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Category Archives: Socially Responsible Investing

Odette Morin

Responsible Investing: Positive versus Negative screening

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:

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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.

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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.

Odette Morin

Inhance Mutual funds named top SRI mutual fund in Canada

We have been working hard to find a Socially Responsible Investment manager that we feel comfortable to recommend.  Inhance Mutual funds is one of our favourite. We like their ESG process, management style and feel confident in their investment process. 

We are please to report that one of their Canadian Balanced fund, the Inhance Monthly Income Fund, has been name one of the two top SRI mutual funds in Canada this week.  The nomination came from the Corporate Knights magazine’s seventh annual survey of the country’s SRI universe.

Corporate Knights crunched the numbers on 64 Canadian SRI funds, using a combination of social and performance scores as well as one-to-five “shield” scores, based on the following: Performance: 40%; Integration: 17%; Engagement: 15% Portfolio Turnover Rate: 10%; and Systemic: 8%.

Vancity and Inhance had the top two balanced funds, but also generated the highest scores overall as a result of their stronger performance numbers.

By investing in companies like Inhance you can contribute to a better world.  They file corporate resolution to make corporations change the way they do business.  Take a look at these two concrete example. Feel great to know that we, through our investments, can contribute to change.

Green is in

Inhance tackles climate change

Odette Morin

Have you ever thought of Socially Responsible Investing?

Have you ever thought about incorporating factors such as the environment, human rights and transparent corporate practices into your investments? If so, then responsible investing may be the perfect opportunity to use your money to achieve your financial goals while contributing to a more sustainable world.

Socially responsible investing has evolved over the years and has recently become more mainstream with adoption by major financial institutions, including the Canada Pension Plan. Below you’ll find some answers to commonly asked questions.

What is responsible investing?

Responsible investing provides a framework for achieving better long-term investment returns and more sustainable markets by considering both an investor’s financial needs and an investment’s impact on society.

Is responsible investing a new investment strategy?

No. It has been used for many years, but it continues to evolve and gain acceptance. Today, environmental sustainability, social responsibility and good corporate governance (ESG) are widely recognized to have a profound impact on company’s long-term financial performance.

Do you sacrifice performance by investing responsibly?

No. Numerous studies show that responsible investing generates returns comparable to the overall market. The Jantzi Social Index (JSI) tracks companies that pass a set of broadly-based environmental, social and governance criteria. The JSI is mapped against the S&P/TSX Composite Index and tracks with equal or better performance, as seen in the chart below.

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What is shareholder engagement?

Traditionally, responsible investing meant screening out companies based on social and environmental concerns. Today, investors partner with companies and suggest ways for them to become better using shareholder engagement. Common engagement topics are diversity, human rights, climate change, business practices, health and safety and toxic material management. The goal is to promote further positive action and to increase long-term shareholder value. Essentially, encouraging progressive companies to be their best.

What are the benefits to my portfolio?

Investors benefit from an investment process designed to produce superior investment returns over the long-term. In addition, analysis of environmental, social and governance factors provides an extra layer of risk management. Responsible investing also ensures that your money is invested in companies that follow progressive practices. That helps you contribute to the development of a more sustainable world.

Whatch this short video on the subject

Odette Morin

YOU FIRST is having a special information on Ethical & Green Investing and Guaranteed investments

We are having a special info session and you are invited!

We don’t have events very often.  You will not want to miss this one on January 28th at 7pm the Terminal City Club.  By popular demand, our first speaker will be on Socially Responsible Investing or commonly called Ethical & Green investing. 

Dermot Foley is the Vice-President of Strategic Analysis of Inhance Investment Management Inc. With his depth of knowledge in labour relations, energy stocks and climate change impact and solutions, Dermot takes a lead role in the ESG analysis of our investment process. Dermot brings over 15 years of experience in social and environmental advocacy, research and policy analysis.  His role is to assess business practices, management systems and treatment of non-financial risk.  Dermot is also responsible for determining the strategy for shareholder engagement with companies held in Inhance portfolios. Prior to joining Inhance, Dermot was the Senior Policy Analyst with the David Suzuki Foundation Climate Change Program for 6 years. Widely esteemed within the environmental community as a strategist, analyst, and spokesperson, Dermot has participated in developing and implementing provincial environmental and energy policy.

