Friday, June 18, 2010

Canadian Responsible Investment Conference Update: Be true to yourself

There’s value in having a conversation about values. And that’s always been the case for advisors who want to specialize in socially responsible investing. But how do you get in front of potential clients in the first place?

“We put ourselves out there and we repel as many people as we attract,” says Stephen Whipp, an SRI advisor with Manulife Securities in Victoria. “It’s the branding, so that when someone walks in the office, they at least have an inkling of what it’s going to be like.”

Whipp learned the hard way that as an advisor, it’s important to be yourself. “Many advisors love the outdoors, they’re environmentalists, they’re active in their own community, but when they put on that suit, they’re an advisor. All they are interested in is profit and loss, the P/E ratio, all the mumbo jumbo. They get so caught up in that, they forget about who they are and what interests them.”

Read the full story, published today on

Canadian Responsible Investment Conference Update: Divestment and engagement

by Farnam Bidgoli, Jantzi-Sustainalytics

Are there limits to corporate engagement? Well, sometimes. And it depends what you mean by engagement.

The final session of the 2010 Canadian Responsible Investment Conference was a spirited and frank discussion about the dynamics of corporate engagement and what one panelist called the ‘nuclear option’: divestment.

At the outset, several of today’s panelists explicitly stated they were averse to the use of divestment. Frank Coleman of Christian Brothers Investment Services, highlighting his organization’s role as a faith-based investor committed to speaking to the conscience of companies, put it most simply: “If we leave, who will replace us? How much social change can we provoke by walking away?”

Michael Jantzi, CEO of ESG research provider Jantzi-Sustainalytics, noted that the decision to use divestment didn’t necessarily sacrifice the chance to provoke change. Jantzi remarked that many companies do not want the reputational risks associated with being publicly excluded by investors, and therefore can be pressured using divestment. However, he concurred with the other panelists that engagement can also be an effective tool – as long as it is taken seriously and not used as an excuse to delay action.

What does serious engagement look like? Firstly, be realistic: all of the panelists agreed that they had to be selective as to what cases they choose to pursue, as engagement is expensive in terms of resources and time. Speaking about the TIAA-CREF’s recent divestment from companies involved in Sudan, panel member Stephen Brown noted that the divestment process lasted three years. After considering the issue of corporate involvement in Sudan, and concluding that oil companies were enabling the human rights violations in the country, TIAA-CREF initiated an extensive engagement campaign. This meant time, resources, and a commitment to dialogue with companies. It also meant an honest evaluation of the engagement outcomes, and the willingness to move to divestment when dialogue wasn’t working.

But it can’t only be about threatening divestment: investors must have an idea of the big picture and what they want to achieve through engagement. As Coleman noted during his comments, letters, meetings and research reports are not end goals in themselves.

Companies will appreciate this clarity. In pursuing engagement, investors should act as a strategic asset to the company, not fringe dissenters. This demands consideration on the part of engaged investors regarding the scope of what is viable. Asking Lockheed Martin to halt weapons production is not a realistic request, but asking for stronger risk management on deep water drilling is.

One way of understanding the limits of what is feasible is to collaborate with other investors. After one audience member asked the moderator, Gary Hawton of Meritas Mutal Funds, about the say-on-pay shareholder resolutions the fund has spearheaded, Hawton admitted that the fund had filed the resolutions after failing to garner responses from private dialogue with the companies. He went on to suggest that if there was greater collaboration between shareholders, it may not have needed to escalate to that point, particularly since Meritas quickly found there was significant interest from other investors. Engagement and communication between investors is therefore another important facet of a serious engagement process. Coleman later reiterated this point by calling for more cross-border collaboration between U.S. and Canadian investors.

In the end, the panelists all agreed that the questions of corporate engagement and divestment are not either/or questions: instead, they represent part of the toolbox available to investors. The decision as to what to utilize from that toolbox depends on what the goal of the investor is. And if there are "limits" to corporate engagement, they are conditioned on the objectives of the investor and the shape of the engagement process.

Farnam Bidgoli is a junior sustainability analyst at SRI research firm Jantzi-Sustainalytics.

Thursday, June 17, 2010

Canadian Responsible Investment Conference Update: Advisors key to SRI sales strategy

Quebec investors don't know a lot about responsible investing, but a significant majority are interested in the concept — so interested, in fact, that 59% of those surveyed by Desjardins said they would consider investing in socially responsible investing (SRI) products. Furthermore, 64% believe that financial institutions have a duty to offer SRI products to their clients, and 92% said that offering SRI products positively affected their perception of Desjardins as a company.

Those are the main findings of a study on Quebecers' attitudes toward SRI, which was released by Desjardins earlier this week at the Canadian Responsible Investment Conference in Toronto.

Read the full story, published today on

Canadian Responsible Investment Conference Update: Engaging with the Oil Sands Sector

“When does the patience run out?” That question from Bruce Cox of Greenpeace resonated with many in the room who were perhaps more interested in disengaging from than engaging with the tar sands sector.

But, to begin at the beginning, Todd Hirsch, Senior Economist at ATB Financial in Calgary opened the discussion by providing some information on the size of the tar sands. At this time there are 52 major projects either operating or about to get going, representing 143 billion investment dollars. And it’s not all purely Alberta oriented; Mr. Hirsch told us that about 20% of that investment activity generates activity in other provinces.

This year, for the first time, tar sands royalties will surpass natural gas and crude oil royalties for the Alberta government.

However, the economic impact is not what concerns socially responsible investors. Karina Litvack from F&C Investments suggested that perception in the UK is that “this is a very worrisome activity and that risks are not being mitigated to the extent they could or should be.”

