A client asked me to make a recommendation for Ethical funds this week.  He asked if the recommendation I make included Suncor.

As you know, I am a big believer of investing responsibly. In fact, I have made a commitment this year to specialize in “Ethical Funds”. It is a big learner curve for me especially in understanding the old and new way of responsible investing. I have researched several Ethical fund companies and Inhance is by far the best one to balance returns with responsible investing.

Here is what I reply to the client, which I thought would make a good subject for a blog post:

The Inhance Global Leaders fund does not hold Suncor or any other tar sands companies in it, since the global investment universe is much larger, Inhance Funds get to be more selective and strict with their ESG screening when building their portfolio of best global companies.

Suncor is held in the Canadian Equity fund, and the Balanced fund which contains about 35% of the Canadian Equity fund in the mix.

The first thing to remember is, there is no such thing as a “perfect” company. If we look close enough at any company, we can find areas that need improvement. This is why the shareholder engagement work a company like Inhance does, is so important.

The old model for Ethical funds, of screening out all of the “sin” sectors did not work, the performance could potentially be affected by excluding so many companies, especially in the Canadian market the investment landscape is so small.

The challenge of delivering performance while investing responsibly has led them to use a “best of sector” approach. They put more emphasis on the positive qualities of a company versus only looking at its negative attributes.

They also effectively use a shareholder engagement process to engage the companies that is held in the funds to improve their policies and procedures, Suncor is a very good example of that.

I asked Inhance to comment on this recently. Here is what they said:


Suncor has a large environmental footprint but with offsetting liabilities on the balance sheet. Suncor currently has a $1.6 billion asset retirement liability on the company’s balance sheet which is being monetized at a rate of $156 million taken from earnings in 2009. The company also posted letters of credit for $271 million with Alberta Environment, to recognize the reclamation liability for project expansions. (I have attached the presentation that Suncor’s Director of Sustainability shared with us last year when he came to our office to answer some of our questions) These are some of the positive qualities that Suncor has demonstrated.

– Suncor has been reporting Green House Gas emissions and reduction actions since 1995

– It has positive employee relations and good relationships with aboriginal and other communities where they operate. They have a full department dedicated to this.

– It has Canada’s largest ethanol plant in Ontario – annual net reduction of 300,000 tonnes GHGs on lifecycle basis.

– It has joint ventures in 147 MW of wind energy production with net GHG reductions of 266,000 tonnes -It continues to invest in energy efficiency, greenhouse gas offsets, R&D on carbon capture, geothermal and petroleum coke gasification.


We can have a much deeper impact by being involved via the shareholders engagement process. By investing together we have a powerful say in what a company like Suncor is doing. I think that Ethical investing is very empowering and a much more positive approach to the issues without giving up returns.