borrower can not issue a Green Bond. So if oil company BP Plc wants to issue a Green Bond to make a new efficient LEED-class building (something it may have been planning anyway) socially responsible asset managers would be allowed to purchase those bonds. (In fairness to the Calvert Green Bond fund, I had conversations with its lead portfolio manager and Chief Investment Officer Fixed Income (Catherine Roy) who understood my issues, but stated that Calvert has experience in SRI and would ensure that it was buying bonds of companies that are socially responsible overall.)

However, the Barclays MSCI Green Bonds Index does address the issue of whether or not the whole company is green-bond worthy in its 90% Rule.  This rule says that a general obligation bond is Green if 90% of its revenues fall under one of its five eligible economic categories.  While I give kudos to Barclays for both addressing the whole issuer and for listing specific economic categories and subcategories, they are too lenient determining whether a whole issuer is Green. For example, using its subcategories, a company is Green if it sells superconductors or building-insulation.

The Case of the Green Parking Garage
In March'15, the WSJ highlighted green bonds sold by Massachusetts (Salem State University) whose proceeds would be used to build a garage with electric-car charging stations. Officials said the garage would reduce pollution by cutting down students' circling the parking lot looking for spots. However, environmental advocates noted that having a parking garage still encourages people to drive and create greenhouse gases.

Conclusion
Green Bond investing properly executed will continue helping the broader investment world adopt SRI.  However, investors should fully understand the issuer's core business. Otherwise, these bonds will just be Greenwashing the issuer's dirty laundry.