Michelle de Cordova from Northwest and Ethical Investments was categorical in her defense of remaining engaged. “You can’t change a company you don’t own. We are committed to our engagement because we see it working.” In addition to their engagement strategy, NEI’s sustainability team has produced some excellent research reports, most recently Lines in the Sands: Oil Sands Sector Benchmarking.

Unfortunately, many of the examples of how engagement is working are related to increased disclosure. While we understand that disclosure is the first step, there was significant frustration in the room at the pace of change. Karina Litvack acknowledged that engagement is a slow process resulting in incremental improvements, while some investors, particularly on the retail side, are looking for transformational change.

Questions from the audience, and the subsequent discussion, suggested that the pricing of carbon might help. One thought was that ‘if you price carbon, you will see innovation like you have never seen.’ Ms. Litvack concurred, “If the pain is not great enough, why should these companies change? Two million dollars for Shell is pocket change.” (this is the estimated extra Shell will pay based on Alberta’s Climate Change & Emissions Management Act requirement for all facilities emitting more than 100 kilo tonnes per annum of specified gases.)

It appears that the results of the engagement process need to be better communicated. Frank Arnold, an advisor in Victoria BC stated, “Ten years ago clients were broadly saying they were interested in environmental issues. Now the first thing they say is they don’t want to support the tar sands.’ While socially responsible investors are in it to drive change, there is growing frustration with the limits of engagement.

Further sessions at the conference provided more information on this topic – stay tuned!

Canadian Responsible Investment Conference Update: Impact Investing: Innovations for Social Finance in Canada

by Karim Harji, Manager for Partnership Development at Social Capital Partners, founder,

Attendees at the Canadian Responsible Investment Conference expect to hear about the hottest trending topics from the panel sessions, with well-known terms and issues Engaging with the Oilsands Sector, Innovations in Cleantech Investing, The G20 and Financial Re-Regulation, and Divestment and Engagement… and of course, (the obligatory) SRI: The View From Europe.

But a panel on impact investing and social finance? That’s probably new ground for many, given the relatively nascent stage of the discussions in Canada. An excellent panel was linked up to provide an introduction to impact investing to those who needed it, and as a reminder to the rest of us around the emerging links between the world of responsible investing and social finance.

First up was Betsy Martin, Senior Advisor with Community Foundations of Canada. Betsy began the discussion by highlighting recent work by the Community Foundations of Canada around social finance. The Responsible Investment pilot project with the seven largest community foundations is the most prominent initiative to spur mission-based investment across the network. Additionally, CFC recently commissioned a report on The State of Community/Mission Investment of Canadian Foundations, which details nine Canadian foundations and their PRI/MRI/MBI approaches. Finally, their website maintains a healthy repository of key resources around responsible investment.

Next was Alex Kjorven, Development Manager at the Access Community Capital Fund, who introduced the fund as a means of “building impact investing through entrepreneurship”. She further described microfinance as lending where character is as equally valued as the validity of business plans, and that personal credit rating is almost an afterthought. Structurally, Access is not a bank but a nonprofit, as well as a charity – and so investors can invest in the organization and receive a low financial return (up to 2%) but high social return, or choose to make a donation and receive a tax receipt. As their site describes, donations go towards operating and program expenses, including reaching out to new clients and new neighborhoods, and providing pre- and post-loan mentorship and support of our loan clients; while investments go towards the loan fund and can be withdrawn at the end of the term. Alterna Savings administers the loans, which are under $5000 and are payable within 18 months.

David Berge, Senior Vice-President, Social Finance at Vancity, provided a gem of an anecdote that I hadn’t heard before, where he talked about the beginnings of what is now one of the leading financial institutions in Canada with assets of over $14.5 billion. Vancity started with 12 members who pooled $22 in Vancouver’s Downtown Eastside, with less than $1 in returns at the time. They have clearly come a long way since then, with new loans of $2.4 billion, 30% of which is distributed each year to members and local communities.

David described some of the areas which Vancity prioritizes as it shifts its own business model, to focus on the women’s economy (twice the size of India’s and China’s economies combined), new programs in food security, social enterprise, energy efficiency, and other areas. He noted that their commitment to these emerging areas is that they are putting their best people on proof of concepts and execution, and are looking for impact and scale when taking multiple pools of capital across the organization and applying them to same set of missions. Another related example is Resilient Capital, which is seeking to build a $10-$15 million fund to lend to nonprofits engaging in social enterprise.

A number of themes around social finance emerged during a Q&A with the audience. David pointed out that even though there is an appetite for impact investing, the downside risks are not well understood. Foreshadowing the microfinance panel later that morning, David noted that people are investing in microfinance before incorporating screening into their portfolios. The bifurcation between philanthropy and investing still exists, and even between different financing vehicles that combine (both) market-rate and non-market-rate returns. He described how insured deposits place the principal risk on Vancity, and make it an easier sell to clients, and where they can see the impact of investing in social enterprise.

Audience members also wanted to know if impact investing is consistent with fiduciary responsibility, because institutional investors are potentially giving up financial returns? David remarked that the big money – pension funds, universities, etc. – are managing for multi-generational time horizons, and so they should also be including the financial and non-financial implications of their investment decisions within the fiduciary process itself. Betsy Martin noted that the Freshfields II report and the UNPRI are important reference points for institutional investors seeking clarification on these issues.

My final thought to recap this panel session: I think that the most exciting part of the entire discussion was the venue itself – at the responsible investment industry’s largest conference, with attendees spanning the spectrum of investors and intermediaries. Some of the boundaries between responsible and impact investing are beginning to blur, and perhaps even lead to some level of convergence in the short- to medium-term. Community investment is gaining more prominence as a pillar of RI, and global trends suggest that impact investing is also going to continue to become more popular. Impact investing may not be an asset class yet, but my sense is that we’ll be seeing more demand for similar panel discussions at next year’s conference sessions in Victoria, BC.

