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Mission: Changing the world, one responsible investment at a time

Posted on Monday June 07, 2021


Mission: Changing the world, one responsible investment at a time

As an investor, are you wondering how to leave your mark and create a better world for your children and grandchildren? Once associated with young environmentalists, responsible investing is now attracting the interest of a wide range of investors, including UNI clients, to whom the cooperative offers funds that meet ESG ("environment, social and governance") criteria.

David Rutherford is Vice-President, ESG Services, at NEI. He and his team seek to make a positive impact on the world and believe strongly that companies are ready to be part of the change. In an interview, he discusses the appropriateness and rigour of NEI's responsible fund selection process.

What is an ESG fund?

Responsible investing is based on considerations of ESG criteria and is emerging as a response to several major social issues, such as climate change, systemic racism, the lack of women on boards of directors and corporate transparency. Companies that are strong ESG performers are making efforts to reduce their environmental footprint, ensure diversity in their business and adopt best management practices.

For Mr. Rutherford, there's no doubt that "companies that stand out in this regard are better long-term investments. Why? Because they not only consider the needs of their shareholders but also the needs of the communities in which they operate, their employees and the planet."

Performance supported by sound risk assessment

ESG criteria provide a framework for companies to play a growing role in transforming societies. But does this environmental, social and governance consciousness have an impact on their performance? "No," says Mr. Rutherford, "at the very least it doesn't have a negative impact, and in many cases it can be positive" The numbers bear him out: more than 70% of responsible funds outperformed their asset class average in 2020.

"Companies that don't meet ESG criteria may even lower your returns. For example, they may be more exposed to corruption scandals. Therefore, ESG provides risk mitigation. With responsible funds, you're not giving up returns, plus you're having a significant impact on the world." For this reason, even if returns from responsible funds are generally similar to those of traditional funds, Rutherford believes responsible solutions will displace traditional funds over the long term.

NEI: The leader in responsible investing

With 35 years of experience in the field, NEI is a longstanding leader in the responsible investment marketplace. Over the years, NEI's innovations have focused on creating a comprehensive ESG program that includes engaging companies in dialogues on ESG issues, developing ESG evaluation criteria to govern the selection of companies as investments, and leading collaborations at the policy level to establish standardized ESG assessments.

What values guide investors' choices?

Mr. Rutherford notes the growing interest of people from all walks of life in responsible investing. What they have in common is that they want to be part of the solution to contemporary challenges: "A year or two ago, the environment was the big concern for investors because there was so much talk about climate change, but now diversity is front and centre. COVID-19 has also made the need for business resilience clear. People are much more aware of these issues and want to address them," Mr. Rutherford says.

Investors are at the heart of Mr. Rutherford's concerns: "I want to make sure that their voices are heard by the companies they invest in, and that they can have an influence on the companies' decisions." That's the benefit of NEI’s leading corporate engagement program – it gives investors that voice.

NEI's approach is based on dialogue and respect. As a shareholder of the companies, NEI tries to advance their ESG practices. "The strategic side is about transforming companies over the long term to, for example, be viable in a low-carbon world. The tactical component is about fixing issues in more timely ways, such as increasing the diversity of a board of directors," says Mr. Rutherford. Beyond the discussion, NEI has tools, like the shareholder resolutions, to make its voice count further.

How does NEI select the companies included in its funds?

NEI has developed its own ESG assessment process based on an analysis of publicly disclosed company data and complementary sources. A company's ESG performance is determined relative to its sector peers, as the severity of ESG risks varies by the industry a company operates in. A risk like cybersecurity for example is more significant for financial firms than oil and gas companies, which would be more concerned with risks associated with greenhouse gas emissions. NEI’s assessment also automatically excludes companies that derive a significant portion of their revenues from tobacco sales and distribution, weapons, nuclear power, pornography and gambling.

Can UNI members make a positive impact on the world?

One thing is clear from Mr. Rutherford's explanation: you have the power to change the world, and one way to do that is through your investments.

NEI and UNI share core values of responsibility, solidarity and courage. "We're united in the pursuit of a common goal," Mr. Rutherford says. "We have to be determined to move forward, even in difficult times. We have the courage to demand changes in corporate practices, and we do it on behalf of our investors."

Credential Asset Management Inc. and Credential Securities at UNI are constantly expanding our offering of responsible funds. Find out more!

Mutual funds are offered through Credential Asset Management Inc.  Mutual funds and other securities are offered through Credential Securities, a division of Credential Qtrade Securities Inc. 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. NEI Investments is a registered trademark of Northwest & Ethical Investments L.P. (“NEI LP”). Northwest & Ethical Investments Inc. is the general partner of NEI LP and a wholly-owned subsidiary of Aviso Wealth Inc. (“Aviso”). Aviso is the sole limited partner of the NEI LP. Aviso is a wholly-owned subsidiary of Aviso Wealth LP, which in turn is owned 50% by Desjardins Financial Holding Inc. and 50% by a limited partnership owned by the five Provincial Credit Union Centrals and the CUMIS Group Limited.

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