Thursday, December 17, 2009

Emerging market companies lagging on ESG reporting

A new study concludes that although a significant number of emerging market companies have begun to report on some environmental, social and governance (ESG) issues, most do not report extensively or according to global standards.

The Social Investment Forum (SIF) says that 96% of emerging market firms reported on at least one ESG factor, but only 14 of 100 companies reported in accordance with Global Reporting Initiative guidelines.

Governance structures and board committees were the most commonly reported ESG indicator while environmental information was the least likely to be disclosed.

“This report clearly points to a need for companies in emerging markets to improve their ESG reporting practices, and investors must become a key driver in encouraging companies to bolster transparency,” says Lauren Compere of Boston Common Asset Management, co-chair of the SIF’s Emerging Markets Disclosure Project.

Companies from Brazil and South Africa were the most likely to issue reports using Global Reporting Initiative guidelines. The report notes that both countries operate a socially responsible stock market index.

Thursday, December 10, 2009

8 in 10 can’t think of a corporate leader in climate change

Is that because there isn’t one?

There was a lot of interesting information in a CBSR webinar that I attended yesterday, Climate change: Public Opinion, Corporate Action and Update from Copenhagen. I’ll break it down into some themes that are particularly relevant to the SRI community.

Chris Coulter of GlobeScan presented 7 key findings on climate change. The questions were asked in a number of countries, and Mr. Coulter often highlighted the Canadian results for us. Notably, the question ‘Which company is doing the most to address climate change?’ elicited no answers from 8 out of 10 Canadians, indicating a real void in this area. Of the responses that were given, the top 4 ‘companies’ were Toyota, Cascades, Ford and Greenpeace. Should Ethical Funds be top of mind here? I don’t know. But it certainly indicates a general lack of corporate leadership and communication, and a significant opportunity for somebody to step forward.

Looking further into this abyss, in answer to an open ended question 'What have you done to reduce your impact on climate change?' the number one answer, provided by 27% of people was ‘recycle’.

We need to formulate some clear and simple messages, and start getting the word out more effectively. Luckily, it appears that people are receptive, in that 78% of Canadians feel that investing in renewables, public transit, energy efficiency etc. will be good for the economy. (and perhaps, if we get that messaging right, for their portfolio).

Mr. Coulter concluded that Canadians believe in the economic upside of a greener world, but are very confused as to how it’s going to happen. “Companies need to talk about these issues. Raising it as an agenda item is also a way to show leadership.”
That would be a start.

Tuesday, December 8, 2009

Be Invested. In a better world.

The Inhance funds have now officially morphed into the IA Clarington SRI funds, which will be offered nationally through IA Clarington's distribution network, as well as through Vancity branches. The Inhance fund family, Vancity Circadian fund family and Vancity Perspectives portfolio solutions family have been merged with funds managed by IA Clarington and represent approximately $92 million in assets under management (AUM), bringing IA Clarington's total AUM to well over $7 billion.

As previously reported, the investment management team at Inhance, including Steve MacInnes and Dermot Foley, has moved to Vancity and will continue to manage the funds for IA Clarington. "We were very pleased to be able to maintain the Inhance portfolio management team," said David Scandiffio, President of IA Clarington. "They are recognized leaders in this category and bring a vast amount of experience to the table."

IA Clarington has integrated the marketing of the SRI funds into the existing IA Clarington approach, which I think sends a message that these are funds for everyone. To their overarching advertising theme ‘Be Invested.’ they have added ‘In a better world.’

Rob Taylor, IA Clarington’s Vice President, National Accounts and Business Development talked about how they developed the campaign. “We could look at SRI from an outsider’s perspective, and ask ‘what does the investor want?’. We thought you should be able to feel good about where you invest your money. We wanted to focus on the underlying benefit of these funds, and then portray that in three words, and that’s how we came up with ‘Feel Good Investing’.”

The website is up and running for the launch of the funds and more marketing material will be available soon, featuring the same imagery and language that’s on the website now. “It can be a challenge for advisors to get information across to their clients. The industry spends a lot of time on numbers, but we think images and pictures and stories are a more powerful way to reach investors,” continued Mr. Taylor, “and that’s how we intend to build our campaign.”

‘Introducing Feel Good Investing – FGI – and the IA Clarington Inhance family of feel good investment funds.
Socially Responsible Investing (SRI) redefined: SRI is FGI.’

Do we really need another acronym? I don’t know. But a non SRI fund company demonstrating a commitment to SRI – that’s something we need more of.

Friday, December 4, 2009

Who is Qtrade, anyway?

When the news was announced Wednesday of Meritas’ merger with Qtrade, that’s the first question that came to my mind. I googled Qtrade, and discovered that they were the top rated on line brokerage. Rob Carrick said “The little independent from out west beats the big boys of Bay Street yet again. The story here is that Qtrade is relentless in scoping out the best innovations of its competitors and nimbly adopting them.” Sounds good so far.