As a reference to those who are new to the conversation around impact investing and social finance, I'd recommend the following publications:

-- Investing for Social and Environmental Impact: A Design for Catalyzing an Emerging Industry (Monitor Institute)
-- Investing for Impact: Case Studies Across Asset Classes (Parthenon Group)
-- Solutions for Impact Investors: From Strategy to Implementation (Rockefeller Philanthropy Advisors)

Karim Harji is the Manager for Partnership Development at Social Capital Partners, a social finance organization which provides growth financing and advisory services to businesses that integrate a social mission into their operations. Karim founded, an online platform for the community of people and organizations that are actively trying to advance the development of a social finance marketspace in Canada.

Tuesday, June 15, 2010

Canadian Responsible Investment Conference Update: Michael Jantzi wins lifetime achievement award

Michael Jantzi, head of SRI research firm Jantzi-Sustainalytics, has been named the winner of the inaugural Canadian SRI Lifetime Achievement Award at this year's Canadian Responsible Investment Conference in Toronto.

Jantzi, 46, has been working in the SRI field since 1990, founded Jantzi Research, and is the co-author of “The 50 Best Ethical Stocks for Canadians.”

The other nominees were Peter Chapman, executive director of the Shareholder Association for Research and Education (SHARE), Bill Davis, a key member of the Taskforce on Churches and Corporate Responsibility, which actively campaigned against apartheid in South Africa and Moira Hutchinson, also of the Taskforce on Churches and Corporate Responsibility.

“Many have gone before me,” Jantzi said in his acceptance speech. “These issues have now gone mainstream but it's important to step back and honour those who laid the groundwork.”

Canadian Responsible Investment Conference Update: Tips from the experts

The credit crisis has created lots of mistrust among investors. But advisors specializing in responsible investing can capitalize on that lack of trust, simply by explaining to clients that investing can be more than just about making money.

“That conversation is incredibly important,” says Steve Schueth, president of First Affirmative Financial Network in Colorado. “More so now than a few years ago. The general description [of our clients] is people who want to make money and make a difference. It's not either or and neither one takes priority, it's both.”

“I believe we can use money in a much more positive, healthy, life-affirming way,” Schueth said on the second day of the Canadian Responsible Investment Conference in Toronto. “As investors, we have an obligation to understand how our money is impacting the word and the legacy we will leave for future generations.”

“I'm passionate about the people I serve,” added Cara MacMillan, an investment advisor with BMO Nesbitt Burns in Ottawa. “And as advisors, we tend to attract people who are similar to us. So you have to have the values discussion. Link the conversation to where people are as individuals and make sure it honours where they are now.”

The BP oil spill has shocked and saddened people around the world, and although it may seem crass, it has also created the perfect opening for a discussion with clients who want their money to change the world in some way, says Schueth. “Think about this: this planet is a closed system. We screw this up, and we all die. More and more people get that. There's more opportunity for us to help people put their money to work in a more positive and transformative way.”

The panelists also agreed that many advisors are ignoring, though likely not purposefully, a huge under-served market receptive to responsible investing: women.

Long-time responsible investor Beth Jones noted that 1.2 million people work in Canada's non-profit sector. Seventy percent are women and their average is 43.

“Women are demanding more say in their investment portfolios,” said MacMillan.

Schueth agrees. “Targeting women is really smart and not that hard to do.”

Monday, June 14, 2010

Canadian Responsible Investment Conference Update: Innovations in Cleantech Investing

It has often been said that necessity is the mother of invention, but Nicholas Parker of the Cleantech Venture Network says that proverb needs to be updated to reflect our changing world. These days, mother nature is the new necessity of innovation. Nicholas Parker spoke on Monday at the opening of the 2010 Canadian Responsible Investment Conference in Toronto.

Across the world we're facing environmental crises from every angle, ranging from soil degradation to water shortages to the serious risk of catastrophic climate change. These are symptoms of a greater problem that is built into our lives. Every day, we're consuming more resources than we need, wasting as much as we're using.

We've gone down a path of ecological overshoot that has us pretending that we have the resources of 1.5 planets rather than just the one, Parker says. While some are still heedlessly skipping down this path toward a cliff, others are waving their arms madly trying to communicate the error of our ways before it's too late.

Others still are pointing out the alternative path. The opportunities path.

Parker did not mince words in the description of the challenges that face us, but cleantech, he said, is about grasping the opportunities that are being presented by these challenges.

Cleantech is basically doing more with less, but it is also about adding value in order to ensure economic sustainability. It includes renewable energy as an important piece, but it's about more than that. It's about making the necessary changes in order to meet our needs in a way that is socially and environmentally responsible. In a nutshell, he said, it's the reformation and transformation of everything we do.

No small task.

It's a description that would overwhelm many, but Parker seems to maintain the energy of an entrepreneur who has spotted his market gap. Perhaps because the last five years have seen a shift and major growth in cleantech, garnering interest from huge players in the old economy like Walmart and GE. It's a shift which has made cleantech the largest venture capital category in the U.S. and has led to the establishment of policies with foresight, like the Green Energy Act in Ontario. But it's not enough to just make space for cleantech, the opportunities for developing cutting edge cleantech organizations also need to be seized. According to Parker, seizing opportunity has not been Canada's strong point.

The race to cleaner economies has become the new space race and Canada is being left behind. Parker pointed out that while countries like China and Korea directed huge portions of their "Great Recession" stimulus packages to green spending, Canada largely missed the opportunity to kick start its own clean economy.

Parker sent his audience away with these seeds of competition planted. While cleantech may be a nebulous bundle of innovation and transformation whose actual components are hard to nail down, the point remains that we urgently need to foster environmentally and socially responsible innovation in this opportunity to re-shape the way that we live.

Laura Tozer is Program Coordinator at the Community Energy Partnerships Program ( The CEPP provides up to $200,000 grants to support community owned renewable energy projects in Ontario.

