Posted on Friday January 24, 2020

Responsible investing and returns: Two compatible dreams

Interested in green investments? Investing is a great way to do your part in an era where climate change is affecting many aspects of our lives. In an effort to make a difference, many New Brunswickers are now turning to environmentally responsible investments without sacrificing returns.

As the RRSP and TFSA contribution period approaches, here’s why you should invest in the sustainable economy.

What is a responsible investment fund?

The selection of companies that make up the portfolio of so-called responsible investment funds is based on economic profitability criteria, but also on ESG (environmental, social and governance) criteria.

For example, the securities that make up the Priority Terra Guar@nteed Investment, available at UNI, are selected from among companies that meet responsible investment criteria. Evaluation consists of four steps:

• In-depth financial analysis

• Exclusion of certain incompatible industries (tobacco, weapons, nuclear)
  
  
• Environmental footprint assessment
  
  
• Determination of the role in the basket of securities for the purposes of optimal diversification

The 20 companies that make up the Priority Terra Guar@nteed Investment are actively committed to reducing the environmental impact of their operations and are part of the movement toward a new green, sustainable economy. Today, a number of investment options that meet rigorous ethical and environmental standards make it possible to invest according to your ecological and economic values.

Reconciling performance and the environment is lucrative

Greta Thunberg and all the scientists of the IPCC (Intergovernmental Panel on Climate Change) agree: the climate is changing. And the markets have started to adapt! Most economic sectors are in the process of changing to adapt to the new demands of investors concerned about their environmental footprint.

Recent studies show that portfolios built with special attention to social and environmental aspects perform at least as well as or better than their conventional counterparts. For example, the Jantzi Social Index, which consists of 50 Canadian ESG-compliant companies, posted an annual return of 6.56% from 2000 to 2019, while the S&P/TSX Composite Index posted an annual return of 6.11% during the same period.

According to the 2018 Canadian Impact Investment Trends Report published by the RIA (Responsible Investment Association), more than $2,130 billion in assets under management (AUM) are now invested according to the principles of responsible investment, a 41.6% increase in responsible investment AUM over a two-year period. You are not alone in thinking that the future lies in increased corporate accountability!

High performance expectations due to the results of the past few years reflect confidence in this new investment approach. For example, 87% of investors surveyed expect moderate to high growth in responsible investment returns over the next two years.

First for performance, then for the future.

When asked about their main reasons for choosing responsible investments, investors responded with “risk management” first and “improve returns over time” second, ahead of any environmental considerations. This goes to show that many believe it is possible to prioritize returns while being a responsible investor.

RRSP or TFSA? Get personal advice with the UNI approach

You are unique, just like your finances! Since no two investors have the same profile, we take an individual advisory approach for each of our members. While RRSPs generally have a positive impact on your tax bill, TFSAs also have several significant advantages, depending on your short- and medium-term plans.

To get the most out of your investments, put your portfolio where your values are and make an appointment with your UNI advisor today!

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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. Mutual funds are offered through Credential Asset Management Inc.