I asked around, and people in Vancouver told me ‘They have a great reputation, but I don’t know much about them’. So I called Scott Gibner, CEO of Qtrade Financial Group, and asked him how they came to merge with Meritas. ”Both our firms got started in 1999-2000, so we grew up at the same time. We were always aware of Meritas’s mandate, and their growth. We have a number of relationships with credit unions, and that was a significant driver in our search for a socially responsible mutual fund partner.

“When we first started talking to the people at Meritas, they kept stressing that they had a pure SRI mandate and they weren’t interested in anything else. We said ‘Listen guys, we know that. That’s why we’re here.’”

Qtrade Financial Group provides wealth management services to financial institutions, among them credit unions, trust companies and financial planning companies. Qtrade Fund Management (QFM) offers a family of mutual funds, as well as managed portfolio solutions. “We plan on growing the SRI component. We have a very large need for it." continued Mr. Gibner. “Gary Hawton is the Chief Investment Officer of QFM because the SRI component is going to be pervasive throughout the offering.”

At this point, QFM has six wholesalers, primarily supporting the credit union system. But as the firms integrate, that number will grow.

Mr. Gibner was unequivocal in his support of SRI. “SRI should be part of everyone’s portfolio. It’s certainly part of my portfolio” Given the wishy washy views of some firms in the SRI space, that’s music to my ears. Welcome Qtrade!

Thursday, December 3, 2009

And the winner is….

Last night the Canadian Investment Awards Gala took place at the Fairmont Royal York in Toronto. The awards recognize leading investment products and firms who demonstrate a commitment to excellence within the Canadian financial services industry. The investment categories have grown over time, and in addition to the standard fund types and the SRI award, a set of awards for hedge funds was added this year.

The Socially Responsible Investment Fund Award was won by the Inhance Monthly Income Fund. Steve MacInnes, the Chief Investment Officer at Inhance, was on hand to accept the award. “It’s a compliment to myself and the team we have at Inhance. The Monthly Income Fund is a fund for the times we went through. It’s very well balanced, no crazy bets and diversified across all yield asset classes. It outperformed it’s balanced fund peer group. We had a shot at winning the whole category”

The runner up was the Ethical Balanced Fund. Both funds are in the top quartile based on Globefund rankings of 3 year performance of the Canadian Equity Balanced Peer Group. Perhaps we can now put an end to the pervasive myth of SRI underperformance.

Glorianne Stromberg was the winner of this year’s Career Achievement Award. This award is well deserved, and a courageous choice given the mutual fund industry’s reluctant acceptance of many of her much needed reforms.

The second annual Green Company Award for Environmental Leadership went to TD Bank. Peter Love, the former Chief Energy Conservation Office with the Ontario Power Authority, when presenting the award, asked a question that goes to the heart of SRI, ‘What good is prosperity if it cannot be sustained?”.

Unfortunately, Thomas Dyck in his acceptance speech spoke about the Great Canadian Shoreline Cleanup, a wonderful initiative, but neglected to mention the impact of TD’s Sustainable Investing Policy introduced earlier this year which now takes ESG factors into consideration when managing their 53 billion dollar mutual fund portfolio.

The CIA Gala is itself committed to going green. The event was powered with renewable energy by Bullfrog Power, and the program was printed by Informco on ‘100% recycled paper with no new trees harmed, using vegetable based inks and Environment 14001 certified processes.’ Hmm, looks like the broader investment community is finally catching up to us!

Wednesday, December 2, 2009

Qtrade and Meritas to join forces

Qtrade Fund Management and Meritas Financial have announced an agreement to combine their operations, creating a company with $4 billion in assets under administration.

Under the terms of the friendly merger, Meritas will continue to operate as an independent entity within the Qtrade Financial Group, specializing in socially responsible investing.

“The opportunity to broaden our wealth management offering with Meritas, a leading provider of SRI investment solutions in Canada, is very exciting,” said Qtrade CEO Scott Gibner in a statement. “Meritas’ strong and unwavering commitment to SRI over the last 10 years has been the foundation for their success and, as SRI funds continue to grow in popularity in Canada and globally, we believe this dedication and historical track record will continue to serve Meritas very well into the future.”

“I am excited by the expanded prospects for Meritas as a result of this partnership with Qtrade,” added Meritas CEO Gary Hawton. “This is a significant milestone in the growth and maturity of Meritas Mutual Funds."

During the current difficult economic climate where many mutual fund companies are cutting staff and closing funds, Hawton says Meritas plans to do the opposite, hiring more staff, developing stronger relationships with advisors and likely adding new funds to the Meritas family.

“Our growth suggests that more Canadians are asking for SRI funds to be added to their portfolios,” Hawton says. “I am convinced that Meritas will emerge as the SRI fund company of choice for a growing number of investors and advisors.”

The transaction is expected to close at the end of March 2010, subject to regulatory and other approvals.