Despite the financial crisis, Canadian pension plans are not cutting back on their responsible investment commitments, attendees to an SRI conference heard on Friday morning.
"We've seen no reduction in interest from institutional investors," said Jordan Berger, Principal, Mercer Investment Consulting, at the Canadian Business Ethics Research Network's second annual SRI Cluster in Ottawa.
Katharine Preston of OPSEU Pension Trust, with 80,000 members and $11 billion in assets under management, says there's a recognition within the pension community that environmental, social and governance (ESG) issues affect performance. OPSEU recently introduced its first ever statement of responsible investment principles.
Still, Preston admits that it can be a challenge to get ESG issues on the agenda at board meetings, particularly in tough times. "It's an evolutionary process," she says.
And there are larger issues to consider. Berger notes that incorporating ESG requires a "re-think" of the pension process. "Climate change is an example of something that can be transformative for humanity. And there's a need to focus on governance and regulation."
From a practical perspective, Ronald Davis, associate professor of law at the University of British Columbia, says trustees remain concerned about their fiduciary responsibilities. And with good reason.
Although there's a strong argument to be made that fiduciary duties should go beyond maximizing financial returns (and in fact ESG factors are now a widely accepted part of the investment process in the pension world), "Trustees are justifiably not comfortable using this criteria," Davis says.
That's not because ESG factors are wrong, but are they sustainable? he asks, pointing out that there is virtually no case law in Canada supporting the ESG argument.
"It's right and it's popular, but you need to engage the beneficiaries in the process," Davis says.
"Members of pension plans should be asking more questions," adds Berger
Friday, May 29, 2009
Thursday, May 28, 2009
New Shariah-compliant product to be launched
It’s a fast-paced world we live in. Just yesterday, this blog referred to FrontierAlt Oasis as Canada’s only Shariah-compliant mutual fund. Not for much longer, it appears.
Jovian Capital Corporation today announced an agreement with Islamic financial services company UM Financial Inc. to “explore the launch of a co-branded, Shariah-compliant investment product.”
Toronto-based UM Financial has previously secured a $120 million Shariah-compliant residential mortgage investment facility from a regulated Canadian financial institution, and has developed Shariah- compliant investment and deposit products with other financial institutions in Canada.
"We are very excited to be partnering with Jovian on a product that would provide Muslims in Canada with a much-needed, Canadian-based and Shariah-compliant investment product which avoids such industries as gambling, alcohol and tobacco, and enables active review of financial ratios and leveraging," said Omar Kalair, President and CEO of UM.
"We feel that a product designed for Muslim investors will have broad appeal in Canada and elsewhere," said Jovian CEO Philip Armstrong.
There’s no word yet on when the new product will be available.
Jovian Capital Corporation today announced an agreement with Islamic financial services company UM Financial Inc. to “explore the launch of a co-branded, Shariah-compliant investment product.”
Toronto-based UM Financial has previously secured a $120 million Shariah-compliant residential mortgage investment facility from a regulated Canadian financial institution, and has developed Shariah- compliant investment and deposit products with other financial institutions in Canada.
"We are very excited to be partnering with Jovian on a product that would provide Muslims in Canada with a much-needed, Canadian-based and Shariah-compliant investment product which avoids such industries as gambling, alcohol and tobacco, and enables active review of financial ratios and leveraging," said Omar Kalair, President and CEO of UM.
"We feel that a product designed for Muslim investors will have broad appeal in Canada and elsewhere," said Jovian CEO Philip Armstrong.
There’s no word yet on when the new product will be available.
Wednesday, May 27, 2009
Standard & Poor’s launches Shariah-compliant index
Standard & Poor’s today introduced a Shariah-compliant version of the S&P/TSX 60. The S&P/TSX 60 Shariah Index is highly correlated to the S&P/TSX 60 Index, S&P says, providing a comparable investment portfolio while adopting explicit selection criteria defined by Islamic law.
“The S&P/TSX 60 Shariah Index will create new opportunities for Islamic investors to benchmark their Canadian investments, and for asset managers to create new investment products serving the Islamic community,” says Alka Banerjee, vice president of Standard & Poor’s Index Services. “With the launch of this index, S&P now has Shariah compliant Indices in 52 markets.”
The new index excludes businesses that offer products and services that are considered unacceptable according to Shariah law, such as stocks of companies that operate in alcohol, entertainment, financial services, pork-related products, and tobacco, as well as companies whose financial ratios may violate the compliance measure. All index constituents are evaluated on an ongoing basis to ensure the index maintains strict Shariah compliance, S&P adds.
The S&P Shariah Indices are screened by Rating Intelligence Partners, a Kuwait-based consulting company specializing in the Islamic investment market.
