This year’s Earth Day focuses on concretely tackling the existential threat of climate change: by shifting away from a fossil-fuel economy to a green, carbon-neutral one. EarthDay.org, the global organizer of Earth Day, calls on individuals, governments, businesses and institutions to “recognize our shared responsibility and help accelerate the transition to an equitable, prosperous green economy for all.” How does this affect your investments? Let’s break it down.
What is sustainable investing?
Responsible investing considers a company’s environmental, social and corporate governance (ESG) practices and how they might impact long-term performance and investment returns.
Many Canadian investors incorporate ESG issues into their investment analysis and decision-making. In an Ipsos survey conducted for SunLife Financial in August 2021, two-thirds of Canadians responded that ESG factors play a “fairly important” or “very important” role in deciding which investments to buy. A survey conducted by the Responsible Investment Association in September 2021 found that 73% of Canadian investors were interested in responsible investing, and 77% said they would like their financial services provider to provide responsible investment information that aligns with their values.
In addition to sustainable investing, investors also use these terms: Responsible Investing (RI), Socially Responsible Investing (SRI), Ethical Investing, Green Investing and Impact Investing.
What ESG factors do investors consider?
The following are many of the non-financial aspects that investors and other business stakeholders consider to assess ESG performance:
- Environment: Carbon emissions, air and water pollution, energy efficiency, water use, waste management, deforestation, commitment to biodiversity, sustainability of supply chains
- Social: Gender and diversity, labor standards, human rights, customer service, community relations, data protection and privacy, employee engagement, health and safety at work
- Guide: board leadership practices; board variety; compliance with legal regulations; board remuneration; succession planning; diversity, equity and inclusion; bribery and corruption; lobbying; political posts
Learn more about responsible investing
If you’re curious about aligning your investments with your values, don’t miss this helpful read:
- Why sustainable investing is important
An investment advisor explains the most important details about sustainable investing, its different approaches (impact investing, purpose-driven investing, divestment, etc.) and how to get started. - Halal Investments in Canada
Canadian Muslims have unique investment needs. Jason Heath shares options consistent with Sharia law including halal funds. - Invest your conscience
Socially responsible investing has come a long way in Canada. This 2017 article looks at Canadian attitudes towards SRI and researching potential investments.
More ways to celebrate Earth Day
On April 22, you can join other concerned citizens in helping the planet, whether you’re participating in a local cleanup, taking environmental action at home, or attending a virtual Earth Day event.
The first Earth Day was observed in the United States in 1970 and marked the beginning of the modern environmental movement. In 1990, Earth Day became global, mobilizing millions of people to take action for the planet; Earth Day Canada was also established that year.