Subscribe to SRI Monitor for daily updates on the 2010 Canadian Responsible Investment Conference.

Friday, June 11, 2010

Congrès canadien 2010 sur l’investissement responsable:Les attitudes du public et des investisseurs envers l’investissement socialement responsable

Par Benjamin Commerie, conseiller en recherche marketing, Mouvement Desjardins

Saviez-vous que les investisseurs âgés de 40 ans et moins démontrent un réel engouement envers les fonds d’investissement socialement responsable (ISR)? En effet, 44 % des détenteurs de fonds ISR du Mouvement Desjardins se situent dans cette tranche d’âge, alors que seulement 29 % d’entre eux s’intéressent habituellement à nos fonds traditionnels.

De plus, même si l’on sait que les fonds ISR et les fonds traditionnels génèrent des rendements similaires, les détenteurs de fonds ISR sont prêts, dans une certaine mesure, à sacrifier une partie de leur rendement en contrepartie des bénéfices sociaux et environnementaux apportés par la nature de leur placement. En effet, entre un fonds classique et un fonds ISR au rendement inférieur de 1 %, 85 % des détenteurs choisissent le fonds ISR. Et si l’on diminue le rendement de 3 %, 58 % d’entre eux choisissent toujours le fonds ISR!

Ce ne sont là que quelques-unes des données révélées dans l’étude « Les attitudes du public et des investisseurs envers l’investissement responsable » réalisée par la Direction recherche marketing et information de gestion, Gestion du patrimoine et Assurance de personnes du Mouvement Desjardins en avril 2010. Ce type de statistiques se fait plutôt rare dans l’industrie de l’investissement responsable au Québec et au Canada, industrie qui, bien qu’elle soit en plein essor, demeure relativement jeune.

Pionnier de l’ISR au Québec, Desjardins s’engageait sur cette voie dès 1990 en lançant le Fonds Desjardins Environnement. Cet engagement s’est réaffirmé lorsque nous avons mis en marché, en janvier 2009, les portefeuilles SociéTerre. Ainsi, Desjardins jouit maintenant d’un bassin de détenteurs de fonds ISR assez important pour être en mesure de les sonder et d’en retirer des résultats significatifs.

C’est donc avec plaisir que je présenterai les détails de cette étude le mardi 15 juin prochain, lors du Congrès canadien 2010 sur l’investissement responsable.

Détenteur d’un MBA, Benjamin Commerie est conseiller principal en recherche marketing chez Desjardins depuis 2005 et possède plus de 10 ans d’expérience dans ce domaine. Au cours des cinq dernières années, il a réalisé une cinquantaine d’études qualitatives et quantitatives afin de mieux comprendre l’épargnant québécois et, plus particulièrement, les détenteurs de fonds de placement. Adepte des techniques Web en recherche marketing, il a notamment mis sur pied le Panel Fonds Desjardins, outil permettant d’établir un lien privilégié, constant et rapide avec les détenteurs des Fonds Desjardins.

Ceci est le sixième dans une série d’articles au sujet du Congrès canadien 2010 sur l’investissement responsable. Veuillez souscrire au blog SRI Monitor pour les mise-à-dates durant le congrès.

Canadian Responsible Investment Conference Preview: Attitudes towards socially responsible investment

By Benjamin Commerie, Marketing Research Senior Advisor, Desjardins Group

Did you know that investors aged 40 and under show a real interest in socially responsible investment (SRI) funds? In fact, 44% of SRI fund holders at Desjardins Group are in that age group, while only 29% of them have shown regular interest in our conventional funds.

Furthermore, even with the knowledge that SRI funds and conventional funds generate similar returns, holders of SRI funds are willing, to a certain extent, to sacrifice part of their return in exchange for the social and environmental benefits brought about through the nature of their investments. In fact, given the choice between a conventional fund and an SRI fund with a 1% lower return, 85% of investors would choose the SRI fund. Even if the return was 3% lower, 58% of investors would still choose SRI funds!

These are but a few examples of the results revealed in the "Attitudes of the public and investors towards socially responsible investment" study conducted by the Marketing Research and Business Information Department of Wealth Management and Life and Health Insurance at Desjardins Group in April 2010. These kinds of statistics are rather rare in the socially responsible investment industry in Québec and Canada: even though it’s growing rapidly, this sector is still in its early days.

As a pioneer of SRI in Québec, Desjardins forged the way in 1990 by introducing the Desjardins Environment Fund. We solidified this commitment in January 2009 when we launched the SocieTerra Portfolios. Today, Desjardins has a large enough pool of SRI holders to allow it to draw meaningful results from surveys it conducts.

It will be my great pleasure to present this study in detail on Tuesday, June 15, at the 2010 Canadian Responsible Investment Conference.

Benjamin Commerie, MBA, has been a Senior Advisor in Marketing Research at Desjardins since 2005 and has more than 10 years of experience in this field. Over the past five years, he carried out more than 50 qualitative and quantitative studies to better understand Québec investors, more specifically, investment fund holders. As an aficionado of online tools for marketing research, he has instituted the Desjardins Funds Panel, a tool designed to establish close and constant contact with Desjardins Funds holders.

This is the sixth in a series of articles on the 2010 Canadian Responsible Investment Conference. Subscribe to SRI Monitor for full blogging coverage during the three-day conference.

French version to follow.

Canadian Responsible Investment Conference Preview: Elements of success for the SRI advisor

By Valentina Bellicova, writer and blogger based in Vancouver

Steve Schueth, president of First Affirmative Financial Network and former director of the Social Investment Forum, fell into the world of finance and picked up a baton which at the time was a mere idea, an idea that you can invest both for profit and for good and that it can be one and the same. Born and raised in Iowa, Steve cut his real life chops in the world of investing: real estate and securities underscored by finance. After 30 years in the business it’s what he knows, it’s what he’s good at and more to the point, it’s his life.

