Some call it the Al Gore effect, others say it just makes good business sense. Concern about climate change, popularized by the former U.S. vice-president, has helped to accelerate interest in green and socially responsible investing, say industry experts.
In six years, the assets of socially responsible investment (SRI) funds have grown nearly 10-fold to $609 billion from $65.5 billion, according to the Social Investment Organization, a non-profit association that is the voice for the socially responsible investment industry in Canada.
“One of the big drivers in this has been the whole consciousness around environmental issues, largely as a result of climate change and the change in consciousness on global warming,” says executive director Eugene Ellmen.
The desire to be part of the solution has pushed more to buy hybrid cars and organic food. Many are taking that next step by trying to use their money as tool to spur companies to improve their environment, social and corporate governance standards.
A majority of Canadians say they have an interest in having their investments reflect a sense of corporate responsibility, Ellmen said in an interview.
However, many financial and investment advisers fail to discuss this option with their clients, he said. Socially responsible investments produce competitive rates of return and charge comparable fees, says Michael Jantzi, head of an independent investment research firm that evaluates and monitors the social and environmental performance of securities.
The Jantzi Index, which includes 60 Canadian companies chosen based on their environmental and social records, has outperformed the Toronto Stock Exchange since it was launched nearly a decade ago.
“This myth that you're going to lose money just simply hasn’t proven true,” he said.
It's the reason that a growing number of institutional investors are turning to SRIs, even though interest by North American pension funds lags five to 10 years behind their European counterparts, said Jantzi.
As of 2008, Canadian pension funds have $544 billion in socially responsible investments, up 26 per cent in two years.
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