Wednesday, August 22, 2012

Vancity Divests Enbridge Holdings from IA Clarington Inhance SRI Funds

Vancity announced today that pipeline company Enbridge no longer meets Vancity Investment Management’s environmental, social and governance criteria for its socially responsible investments. The decision was based on the U.S. National Transportation Safety Board report on the Enbridge 2010 pipeline spill in Michigan.

As a result, Vancity Investment Management (VCIM) has divested its Enbridge holdings in the IA Clarington Inhance SRI funds which it manages.

VCIM is a sub-advisor on three SRI funds for IA Clarington and determines which holdings are contained within the funds, based on ESG criteria. Two of these funds previously contained Enbridge holdings.

“When you purchase the IA Clarington Inhance SRI funds, you are also investing in a disciplined process that considers ESG factors and financial analysis,” says Tamara Vrooman, President and CEO of Vancity. “Vancity Investment Management’s portfolio managers balance risk, return and the impact of all the investments that are made. They believe in engaging with companies to improve their ESG performance, however, if companies no longer meet the ESG criteria, they will divest the holdings from the portfolio.”

“It looks like there’s even more risk [to Enbridge], which we think further potentially puts the financial performance at risk,” Vrooman told the Globe & Mail. “We think the balance has tipped such that it’s not going to be a higher-performing investment in our criteria.”

The Globe also notes that Vancity is not the only investment firm considering divesting Enbridge. Northwest & Ethical Investments LP (NEI) has spent six years pressuring the company to gain better first nations acceptance before pursuing the Northern Gateway pipeline. NEI sponsored a resolution at this year’s annual general meeting calling for a report to shareholders on how first nations opposition would impact plans for the project. It failed, but gained 29% support.

NEI, which has pushed for executive compensation to be more closely tied to pipeline safety, the Globe reports, is now seriously weighing the benefits of sticking with Enbridge, and expects to revisit its position on the company following meetings with management and the board in September and November.

“We are kind of running out of rope here on Enbridge,” Bob Walker, NEI’s vice president of sustainability told the Globe. “Typically we see things moving in a more progressive direction. With Enbridge, things seem to be going from bad to worse.”

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