Responsible Investing: The Way of the Future
Sustainability As more and more Canadians are investing responsibly, Dustyn Lanz outlines the impact that responsible investing brings to society and your wallet.
More and more Canadians are investing responsibly — Dustyn Lanz outlines the impact that responsible investing brings to society and your wallet.
Mediaplanet: What is responsible investing?
Dustyn Lanz: Responsible investing (RI) refers to investments that incorporate environmental, social, and governance (ESG) factors. There are numerous RI strategies to consider. For example, a growing number of investment firms are integrating ESG issues into their financial models to identify risks and opportunities that might not show up in a company's financial statements.
"As an investor, it's irresponsible to ignore ESG issues because they are some of the more important drivers of change in the global economy today."
You could also build an RI portfolio by "screening in" sustainability leaders and "screening out" sustainability laggards. Or you could invest in a fund that focuses on a specific ESG theme such as clean technology or women in leadership, or a fund that engages with companies to improve their sustainability performance.
What is the importance of responsible investing?
A company is more than just the numbers. Incorporating ESG issues into investment decisions provides investors with a more comprehensive view of a company and whether its returns will be sustainable over the long term. As an investor, it's irresponsible to ignore ESG issues because they are some of the more important drivers of change in the global economy today.
What are the benefits of responsible investments over traditional investments?
Responsible investing can contribute to positive societal change while also reducing risk and improving financial performance over the long term. A study from Carleton University found that RI equity mutual funds in Canada financially outperformed their respective benchmarks 63% of the time.
How can investors ensure they are investing in vehicles that reflect their social values?
The first step is to talk to a financial advisor who specializes in responsible investing or to familiarize yourself with the available responsible investment options. Investors who are interested in finding responsible investment advice or products can visit the RI Marketplace, a new online directory of responsible investment products and services that we've launched to help investors of all types.