It will be followed by a talk on the new Guaranteed Investment & income funds. Do market volatility make you nervous?  Are you concerned about losing some of your capital invested? Do you want an investment that can offer predictable, sustainable and potentially increasing income for life?  Vincent Nijjar, VP CI Investments will talk about this new product whichprotects your capital and pay a 5% annual income guarantee with upside potential if and when the markets do recover.

Last but not least will be Isabelle St-Jean, author of Living Forward, Giving Back, a Guide to Fulfillment in Midlife and Beyond. Her presentation is called; What is next? Success factors for a purposeful reengagement in midlife and beyond.  This informative, uplifting, energizing & inspiring talk will explore some of the non-financial success factors of retirement such as the renewal of one’s purpose and personal identity and how we can be fulfilled by making a difference in our community.

Mark your calendar today and RSVP with Victoria at

Odette Morin

The Evolution of Responsible Investing

Should you consider ethical investing for your portfolio? Can changing the world also make you money?

We ask ourselves the same question every year.  Should we add socially responsible investments to our fund line up for our clients?  Sure, the concept of avoiding “sin” stocks such as purveyors of tobacco and weapon makers gives you an instant feel good reward.  But, as your financial planner, my question is, do these funds make profits and what are the risks?  How are these funds managed and are they diversified enough to preserve capital over the long term?  The face of socially responsible investing has changed dramatically over the past few years. Let’s review what they are today and why you may be interested. 

When SRI was first created, it was a mission or values based approach that often looked at the company for their moral behaviour above their financial potential. However, time and experience have evolved products in this area. Many firms are moving, or have moved, away from negative screening, and are now using positive performance metrics when evaluating a company’s environmental, social and governance performance.

Positive screening is the process of selecting, rather than excluding, securities based on established SRI criteria. Specifically, positive screening looks for companies that provide social justice and environmental accountability. Responsible investors seek to align their investment strategies with their values. They consider the impact of their investments on the world and invest in companies that aim to minimize the negative impacts or produce positive ones. 

In the 1990’s environmental problems came to the forefront of public awareness with issues including ozone depletion, climate change and hazardous waste. As a result corporations began assessing and reporting on a variety of environmental programs to demonstrate their level of commitment and progress in addressing these problems. At the same time some shareholders took responsibility for their ownership in companies and became more active at annual shareholder meetings. They sought improvements in environmental policies and practices, as well as in the level of disclosure and quality of reported information.

Over time, company reporting became more sophisticated and broadened to include other factors and issues that demonstrate corporate social responsibility: employee relations, corporate governance and community relations.

Today responsible investing has evolved as an intentional investment strategy aimed at generating financial returns from responsible companies. A key part of this strategy is shareholder engagement, which encourages and promotes responsibility and helps investors identify companies with the best practices.  In recognition of the importance of responsible investing in financial performance more than 200 international pension funds, including the Canada Pension Plan and other institutional investors, holding more than $9 trillion US in assets have adopted the UN Principles of Responsible Investing. The Principles include:

Incorporating environmental, social and governance issues into financial analysis and decision-making, becoming active shareholders, seeking disclosure on these issues, promoting acceptance of the Principles in the investment industry and reporting on activities and progress towards implementation. Recognition that environmental, social and governance performance can have a profound impact on financial performance, as well as on the small planet we share, has brought responsible investing to the forefront of mainstream investor consciousness.

Responsible investing is the foundation of a few Mutual Funds companies. They rigorously incorporate environmental, social and governance criteria into in-depth financial analysis and portfolio construction.  They identify core corporate responsibilities and ensure they are being appropriately addressed by the companies they invest in.  You may want to read a blog written by Dermot Foley from Inhance Investments on the subject.

Click here to read: Can ESG cure the markets?

We short-listed several leaders in the Responsible Investment space who may be the right fit for your portfolio. Please ask us for more details.