About socially responsible investing


FAQs

What is socially responsible investing?
Is socially responsible investing a new investment strategy?
Do you sacrifice anything by investing in a mutual fund that follows socially responsible investing principles?
How is socially responsible investing applied to the IA Clarington Inhance SRI funds?
Are some socially responsible investing criteria more important than others?
Are different criteria used depending on where you invest?
How do you engage with companies?
What benefits do socially responsible investing principles add to a portfolio?



What is socially responsible investing?

Socially responsible investing provides a framework for achieving better long-term investment returns and more sustainable markets by considering both an investor’s financial needs and an investment’s impact on society.




Is socially responsible investing a new investment strategy?

No. It has been used for many years, but it continues to evolve and gain acceptance. Today, environmental sustainability, social responsibility and good governance are widely recognized to have a profound impact on company’s long-term financial performance.

Since April 2006 the UN Principles of Responsible Investment have been adopted by 491 institutional investors and asset managers with $18 trillion in assets under management. Inhance Investment Management Inc., a Vancity subsidiary until December 2009, was the first Canadian mutual fund company to adopt these principles.

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Do you sacrifice anything by investing in a mutual fund that follows socially responsible investing principles?

No. Numerous studies show that socially responsible investing generates returns comparable to the overall market.

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How is socially responsible investing applied to the IA Clarington Inhance SRI funds?

First, we look for companies capable of generating superior financial performance. Then we apply social, environmental and governance criteria. We look for companies with excellent employee and customer relations, strong records of community involvement, sound environmental management practices, respect for human rights, and safe and useful products.

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Are some socially responsible investing criteria more important than others?

Yes. Human rights compliance is important for companies that have international operations or source material from developing countries. Labour relations is important for manufacturing and industrial operations, and increasingly important for the service sector, a fast-growing area of the economy.

Environmental compliance is essential for energy and materials companies. These companies have an exposure to evolving regulations because of their large environmental footprint.

We also expect larger companies to employ more sophisticated policies and practices than junior companies, which have limited financial or human resources.

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Are different criteria used depending on where you invest?

Yes. Although, some regions, like the European Union, have made compliance with socially responsible investing a normal business practice.

In other regions, however, human-rights vulnerabilities may be higher. So we expect companies with this type of exposure to support and protect employees and their families.

Some countries may have lax enforcement or lower standards. For example, a company with operations in a developing country must ensure that safety and other working conditions at least meet International Labour Organization standards.

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How do you engage with companies?

We use shareholder resolutions, face-to-face meetings and other strategies to communicate our views and objectives to companies we invest in. When needed, we will engage management on issues such as diversity, human rights, climate change, business practices, food health and safety and toxic material management. Our goal is to promote further positive action and to increase long-term shareholder value. We want to encourage progressive companies to be their best.

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What benefits do socially responsible investing principles add to a portfolio?

You benefit from an investment process designed to produce superior investment returns over the long-term. In addition, analysis of environmental, social and governance factors provides an extra level of risk management to the investment process.

Socially responsible investing also ensures that your money is invested in companies that follow progressive practices. That helps you contribute to the development of a more sustainable economy and to society.

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