Steve could have done well on the straight and narrow conventional way of quantitative analysis investing, instead, he decided to focus on the less visible: policies, practices and even culture. A recommendation to invest based not so much on hard core performance supported by metrics but rather on social responsibility supported by observation and moral judgement. It’s a radical departure from anything taught in business school – yet that is exactly what Steve did, one could definitely say that the road less travelled has done rather well by him.

At First Affirmative Financial Network, Steve has expanded the company’s emphasis to include sustainable as well as social and responsible investment. Analysts look to uncover profitable, sustainable and socially responsible companies with a view to the future instead of the past. No crystal ball gazing here, instead it’s all about gauging a firm’s corporate governance, its transparency and whether it is well managed and more profitable than others in their industry fields.

Who are the investors?

According to 2007 statistics put out by the Social Investment Forum, 2.7 trillion dollars are professionally managed and classified as SRI. Investments come from large institutional investors such as the New York State Pension Plan, from family foundations and lastly from individuals who connect the dots between their values and their dollars. Ultimately, these are all people who want their investments to reflect who they are. They want their money to work for good and to put profits in their pockets at the same time. Each year the numbers grow. But it wasn’t always so.

Steve was the Director of Development at the Wharton School of Business at the University of Pennsylvania when he met Wayne Silby and John Guffey, founders of Calvert Investments, a U.S. pioneer in social responsibility investing. It wasn’t so much an “aha” moment as one that Steve sort of grew into. He started paying attention to what Wayne and John were doing at Calvert. Soon the notion of questioning what your money is doing and where it is employed began to take hold. The idea that you could use money in a way that was more reflective of your own values just began to make sense.

In 1989, Steve joined Calvert Investments. Green was making a mark on consumers and doing what’s right was the natural progression for investors. It was the right time for expansion and exciting times for Steve. As he worked closely with like minded colleagues Steve saw Calvert take on leadership status in the field of sustainable investment strategies. In 1993 he was promoted to President of Calvert Distributors, the dealer-broker arm of the company and became responsible for it’s sales efforts until 1997. During his tenure at Calvert Steve and his team created the first global screened social mutual fund in the U.S. and was directly involved in four other socially responsible mutual funds.

The unasked question: What does the future hold for SRI?

The unspoken answer: The world has shifted. SRI has come into its own. In terms of time, it was but a mere moment ago when the idea was first spoken – a moment that slowly rose on the horizon some 40 years past. And as moments go it was a scraggly little thing, scrawny and void of muscle, but it had some muster and a vision and wobbly though it was, it has stood the test of time, gaining strength and momentum. Today, that idea draws more than a little bit of respect and attention, all fuelled by a moment in time which continues still. Call that moment the sustainable and responsible approach to investing. It has only just begun to shine on the horizon.

Steve Schueth hosts “Elements of success for the SRI advisor: tips from the experts” on Tuesday, June 15 at 9:15 am at the 2010 Canadian Responsible Investment Conference.

Valentina Bellicova lives, writes and goes for long walks along the shores of Vancouver, BC. Born in Yokohama, Japan she came to Canada in her early twenties. She ascribes her love of nature and beauty to her mother. Valentina is a professional blogger, has several of her own and can be reached at her flagship blog: Blog Income Life

This is the fifth in a series of articles on the 2010 Canadian Responsible Investment Conference. Subscribe to SRI Monitor for more pre-conference articles this week and full blogging coverage during the three-day conference.

Thursday, June 10, 2010

Canadian Responsible Investment Conference Preview: The view from Europe

by Lisa Hayles, Head of Client Services (North America), EIRIS

Responsible investment asset growth in Europe continues to surpass other parts of the world. Recent figures released by EIRIS show that U.K. investment in green and ethical funds has hit a record high of 9.5 billion pounds sterling (about $14.4 billion dollars). The last Eurosif study revealed that 2.7 trillion euros ($3.4 billion dollars) was invested under SRI guidelines across Europe, representing 17.5% of the total. What lies behind these impressive figures? Though European responsible investors employ similar strategies to their peers in other jurisdictions, a combination of factors has led to both significant growth and the adoption of particular regional approaches.

There is no one-size fits all approach across Europe. Though their fiduciary duty remains paramount, European institutional investors pursue responsible investment strategies to achieve other equally legitimate goals: because they believe these strategies are consistent with being a responsible investment institution; to reflect the view of their members or beneficiaries; in response to public or media concerns; or simply to comply with the law.

In continental Europe, "best-in-class" and thematic approaches are popular with large funds. The FRR and ERAPF in France and the U.K. Environment Agency have all awarded or terminated mandates with explicit reference to ESG considerations. The focus by investors in Scandinavia on compliance with international law (as a result of conventions their nations have signed) has led to highly-publicised divestment decisions around environmental degradation, human rights and labour standards. However, strong “ethical” considerations still dominate in many markets. For example, the concerns of pension scheme members in Denmark and the Benelux countries, coupled with very active media scrutiny of funds’ investments, has led to legislation and resulted in the exclusion of companies with links to cluster munitions or anti-personnel landmines.

In Europe, for a not insignificant minority of investors, the goal of creating a more sustainable and just society is understood to be compatible and in fact essential to sustainable, long-term investment strategies.

On Tuesday, June 15 from 5pm-6:15pm, Cindy Rose of Aberdeen Asset Management, Kees Gootjes of VBDO in the Netherlands and Lisa Hayles of EIRIS will provide an overview of the current state of play in Europe and discuss the drivers of European SRI growth during the "View from Europe" panel at the Canadian Responsible Investment Conference.

Lisa Hayles is Head of Client Services (North America), EIRIS.

