Socially Responsible Investing... Thoughts and Ideas
by Paul Tidey, CFP, CSA, FLMI

Socially Responsible Investing (SRI) purports to consider both the investor’s financial needs and an investment’s impact on society. SRI investor actions are said to encourage corporations to improve their practices on environmental, social, and governance issues. You may also hear SRI-like approaches to investing referred to as mission investing, responsible investing, double or triple bottom line investing, ethical investing, sustainable investing or green investing.

The theory is that SRI investors seek to align their investment strategies with their values. This can occur when the Investment manager and client hold the same values and use their money toward building a more sustainable world while striving to earn competitive returns.

The “responsible” stated goals of an SRI investment involve the screening of companies in both positive and negative aspects of that firm. The practice involves evaluating investment portfolios or mutual funds based on social, environmental and good corporate governance criteria. The buy lists should include businesses with good employer-employee relations, strong environmental practices, products that are safe and useful, and operations that respect human rights around the world.  

Generally speaking all SRI funds shy away from at least one of the following industries: tobacco, alcohol, gambling, military weapons, nuclear power.  However, it would be incorrect to assume that every SRI investment will. We have found varying degrees of tolerance within SRI investments. Different firms have different scales to evaluate risk and “tolerance” for various investments. For example “dirty” industries such as Oil & Gas may be included in an SRI list and individual securities are selected and judged as “best of class” in their respective industry, with regard to being socially responsible.

The question of whether to use an SRI fund is a very personal one and one that requires an additional level of due diligence on behalf of the client and the advisor. There are a number of SRI mandates by various fund managers that are “striving” to be the best and completely achieve the criteria set out.  However, there are many firms marketing fund names that may not fully and accurately describe the actual investments inside of the fund.

As always, we at Arbutus Financial work with our clients to identify your long term needs, goals, and dreams. We will take the time and work with you to plan your portfolios in a manner that allows you to sleep during volatility but also allow you to feel good about your investing.  We encourage your questions and interest in SRI investing and we also screen the funds that we have, and continue to recommend, to ensure they meet positive long-term goals with or without an “SRI label”.   

Here are a few of the better known Canadian SRI fund firms; Acuity,  Inhance,  Jantzi Funds.

This article is solely the work of Arbutus Financial for the private information of our clients. Although we are registered Mutual Fund Representatives with Dundee Private Investors Inc. (“Dundee Private Investors”), a DundeeWealth Inc. Company, this is not an official publication of Dundee Private Investors. The views (including any recommendations) expressed in this newsletter are those of the author alone, and they have not been approved by, and are not necessarily those of, Dundee Private Investors.