Erin English, First Credit Union
What is Socially Responsible Investing (SRI)? SRI means investing money into companies with strong environmental, social, and governance commitments in order to generate financial return as well as positive social impact.
Not too long ago, only a small number of Canadians were aware of SRI, but that has quickly changed. According to the Responsible Investment Association (RIA), SRI is one of Canada’s fastest growing and most successful investment sectors, with $1.5 trillion in assets under management. Responsible investing is becoming a popular choice with both pension funds and individuals.
Why is SRI becoming more attractive? Investors increasingly want their money to work both for them, and for the world around them. They’re seeing SRI as a double win. Companies that are attractive to responsible investors need to be successful on financial as well as on environmental, social, and governance measures, which include everything from how the company manages its environmental footprint to the diversity of its leadership and workforce.
Many studies have looked at the link between a positive social impact and positive returns. A 2015 report for the Smith School of Enterprise and the Environment at the University of Oxford revealed what the authors called “a remarkable correlation between diligent sustainability business practices and economic performance2”. The study examined over 200 sources, and came to the conclusion that “Responsibility and profitability are not incompatible, but in fact wholly complementary”.
New evidence also suggests that an SRI approach may also reduce risk in a portfolio. In an analysis commissioned by OceanRock Investments Inc, Dr Tessa Hebb of Carleton University compared the risk and return performance of Canada’s SRI mutual funds against all Canadian mutual funds. She found that SRI funds often outperformed comparable non-SRI funds, and that SRI equity funds demonstrated reduced volatility 55% of the time.
Overall, investors are finding that SRI is one of the best strategies to reduce risk and generate competitive returns. You can do well, doing good™! To find out more, and to learn how you can join the growing group of Canadians making a positive impact on companies, communities, and the environment by investing responsibly, visit First Credit Union at 2717 Dunsmuir Ave in Cumberland.
Erin English is a Personal Account Manager at First Credit Union in Cumberland. She can be reached at 250.336.2272 or firstname.lastname@example.org. To learn more, visit www.firstcu.ca.
Doing well, doing good is a trademark of Qtrade Canada Inc.