This is the fourth in a series of articles on the 2010 Canadian Responsible Investment Conference. Subscribe to SRI Monitor for more pre-conference articles over the next couple of weeks and full blogging coverage during the three-day conference.

Canadian Responsible Investment Conference Preview: Microfinance Investing: Doing well by doing good

By Joan Trant, Executive Director, International Association of Microfinance Investors

Microfinance provides financial services to low-income individuals lacking access to the formal banking sector. From a revolutionary beginning in the 1970s, microfinance now encompasses 10,000 charitable organizations and regulated financial institutions across the globe, which offer an array of financial services to the base of the socioeconomic pyramid.

Microfinance institutions (MFIs) provide products and services like loans, savings, insurance and remittances to low-income clients such as bakers, weavers, shoemakers and seamstresses. As MFIs become financially self-sustaining, they are often transforming from nonprofit entities to regulated financial institutions. This permits MFIs to tap commercial sources of capital, and microfinance funding has shifted from primarily donors to market-oriented investors, increasing the flow of funds to microfinance and helping more poor communities lacking banks access financial services. Investors may make direct investments in MFIs and indirect investments in microfinance investment vehicles (MIVs). Total investment in the microfinance sector has expanded to around US$35 billion, but an additional US$265 billion is needed to provide financial services to the world’s 1.5 billion working poor.

Funding for microfinance comes from local and international sources. Foreign private sector capital has fueled microfinance’s double-digit growth, spawning the creation of 109 MIVs, which channel over US$13 billion, or approximately half of all investment from private sources, into MFIs. MIVs may offer fixed income, equity or blended investment options and run the gamut of registered mutual funds, private equity funds, microfinance bank holding companies and structured finance vehicles.

The market demand for microfinance is significant. Penetration in eight large emerging countries is below 5%, and the industry overall offers a 15x growth factor. MFIs exhibit attractive business attributes for investors: 1) a loyal client base to lower acquisition costs, 2) high interest rates to cover hefty operational expenses, 3) high loan repayment rates due to strong portfolio quality and 4) high solvency and liquidity resulting from short loan tenors. In addition, microfinance offers investors broader emerging market diversification, thanks to exposure to countries not typically covered by emerging market instruments.

Lending remains the predominant investment strategy, but investors are increasingly seeking equity opportunities. Currently, equity represents 30% of total funding.

In 2008, microfinance outperformed most other components in investors’ portfolios, with debt returns in the 4.9% to 17.0% range. While resilient, microfinance is not immune to the global financial crisis, and 2009 debt returns were lower, at 3.1% to 15.2%, depending upon MIV strategy and performance. According to a recent J.P. Morgan-CGAP MFI valuation study, 2009 return on equity (ROE) ranged from -3.2% (Tajikistan) to 26.7% (Cambodia), averaging about half the ROE in 2007-08 (ROE is much higher in India). Equity investors expect 9% to 20% ROE in 2010, targeting internal rates of return (IRR) of 15% to 20%, although more conservative analysts anticipate lower returns.

As a nascent industry, microfinance poses daunting hurdles for investors: short track record, low transparency, no deal standardization, no secondary market for assessing value or trading assets and few exit strategies. The effects of the global crisis have slowed MFI growth and precipitated some infrequent yet cautionary debt restructurings.

Despite the challenges, the microfinance sector presents a unique investment opportunity for investors seeking social impact and financial profits that can range from below market to risk- adjusted and even premium returns. Microfinance presents an attractive opportunity for investors with global focus, tolerance for illiquid assets, a long-term investment horizon, an understanding and acceptance of the assets’ risk profile, leniency regarding short industry track record and the dual goal to pursue financial return and social impact.

To learn more and add your voice to the dialogue, please participate in one or both of the microfinance-related sessions during the 2010 Canadian Responsible Investment Conference: Tuesday, June 15, 1:30-2:15 pm, Microfinance Investors Forum (workshop) and Wednesday, June 16, 11:00am-12:00 noon, “International microfinance: Making microfinance institutions a new asset class” (a panel discussion featuring Joan Trant, executive director, International Association of Microfinance Investors, Gerhard Pries, President, Sarona Asset Management and Mamdouh Foad, executive director, Egyptian Association for Community Initiatives and Development).

The information in this article is provided for informational purposes only, is not comprehensive, and does not contain important disclosures and risk factors associated with microfinance investments. The International Association of Microfinance Investors (IAMFI) is not responsible for the accuracy, completeness or lack thereof of information from third parties. The information does not take into account the particular investment objectives or financial circumstances of any specific person or organization. Nothing in this article may be considered an offer or a solicitation to purchase or sell any particular financial instrument. Before making an investment in microfinance, investors are advised to review such investment thoroughly and carefully with their financial, legal and tax advisors to determine whether it is suitable for them. IAMFI is a global membership organization dedicated to helping commercially oriented microfinance investors leverage their capital more effectively. IAMFI supports current and potential investors, especially those who invest in funds and other vehicles, in achieving their goals by offering credible, objective industry information, conducting proprietary research, facilitating dialogue within the sector and engaging in outreach to improve the global environment for microfinance. For more information, please visit

This is the third in a series of articles on the 2010 Canadian Responsible Investment Conference. Subscribe to SRI Monitor for more pre-conference articles over the next couple of weeks and full blogging coverage during the three-day conference.

Tuesday, June 8, 2010

Social Change, Social Media

Last night's kickoff to Net Change Week at MaRS featured two people who excel at utilizing technology for social change.

