The Canadian market for responsible investing is the fastest growing in the country.
Responsible investing is on the rise in Canada and 100% of your portfolio is eligible for responsible investing. How can investors be a part of earning wealth while making the world a better place?
Responsible investing incorporates environmental, social and governance (ESG) criteria into the selection and management of investments, in addition to analyzing the company’s financial statements by avoiding investing in companies involved in environmental degradation, endangering public health, and human rights abuses.
“There are three approaches to managing investments in a responsible manner: divest out of an unethical situation, screen out a particular group of companies, or take advantage of having shareholder voting rights and engage with that company’s leadership to encourage change,” says David M. Francilia, CFP, RIS, senior wealth advisor with Envision Investment Services and a licensed advisor with Credential Qtrade Securities Inc.
“You don’t need to compromise on performance because companies with strategic ESG practices often achieve better financial results over the long term,” he adds. “This means rates of return on some responsible investments are often comparable to their index counterparts.”
Responsible investing can be more rewarding to investors since it allows them to align their values with their investment dollars. “For example, I have two daughters, so I include a women’s leadership strategy in their education savings plan and focus on investment in companies that prioritize and advance women in leadership roles,” Francilia says. “I include an actively managed mutual fund that carries out a similar strategy, and I hold a few individual company stocks that relate to my daughters’ interests and have women in leadership positions.”
Another thematic strategy would be focusing on companies that derive a good portion of their revenue from positive change in areas of energy efficiency, renewable resources, water infrastructure, pollution, and waste management.
“These are areas of growth and increasing social interest,” Francilia says. “Listening to the powerful voice of Greta Thunberg promoting action to combat climate change is encouraging, and the best way to support a movement like this is to direct your investment dollars into potential environmental solutions.
“Every year, the number and diversity of investment products that address responsible investing continues to grow,” he adds. “There are also more investor dollars flowing into these products. That’s why we’ve made it a priority to ensure our advisors are fully qualified to sell responsible investment funds.”
Envision Investment Services is a division of First West Wealth Management Ltd.
Learn more about responsible investing at envisionfinancial.ca/RI.
Read more about David Francilia on LinkedIn.