Social investments hold steady

  • May 8, 2009
{mosimage}TORONTO - Before stock markets around the world crashed in September 2008, $609.23 billion  in Canada was invested with an eye on protecting the environment, treating workers and communities fairly and running the company openly.

Socially responsible investing principles captured 19.9 per cent of more than $3 trillion invested in Canada, according to the second biannual Canadian Socially Responsible Investment Review. While total SRI investments climbed 21 per cent between mid-2006 and June 2008, the ethically invested market share remained steady at just under 20 per cent.

The numbers are no big surprise to Social Investment Organization executive director Eugene Ellmen.

“If there’s some disappointment there, it would be on the pension side,” Ellmen said.

After initial breakthroughs with the both the Canada Pension Plan Investment Board and the Caisse de Depot, both adopting some socially responsible investment policies in 2005, other Canadian pension funds, foundations and large trusts have failed to follow suit, Ellmen said.

“Compared to countries like Australia, where there is a lot of growth in this area, Canada is not growing as fast as other parts of the world,” Ellmen said.

The SIO plans roundtable discussions with large pension funds later this year, but Ellmen suspects the fund managers have been slow to modernize their investment policies because they’ve been distracted by the problems posed by a ballooning population of pensioners combined with reduced investment income.

“There have been a lot of issues around solvency the last couple of years,” Ellmen said. “I think the management time of trustees and managers has been spent on solvency issues rather than other issues, like socially responsible investment.”

While the numbers in the report represent pre-crash levels of investment, Ellmen doesn’t think the socially responsible share of Canada’s investment market has changed much with the market turmoil.

“We still think it’s around 19 or 20 per cent of the total market,” said Ellmen.

With a May 4 announcement that TD Asset Management Inc. will adopt environmental sustainability policies to govern all its investment funds, Ellmen thinks it’s likely more institutional investors and managers are looking at social investment principles. TD Asset Management has $169 billion under management, including $47.6 billion in mutual funds.

“The mainstream investment community is beginning to look at some of the risk management issues that it missed a few years ago that led to the collapse in the fall,” he said. “They’re beginning to think that maybe it does make sense to look at ESG (environmental, social and governance) issues.”

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