Jon Warnow is the man behind Step It Up and now, addressing the climate change crisis. In an extremely entertaining presentation (he was testing out new presentation software which was a lovely change from slides), he discussed the evolution of open source activism. Beginning from figuring out how to create accessible campaigns that empower constituencies, we have reached a point where organizations such as MoveOn are incredibly efficient at gathering our views, aggregating them and presenting them to decision makers. However, Mr. Warnow feels that there is now “a hunger for people to be doing more than clicking on these links”, and posited that this efficiency may have come “at the expense of deep engagement and real social change”. He used the concept of an event horizon -not the science fiction horror film but ‘In general relativity, an event horizon is a boundary in spacetime, most often an area surrounding a black hole, beyond which events cannot affect an outside observer.’ to suggest that too much clicking without any follow up may lead to an event horizon for online activism.

To prevent that from happening, nimble organizations must respond to supporters’ need for meaningful offline action. We are moving to ‘a hybrid mode where we harness online tools for offline action’. Mr. Warnow characterized social tech as being at a crossroads, and believes the way forward requires us to place more focus on social change than on social media metrics in order to create a more balanced online offline experience.

The second speaker at the People Powered event was Jeremy Heimans. Much of what Mr. Heimans said struck me as being particularly relevant to the SRI community. “Movement makers must also be brilliant brand strategists and storytellers. It’s not enough to just be worthy.”

Coming from a background of political activism with GetUp in Australia, he has come to realize that “Citizen power isn’t enough.” Mr. Heimans showed a chart with the ‘huge global problem’ in the middle, and then identified constituents with political power, shareholders with financial power, consumers with purchasing power and the audience with cultural power as some of the sources of power people have. “The most effective 21st Century movements will give people many ways to exercise their power.”

“Movement making is being revolutionized – if only those hippies had had the internet.” Jeremy Heimans joked. Well, speaking as an aging hippie myself, I think we did a pretty good job without the internet, but it’s important to recognize that for the SRI community to be part of the current wave of social change, we need to be channeling the power of technology and social media far more effectively.

Meritas launches new fund-of-funds

Meritas Mutual Funds recently launched the Meritas Balanced Growth Portfolio Fund, the SRI mutual fund company’s second fund-of-funds.

Meritas Balanced Growth Portfolio Fund’s target is a 65%/35% equity/fixed income and money markets split.

It will invest in other Meritas mutual funds based on the following benchmarks:

-- Meritas Money Market Fund 2%
-- Meritas Canadian Bond Fund 33%
-- Meritas Jantzi Social Index Fund 35%
-- Meritas U.S. Equity Fund 15%
-- Meritas International Equity Fund 15%

Meritas notes that the new fund will be automatically rebalanced when an investment has deviated from its benchmark by more than 2.5%.

Monday, June 7, 2010

Canadian Responsible Investment Conference Preview: Impact Investing: Problem solving while profit seeking

By Alex Kjorven, Development Manager, ACCESS Community Capital Fund

Impact investing represents a category of investment that generates financial returns while aiming to solve social or environmental challenges. It goes beyond socially responsible investment decisions, which focuses primarily on screening companies based on their social or environmental footprints. Impact investing takes this one step further. By funding market-based solutions to social and environmental challenges, impact investors recognize the power of enterprise in bridging the gap between philanthropy and profit maximization.

From a global perspective, the amount of money required to solve the social and environmental problems of today cannot be funded through philanthropy and public resources alone. However, impact investments are positioned to narrow this gap by tapping into the for-profit capital markets by offering an attractive return while funding positive change. It has the potential to re-direct substantial sums of profit-seeking capital in the direction of solving some of today’s most pressing issues ranging from financial services for the poor to education or sustainable agriculture.

Today, we are seeing a rapidly growing trend in new enterprises making their way into mass markets. Social entrepreneurs are successfully building innovative, for-profit business models aimed specifically at solving these issues above. As infrastructure continues to develop around effective identification and evaluation of social impact metrics, impact investments in these types of enterprises may one day move to compete equally against any other market grade investment options currently available.

In the meantime, impact investments exist at various levels and take many forms. It could mean lending to a community microfinance project, or an equity investment in a social enterprise providing employment to at-risk youth. Regardless of the scale of operations or the level of investment required, one thing is for sure; the combination of profit seeking capital with a socially driven business model creates a better way to solve problems.

David Berge, Senior Vice-President, Social Finance, Vancity and Betsy Martin, Senior Advisor, Community Foundations of Canada will join Alex Kjorven at the “Impact Investing: Innovations for Social Finance in Canada” panel discussion on Wednesday, June 16 at the 2010 Canadian Responsible Investment Conference.

This is the second in a series of articles on the 2010 Canadian Responsible Investment Conference. Subscribe to SRI Monitor for more pre-conference articles over the next couple of weeks and full blogging coverage during the three-day conference.

Friday, June 4, 2010

Social investment group announces lifetime achievement award finalists

The Social Investment Organization has announced the four finalists of the first Canadian SRI Lifetime Achievement Award, to be presented to an individual voted by peers to have made an outstanding lifetime contribution to the Canadian SRI industry.

The finalists – chosen through a public nomination process – are:

Peter Chapman
Bill Davis
Moira Hutchinson
Michael Jantzi

Peter Chapman is the executive director of the Shareholder Association for Research and Education (SHARE). He has worked for more than 25 years in a number of areas including corporate engagement, ESG research, community investment and public policy.

Bill Davis was a key member of the Taskforce on the Churches and Corporate Responsibility, which actively campaigned against apartheid in South Africa. After retiring from a long career with the United Church of Canada, Bill worked as an advisor to the NGO Kairos.

Moira Hutchinson was also heavily involved with the Taskforce on the Churches and Corporate Responsibility, working with the organization for ten years and helping to file 23 shareholder proposals. Moira wrote “The Promotion of Active Shareholdership” in 1996, which helped boost the concept of shareholder engagement, and is a member of the investment committee of the Atkinson Charitable Foundation.

