More and more, environmental, social and governance factors – or ESG – are helping people manage their investments. Vancity photo
You’ve likely heard the term “socially responsible investing.” For some it means prioritizing environmentally sustainable investments; others may want to avoid investments in companies that don’t align with their social values.
Regardless of the motivation, more and more, these environmental, social and governance factors – or ESG – are helping people manage their investments. At the same time, several myths and misconceptions about socially responsible investing persist.
Myth 1: Socially responsible investing only focuses on climate and environment.
Fact: Avoiding environmental heavy-hitters like fossil fuels and “sin stocks” like alcohol, tobacco and gambling is a big part of responsible investing, but it’s not the whole picture.
In fact, socially responsible investing is much more robust. For example, in addition to measuring how a fund performs, Vancity Investment Management also considers social and governance factors, such as diversity and inclusion or if a company pays a living wage. The potential for education and shareholder engagement is another big part of whether an investment is considered responsible.
Myth 2: Socially responsible investing doesn’t pay.
Fact: Incorporating ESG investments in your portfolio can enhance your returns while bringing equal or lower volatility than traditional funds.
According to Canada’s Responsible Investment Association, 63 per cent of SRI equity mutual funds outperform the benchmark, and 64 per cent exceed the median return.
In addition, socially responsible investing funds often accommodate a variety of investment strategies and objectives. Vancity’s IA Clarington Inhance, for example, offers four funds (Bonds, Income, Canadian Equity and Global Equity) and three blended portfolios (Conservative, Balanced and Growth).
Myth 3: Socially responsible investing means fewer options for members.
Fact: In fact, a growing interest – 77 per cent of investors report interest in responsible investing– means more businesses are shifting how they manage their business and operations to meet the demand.
In turn, investors are seeing more values-aligned options rather than fewer, and at an equal or lower cost than traditional funds. So, while 10 years ago investors found few intentional socially responsible funds, today that gap has pretty much closed.
The bottom line: Socially responsible investing is here to stay and long-term sustainability is already a cornerstone of how Vancity does business.
To speak with a wealth professional to learn how to make socially responsible investing part of your financial plan, contact your local Credential Securities Wealth Advisor, Paul Brebber, at Vancity’s Oak Bay branch at
Mutual funds are offered through Credential Asset Management Inc. Mutual funds and other securities are offered through Credential Securities. Credential Securities is a registered mark owned by Aviso Wealth Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Unless otherwise stated, mutual fund securities and cash balances are not insured nor guaranteed, their values change frequently and past performance may not be repeated.