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Investors increasingly looking to environmentally conscious companies

People becoming 'frustrated to see that they're investing in companies that don't align with their values and principles,' says local investment adviser
Jackie Ramler is an investment adviser with Executive Wealth Advisors, Raymond James Ltd.

“Investors these days are paying more attention to where their money is invested. They are not looking only at financial return,” says Barrie-based investment adviser Jackie Ramler, of Executive Wealth Advisors, Raymond James Ltd.

Her experience is that investors are looking at how a company screens their investments as well as considering the company’s environmental, social, and governance (ESG) standards and behaviours.

‘Environmental considerations’ refers to how a company treats the natural environment, including corporate policies addressing climate change. ‘Social criteria’ refers to how they manage relationships with their employees, suppliers, customers, and the communities where they operate. ‘Governance’ deals with a company’s leadership.

Sustainable investing offers a growing number of options for investors who want to pursue goals beyond financial growth when they build their portfolios. While conventional investing is focused on risk and return, and philanthropic investing seeks solely to benefit charities and causes without expecting income, sustainable investing aims to accomplish both. Individual investors and even portfolio managers are increasingly considering ESG themes in their decision making, combining ESG criteria with traditional financial considerations.

“The trend was there before,” says investment adviser Jackie Ramler, “but ESG investments have faced a trifecta of challenges in the last few years.”

First, during 2020-21, an overheated market meant ESG investments became overvalued. Second, ESG companies, which are often capital-intensive and can hold a lot of debt, faced rising interest rates. And third, politics and misinformation intervened — voices rose up against electric vehicles, against clean energy, even denying climate change. A lot of the new ESG economy got hit in the squeeze.

“Now, at the maximum point of opportunity, it’s tough when investors and companies are coming off the last few years. The market is only up today because oil (25 per cent of the Canadian market) has made a strong run. When oil does well, when the banks do well, then the market does well.”

Some of the large banks are heavily invested in fossil fuels. When investors consider the top holdings in their funds, they can become frustrated to see that they’re investing in companies that don’t align with their values and principles.

Investors may consider sustainable investing for several reasons. They may aim for a positive impact or to avoid ties to questionable activities. They may not feel comfortable investing in companies whose business practices they view as morally objectionable. They may also realize that companies with a negative reputation or poor business practices may not be sustainable over the long term.

“Most investors are not aware they have choices,” says Ramler. “Once they find out they have options, and have informed support, they are investing more in ESG companies, whose profitability will only increase as their debt declines. The stock market used to have just a few cleaner options. We now have many more regular clean investments.”

Ramler believes that many advisers don’t understand this; they look only at financial return.

“There are some good ESG investments out there. You just need the right advice.”

“It’s about being future-focused,” she says. “Our decisions today have a direct impact on the lives of our grandchildren. Through our investments, we’re creating the future we want to see.”

What is the average investor to do? Many investors have their money in managed funds, where individual holdings are not immediately apparent.

“We want people to look under the hood,” says Ramler. “Go to an independent source (e.g., and take a look at the portfolio tab. You can get updates on your mutual funds there. Also, make your financial adviser aware that ESG investments are important to you. Some advisers are not aligned in this way and don’t have the necessary screening tools. They may not understand future goals beyond retirement or estate planning. Gauge whether your adviser understands what you’re talking about.”

While groups like the Responsible Investment Association promote responsible investments (Ramler is on the board), ‘green washing’ is common.

“For example,” she says, “some of the screening tools still show fossil fuel companies as top-rated — discounting their environmental costs.”

Sustainable investing, when incorporated into a well-defined, long-term investment plan, can be a powerful tool in addressing global challenges while still achieving personal financial goals.

— Written by Gord Ball



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