Michael Jantzi is the chief executive of Jantzi-Sustainalytics and the founder of Jantzi Research, one of Canada’s best-known SRI research firms. He’s been working in the SRI field since 1990 and is the co-author of “The 50 Best Ethical Stocks for Canadians.”

Full biographies of the four finalists are available on the SIO website.

SIO members can vote online until Friday, June 11. Conference participants can also vote online or at the Canadian Responsible Investment Conference. The winner will be announced at the conference dinner on June 15.

Who is your choice for this award? Please feel free to comment.

Thursday, June 3, 2010

Canadian Responsible Investment Conference Preview: SRI in the oil sands: a contradiction in terms, or a challenge we can meet?

By Michelle de Cordova – Manager, Sustainability Research, Northwest & Ethical Investments L.P.

It has been labelled by NGOs as “the world’s dirtiest oil.” Few would dispute that extracting oil from Alberta’s oil sands has serious environmental and social impacts. But are the oil sands really the bottom of the barrel in social and environmental terms? If there ever was any “clean” oil, it is fast disappearing. As conventional reserves become scarcer and harder to access, the major oil companies are focusing on a diverse array of “unconventional” asset types – from oil sands and shale gas to ultra-deep offshore production. Each poses its own set of environmental and social risks, as the unfolding environmental disaster in the Gulf of Mexico has demonstrated so clearly. The search for new sources of supply also has companies venturing into increasingly fragile ecosystems, and into countries vulnerable to conflict, or where the company risks complicity in corruption and human rights violations.

Yet companies are not absolved from the responsibility to address oil sands impacts, just because oil is getting “dirtier” in general. Investors are becoming increasingly aware of those impacts – including aboriginal rights concerns, community challenges, greenhouse gas emissions, air pollution, water access, land use and reclamation issues, and the tailings legacy of mined oil sands. Uncertainty as to whether these impacts can be mitigated, and at what cost, has some analysts questioning the long-term financial viability of oil sands investment.

But the fact remains that investing in the oil sands is difficult to avoid – particularly for investment institutions that must generate competitive returns, and are widely invested across the economy. Oil and gas companies account for some 20% of the total market capitalization of the Toronto Stock Exchange and the TSX Venture Exchange. The biggest Canadian oil and gas companies all have oil sands interests – and the biggest global public companies in the sector are now joining them. Many Canadians are concerned about oil sands impacts – but many Canadians also depend on the oil sands for their livelihoods.

All this adds up to a major challenge for socially-responsible investment institutions trying to chart a path through Alberta’s oil sands – one that will allow them to meet societal expectations and fulfill responsible investment mandates, while respecting fiduciary duty.

Some institutions seek to address oil sands risk by avoiding investment in the oil sands completely, while others call for engagement. Which approach is the best way to make a real difference? At Northwest & Ethical Investments L.P., our change strategy is to engage oil sands companies. I look forward to sharing some of our early results during the session “Engaging with the Oil Sands Sector” on Monday, June 14 at the Canadian Responsible Investment Conference. The panel discussion also features Todd Hirsch, Senior Economist, ATB Financial, Calgary and Karina Litvack, Head of Governance & Sustainable Investment Team, F&C Investments, London.

Michelle de Cordova manages research on sustainability issues as well as sustainability policy and standards work under the Sustainable Investing Program at Northwest & Ethical Investments L.P. (NEI). She authored NEI’s 2008 report, Unconventional Risks, on environmental, social and governance (ESG) investment risks associated with the oil sands, and co-authored its 2009 follow-up report Lines in the Sands, benchmarking oil sands companies’ ESG risk. Currently she is working on research projects relating to oil sands policy and regulation, and to establishing and maintaining “social license to operate” for extractives projects. Prior to her role with NEI, Michelle has worked for the UK Diplomatic Service, WWF, Oxfam and as an environment and development consultant in Canada, Europe, Asia and Africa.

This is the first in a series of articles on the 2010 Canadian Responsible Investment Conference. Subscribe to SRI Monitor for more pre-conference articles over the next couple of weeks and full blogging coverage during the three-day conference.

Tuesday, June 1, 2010

OPTrust becomes PRI signatory

The OPSEU Pension Trust (OPTrust), one of Canada’s largest pension funds, has become a signatory to the United Nations Principles for Responsible Investment (PRI).

Since its establishment in 2005, more than 700 PRI signatories have agreed that they “have a duty to act in the best long-term interests of our beneficiaries. We believe that environmental, social and governance (ESG) issues can affect the performance of investment portfolios.”

OPTrust adopted its own Statement of Responsible Investing Principles in March 2009.

The pension fund’s responsible investing program includes active proxy voting, integration of ESG considerations into investment decision making processes, and corporate engagement through various investor coalitions.

“Signing the PRI represents an important step in OPTrust’s continuing commitment to integrating environmental, social and corporate governance (ESG) considerations into its investment activities,” says Morgan Eastman, Chief Investment Officer of OPTrust.

"We are delighted that OPTrust has signed the PRI”, says James Gifford, Executive Director, PRI. “This continues the strong momentum within responsible investment post-crisis. OPTrust's participation will add greatly to the PRI's Canadian activities and it has a lot to offer in terms of integration of ESG issues and active ownership within mainstream pension management.”

OPTrust has assets of $11 billion and administers the OPSEU Pension Plan, with more than 82,000 members.

More than 30 Canadian asset owners, investment managers and professional service companies have signed the PRI, including British Columbia Municipal Pension Plan, Caisse de dépôt et placement du Québec, Canada Pension Plan Investment Board, Comité syndical national de retraite Bâtirente, Public Service Alliance of Canada Pension Fund, Fonds Desjardins, Meritas Financial Inc., Northwest & Ethical Investments LP, Sarona Asset Management, Vancity Investment Management, Corporate Knights Research Group, Groupe Investissement Responsible and the Shareholder Association for Research and Education.