Thursday, February 12, 2009

Ethical Funds maps out action plan for 2009

It looks to be another busy year for the research team at Vancouver-based Ethical Funds, with today’s release of the mutual fund company’s extensive sustainable investment program annual report.

Bob Walker, vice president, sustainability, says Ethical plans to focus on three key issues in 2009. “The first is investor risk in Canada’s oil sands. The second is how companies can assess the full range of their impacts on human rights and ensure that their activities benefit impacted communities. The third will address how investors can help restore integrity to capital markets and the publicly-traded companies that benefit from the ethical functioning of those markets.”

As well as engaging oil sands companies on climate change, Ethical will ask companies in other sectors to work on emissions reduction, including continued dialogue with real estate companies on implementing green building strategies. Oil sands companies will also be asked to address cumulative water use issues and forestry companies will be encouraged to adopt sustainable practices.

On the social side, Ethical will continue to work with companies to encourage the development and implementation of human rights policies and programs when operating in risky countries. The fund company will also work towards eliminating sweatshop conditions and make an effort to ensure companies are not inadvertently supporting the use of child or forced labour.

Respecting indigenous rights is also on the 2009 agenda, particularly in the mining sector, where Ethical will support the adoption of informed consent as the standard for project development.

Corporate governance will be Ethical’s third main focus, with the company asking companies to improve their corporate social responsibility reporting and overall quality of their disclosure. Curbing excessive compensation will remain a priority, with Ethical asking that compensation be linked to positive performance on both the financial and the non-financial side.

“We believe companies that proactively address environmental, social and governance challenges have a long-term competitive advantage over companies that choose to ignore these issues,” notes Walker.

The sustainability report also includes highlights from Ethical’s work in 2008, including encouraging more Canadian companies to participate in the Carbon Disclosure Project, encouraging Canadian banks to adopt and disclose procedures for evaluating climate change-related credit risk in their commercial lending policies and raising awareness of the risks investors face from the scale and pace of development in Alberta’s oil sands.


  1. How much effect can a fund manager/company really have on the business practices of a major coporation?
    Is there historical evidence of any (many) coporations positively changing their business/HR/ethical methods as a direct result of influence from the financial sector?

  2. Hi Chris, there’s some good info in ‘Do Your Proxy Votes Really Count?’
    SRI mutual funds have brought resolutions asking companies to report more clearly/comprehensively on environmental, social and governance factors. While not earthshaking, these have incrementally improved transparency. A major success we had some years ago was the campaign to force Talisman to sell its operations in Sudan.
    When the current AGM season is over, we will have commentary and dissussion on how this year’s crop of resolutions fared. We are having some wins on the Say on Pay issue in the U.S., we’ll see how it goes here. We welcome your input or ideas for posts.