As a values-based financial co-operative, we not only do business in ways that are financially sound and socially responsible, we give our members the opportunity to invest in companies that share those values.
It’s called socially responsible investing (SRI) and it’s a strategy that considers both financial returns and social good. SRI avoids businesses involved in alcohol, tobacco, gambling, pornography, weapons and other similar categories. Instead, investors encourage corporate practices that promote environmental stewardship, consumer protection, human rights, and diversity.
SRI funds identify areas of concern under the heading of Environment, Social, and Governance (ESG) Issues. The company under review has to pass the ESG screening to be considered for investment. While doing due diligence on a potential company, analysts look at ESG issues such as:
- Waste reduction
- Responsible water usage
- Respect human rights
- Safety in a workplace
- Giving back to the communities
- Executive pay
It stands to reason that a company with good ESG performance would lessen the risk of lawsuits, regulatory penalties, potential labor issues, human right issues, reputational damage and much more, which in turn would affect the performance of the company and the investments. A positive ESG score has the potential to minimize risk, increase performance while allowing the investor to know their money is doing more.
With over $1.5 trillion in assets under management, SRI is a growing area for investors that has seen a 49% increase in past two years. SRI represents 38% of Canadian investment industry and it is expected to see moderate to high levels of growth over next two years.
Source: 2016 Canadian Responsible Investment Trends Report. Responsible Investment Association (RIA), https://www.riacanada.ca/. Feb 2017, Online report, Accessed: Sept 20th 2017.
*Mutual funds are offered through Credential Asset Management Inc. Mutual funds and other securities are offered through Credential Securities Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Unless otherwise stated, mutual fund securities and cash balances are not insured or guaranteed and are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer that insures deposits in credit unions. Their values change frequently and past performance may not be repeated. Credential Securities Inc. is a Member of the Canadian Investor Protection Fund.
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