How We Incorporate Socially Responsible Investing
Responsible investing is taking centre stage with Canadian investors – and it’s for good reason, in our view. The time has come to align our investment choices with our values as well as our goals. This may mean focusing on the impact of our funds, or supporting companies with strong environmental, social and governance (ESG) records and making choices accordingly.
Investment strategies incorporating both financial and non-financial factors that can generate value largely fall into four categories: socially responsible investing, ESG integration, impact investing and theme-based sustainable investing. Learn more about responsible investing here.
As investor conviction in responsible investing has grown, so too has the breadth and depth of the research available to help us with these choices. Every portfolio comes with environmental and social risk, and we are often asked if we, as Portfolios Managers, consider these factors. The simple answer is “we do!”
ESG (environmental, social and governance) investing covers the broadest array of responsible investment concerns and forms the backbone of our commitment to sustainable investing. In practical terms, this means that each of the companies held in our portfolio is put through a “screener” evaluation and assigned a score and a risk rating according to specific ESG criteria.
To ensure sound ESG insights, we engage third-party research from a company called Sustainalytics. They maintain and update an extensive database both here in Canada and the United States. We are regularly updated on changes within any of our held corporations that could affect their risk rating in one of the ESG areas. In the event of a rating change or concerning trend, the investment committee looks to replace the shares with a more suitable option. Evidence shows that companies that score well by ESG standards tend to be more profitable in the long term. We consider this a win-win for the environment, innovation and the health of our portfolios.