More and more, investors are considering environmental, social and governance (ESG) factors when managing their investments. You may have heard the term for it – socially responsible investing (SRI) – but is what you’re hearing true?
We caught up with Vancity’s Director of Sustainable Wealth Management Steve Eng and Director of Wealth Solutions Kristin Schreckenbach to bust three common myths about socially responsible investing.
Myth 1. Socially responsible investing only focuses on climate and environment.
Fact: Avoiding environmental heavy-hitters (like fossil fuels) and “sin stocks” (like alcohol, tobacco and gambling) is a big part of responsible investing, but it’s not the whole picture. “It’s not just a pass or fail,” says Steve. “It’s a lot more robust than most people think.” Vancity Investment Management (VCIM) also considers the social and governance factors of a fund – like diversity and inclusion, or if a company pays a living wage – in addition to measuring how it performs. The potential for education and shareholder engagement is a big part of whether an investment is considered responsible, too.
Myth 2. Socially responsible investing doesn’t pay.
Fact: Incorporating ESG investments in your portfolio can enhance your returns. According to Canada’s Responsible Investment Association (RIA), 63% of SRI equity mutual funds outperform the benchmark, and 64% exceed the median return. That’s in addition to having equal or lower volatility than traditional funds (which is a good thing). The IA Clarington Inhance SRI funds, managed by our own VCIM, are no different. With four funds (Bonds, Income, Canadian Equity and Global Equity) and three blended portfolios (Conservative, Balanced and Growth), most strategies and objectives can be covered.
Myth 3. Socially responsible investing means fewer options for members.
Fact: The opposite is true! Thanks to a growing interest in responsible investing – 77% of investors are interested in SRI, according to RIA – more businesses are shifting how they manage their business and operations to meet the demand. This means investors are seeing more values-aligned options rather than fewer, and at an equal or lower cost than traditional funds. “Ten years ago there were very few intentional SRI funds and the companies offering them were often small,” says Steve. “Now, that gap has pretty much closed.”
Socially responsible investing is here to stay. And here’s another fact: Socially responsible investing isn’t just a fad. That’s why Kristin says the facts speak for themselves when it comes to ensuring all Vancity’s investment offerings are responsible. “My answer is always ‘Why not?’ It’s the right thing to do,” she says. “Focusing on long-term sustainability is already part of who we are and how we do business, so why wouldn’t we want to help our members achieve that through their investments as well?”
Mutual funds are offered through Credential Asset Management Inc. Mutual funds and other securities are offered through Credential Securities. Credential Securities is a registered mark owned by Aviso Wealth Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Unless otherwise stated, mutual fund securities and cash balances are not insured nor guaranteed, their values change frequently and past performance may not be repeated.