| Written by Michael Swan, The Catholic Register,
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 The state of our environment has captured the attention of Canadian investors.
A Harris/Decima poll of more than 2,000 Canadians for Investors Group found 56 per cent thought environmental considerations are an important part of socially responsible investment decisions. Environment out-polled such traditional ethical investment factors as alcohol and tobacco at 43 per cent, and weapons at 53 per cent. Only substandard human rights practices at 70 per cent and child labour named by 79 per cent were more likely to determine ethical investment decisions.
With an aging population, Canadians have more assets invested and have become more knowledgeable about investing, said Investors Group fund manager Dan McClure. People now approaching their retirement years are not thinking of their investments in isolation, he said.
“Not only am I passing assets on, I’m passing on the planet,” is the attitude of many investors, said McClure. “I’m leaving these financial assets and I’m leaving the environment to the next generation. What is the state I’m leaving them in?”
Investor’s Group has launched a new mutual fund to specifically respond to concerns about the environment — the Investors Summa Global Environmental Leaders Fund. McClure is the portfolio manager for the internationally invested Environmental Leaders Fund and co-portfolio manager for the domestically invested Investors Summa SRI Fund.
“Investment firms are realizing there’s a demand for these (socially responsible investment) products, and there’s a demand now for some variety in these products,” said McClure.
With the range of SRI funds now available, few investors are going to be impressed simply because a fund is invested with an eye to environmental, social and governance considerations. Ethical investors now demand income funds, global funds, balanced funds, multi-strategy funds and sector-specific concentrations, said McClure.
Investors Group isn’t the only mutual fund company marketing a product which targets investors concerned about the environment. Acuity funds offers the Acuity Clean Environment Equity Fund, which concentrates on leaders in sustainable development, and the Acuity Natural Resource Fund, which invests in Canadian mining and energy companies. In chance Investment Management offers the Inhance Global Leaders Fund, which is invested under guidelines which look specifically at climate change issues.
Virtuous investors who choose environmentally focussed mutual funds are not making a personal sacrifice for their ideals, said McClure.
“Academic studies and certainly the market today would show that through a business cycle you’re not taking a hit by investing in an SRI fund,” he said.
A study by global consulting firm Mercer and the United Nations Environment Program Finance Initiative released in October concludes investors who incorporate environmental, social and governance factors into their investment decisions do not sacrifice performance.
The Mercer study looked at 20 academic studies and 10 broker studies of ESG investing strategies. Ten of the 20 academic studies found a positive relationship between ESG investing and returns. Of the 10 broker studies all five thematic studies drew positive conclusions about ESG investing. Out of five quantitative broker studies comparing ESG and traditional financial criteria, three found a positive relationship between ESG investing and returns and two concluded a social investment strategy is neutral.
SRI investment isn’t exactly mainstream yet, but it’s getting there, said McClure.
“A little more acknowledgment is coming from the mainstream investment community in the sense that some of the things you look at from an SRI perspective are not necessarily that different from what you would look at from a standard investment process — things like corporate governance,” he said.
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