How Investing in Socially Responsible Investments Can mean Less Risk for Your Portfolio

The latest RIA Investor Opinion survey reveals about three quarters of Canadian Investors are interested in socially responsible investments.  Even with this strong interest only 25% of investors are knowledgeable, while 73% know very little or nothing about it at all.  I’d like to share some information from the Responsible Investment Association that might help you become more knowledgeable and decide if this is something for you.

What are Responsible Investments?

In a world where climate change, water scarceness and global supply chain issues dominate the pages, it’s become apparent that the tools that investment managers have traditionally used to manage risk simply aren’t up to task anymore.

Responsible investing strategies are addressing that need. Responsible investing is the integration of environmental, social and governance (ESG) factors into the selection and management of investments. It’s quickly becoming a mainstream function of good investment practices, resulting in better informed investment decisions. Resulting in reduced risk while being able to invest in a sustainable future.

Performance

There is a growing body of evidence that responsible investments meet, and often exceed the performance of traditional investments while having a positive societal impact. Contrary to belief you don’t have to choose one over the other.

A 2015 study done by Carleton University showed that in addition to providing solid financial returns, Canadian Responsible Investments mutual funds demonstrated their ability to reduce risk and provide better downside protection than traditional equity funds.  Nearly every comparison pointed to better long-term risk adjusted returns when ESG issues were taken into account.

Responsible Investing products

There are many responsible investment mutual funds products:

- Fossil fuel free and low carbon funds

- Green funds that focus on solutions

- Impact funds

- ESG funds that incorporate engagement with companies about environmental, social and governance issues.

If you’d like to know more about investing in socially responsible investments, please get in touch with me anytime