Re-spon-si-ble in-vest-ment
(phonetic pronunciation)
An approach to investing that aims to incorporate environmental, social, and governance (ESG) factors into investment decisions and research, to better manage risk and generate sustainable, long-term returns. (UNPRI.org)
50% of professionally managed money in Canada today is in responsible investments.
That’s more than $2 trillion in Canada at the start of 2018.
And $30.7 trillion worldwide.
Responsible investment can be used as an umbrella term, representing three key investment strategies:
- ESG integration
- Social Responsible Investing (SRI)
- Impact investing
Environmental, Social and Governance (ESG) integration
Does not require ruling out specific companies or entire sectors.
A wide range of issues are connected to ESG factors:
Environmental: Can include climate change, resource depletion, waste & pollution, deforestation
Social: Can include working conditions, indigenous & local communities, health & safety, conflict, diversity
Governance: Can include bribery & corruption, tax strategy, board diversity, political lobbying, donations and cyber security
Integrating ESG means assessing risk and return by ensuring these non-financial factors are accounted for.
Socially Responsible Investing (SRI)
Also known as values-based or ethical investing. It allows investors to align personal values with their investment choices.
SRI strategies can apply positive or negative screens to include or exclude companies from the investment universe based on ESG criteria.
Impact Investing
Investments that intend to generate positive social and environmental impact.
Today, responsible investment has evolved considerably in its sophistication and range of approaches.
Talk to an advisor about how to incorporate responsible investment into your portfolio.