– by Viola Van de Ruyt, VandeRuyt Wealth Management Group –
Socially responsible investing has become a more common concern amongst Canadian investors. The Responsible Investment Association reports that as of 2013 (the most recent report) there were one trillion dollars of assets in Canada being managed using one or more responsible investing strategies, a 68 percent increase over 2011. Although about 80 percent of this is pension money, I am seeing the same increased interest amongst individual investors.
What is socially responsible investing or SRI as it’s often referred to? If you ask five people what type of investments would concern them you’ll probably get five different answers. But almost all people are concerned about human rights, they don’t want to invest in a company that employs child labour and most people don’t want to invest in tobacco. There will be variations in the other answers but SRI typically is concerned about three main issues: environmental, social and governance or ESG. In 2013 the top three issues that Canadian investors and investment managers got involved in were executive compensation, human right issues and greenhouse gas emissions. They got involved by having in depth dialogues with the companies they have invested in and by shareholder action.
Just as it is difficult for the average Canadian to be completely ‘green’ with their transportation, it can be difficult to be completely ‘green’ with your investing but here are three ways you can improve your SRI.
1. Invest directly in shares of companies you like. You’ll have complete control, but it can be time consuming for an individual.
2. Index investing i.e. the Jantzi social index. It’s the easy, low cost option but there’s no shareholder involvement.
3. SRI mutual funds – there are several fund companies specializing in SRI. You’ll have active management and involvement but you must choose carefully – they’re not all alike.
Just as many drivers opt to buy a fuel efficient vehicle and walk short distances to reduce the amount of gas they use, I am seeing many investors opt to introduce some SRI strategies into their portfolio. It may not be perfect but it is a step in the right direction!
Viola is an Investment Advisor with National Bank Financial Wealth Management in Sidney. The securities or sectors mentioned are not suitable for all investors and should not be considered as recommendations. Please consult your investment advisor to obtain complete information, including the main risk factors. National Bank Financial is an indirect wholly-owned subsidiary of National Bank of Canada which is a public company listed on the Toronto Stock Exchange (NA: TSX). National Bank Financial is a member of the Canadian Investor Protection Fund.
To reach Viola please visit her website www.violavanderuyt.ca.