Canada is currently home to one Shariah-compliant mutual fund, FrontierAlt Oasis, which is designed to provide long-term capital growth through an actively managed portfolio of primarily Canadian securities that adhere to Shariah investment principles.
As of April 30, 2009, FrontierAlt Oasis had a three-month return of 3.88%, but was down -41.89% since April 2008, according to Globefund.
“The S&P/TSX 60 Shariah Index will create new opportunities for Islamic investors to benchmark their Canadian investments, and for asset managers to create new investment products serving the Islamic community,” says Alka Banerjee, vice president of Standard & Poor’s Index Services. “With the launch of this index, S&P now has Shariah compliant Indices in 52 markets.”
The new index excludes businesses that offer products and services that are considered unacceptable according to Shariah law, such as stocks of companies that operate in alcohol, entertainment, financial services, pork-related products, and tobacco, as well as companies whose financial ratios may violate the compliance measure. All index constituents are evaluated on an ongoing basis to ensure the index maintains strict Shariah compliance, S&P adds.
The S&P Shariah Indices are screened by Rating Intelligence Partners, a Kuwait-based consulting company specializing in the Islamic investment market.
Canada is currently home to one Shariah-compliant mutual fund, FrontierAlt Oasis, which is designed to provide long-term capital growth through an actively managed portfolio of primarily Canadian securities that adhere to Shariah investment principles.
As of April 30, 2009, FrontierAlt Oasis had a three-month return of 3.88%, but was down -41.89% since April 2008, according to Globefund.
Monday, May 25, 2009
I’ll take Sustainability for 500, Alex.
Want answers to your questions about sustainable business? Check out the new website ethipedia.net. ethipedia, the online encyclopedia of sustainable business practices, hosts a database of documented practices adopted by organizations seeking to incorporate greater social and environmental responsibility into their operations. With an initial store of over 75 case studies from around the world, this is the largest free resource of its kind.
"The goal of this portal is to offer a library of replicable strategies for applying sustainability principles to one's organization. By making this information accessible, this site hopes to accelerate the market shift towards sustainable operations," says the site's Co-Founder, sustainability consultant Brenda Plant.
The project was launched by ethiquette Inc., creators of the green consumer portal, www.ethiquette.ca, in partnership with Fondaction, Quebec's labour-sponsored venture capital fund. Content exchange partnerships have so far been established with the Canadian Business Ethics Research Network and the World Forum Lille, a European coalition of businesses implementing Corporate Social Responsibility strategies.
What are sustainable business practices? Practices recognized by ethipedia are ones that go beyond legal compliance and that demonstrate an improvement upon standard procedures.
The Practice must have a ‘net positive’ effect on the environment or social conditions when all surrounding and subsidiary effects are considered. That is, that a perceived benefit is not cancelled out by an accompanying drawback. The net positive effect of the Practice must correspond with one of 7 social or environmental areas of concern: respect for the environment, governance and transparency, respect for social justice, respect for workers, community economic development, respect for consumers and fair operating practices.
If you think companies can and should do better, check out the ideas and resources on this website.
"ethipedia opens the door to a powerful information exchange and the advancement of sustainability." Amy Domini, Founder and CEO of Domini Social Investments and the Co-founder of the Domini 400 Social Index, a stock market index selected according to a set of social and environmental standards.
"The goal of this portal is to offer a library of replicable strategies for applying sustainability principles to one's organization. By making this information accessible, this site hopes to accelerate the market shift towards sustainable operations," says the site's Co-Founder, sustainability consultant Brenda Plant.
The project was launched by ethiquette Inc., creators of the green consumer portal, www.ethiquette.ca, in partnership with Fondaction, Quebec's labour-sponsored venture capital fund. Content exchange partnerships have so far been established with the Canadian Business Ethics Research Network and the World Forum Lille, a European coalition of businesses implementing Corporate Social Responsibility strategies.
What are sustainable business practices? Practices recognized by ethipedia are ones that go beyond legal compliance and that demonstrate an improvement upon standard procedures.
The Practice must have a ‘net positive’ effect on the environment or social conditions when all surrounding and subsidiary effects are considered. That is, that a perceived benefit is not cancelled out by an accompanying drawback. The net positive effect of the Practice must correspond with one of 7 social or environmental areas of concern: respect for the environment, governance and transparency, respect for social justice, respect for workers, community economic development, respect for consumers and fair operating practices.
If you think companies can and should do better, check out the ideas and resources on this website.
"ethipedia opens the door to a powerful information exchange and the advancement of sustainability." Amy Domini, Founder and CEO of Domini Social Investments and the Co-founder of the Domini 400 Social Index, a stock market index selected according to a set of social and environmental standards.
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