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Green Financing and Responsible Investing: A New Way of Life in Canada



Responsible investing is very much in vogue in Canada. The present scenario in Canada is immensely encouraging and inspiring. Currently companies in Canada are concerned and very much aware of their social and environmental footprint. They are realizing how any wrong steps or initiatives by them could adversely affect their bottom line.

Even for the investors, it is constantly becoming important to consider environmental footprint issues. More and more companies are implementing socially and environmentally conscientious investing and it is no longer considered to hamper progress or performance.

Growing Trend toward Responsible Investment

It is now becoming financially judicious and practical move to possess a greener portfolio. A host of studies and researches in the last few years have supported the cause for responsible investing and have emphasized the performance proficiency of responsible investment. Statistics from the Responsible Investment Association based in Canada, further reveal that responsible investments have really gone up from $600 billion to more than $1 trillion in just a couple of years. Browse through debt reviews for green finance related investment information.

This is actually a whopping 68% increase and the absolutely amazing fact is that pension funds and some other institutional investors have contributed to the lion’s share of the funds moving into the responsible investment portfolios. Moreover, retail investors are also, going green in much higher numbers than they ever did before by investing in mutual funds. It is quite evident that more and more investors are going green not only from value point of view, but also, as an effective risk mitigation strategy meant for institutional pools.

What Does Responsible Investment Entail

Responsible investment is referred to all those investments that are integrating social, environmental and governance criteria for selecting and managing the investments. Responsible investment may also include negative screening related to stocks such as excluding cigarette firms or even shareholder engagement in those cases where investors are supposed to come together for voting at annual general meetings of shareholders to compel firms to modify their ways and attitude. Many others are going a step further by indulging in impact investment that generates environmental, social and financial returns for instance, investments in local cooperatives.

Divesting from Mining, Oil and Gas Companies: The New Trend

Globally, increasingly oil and gas and mining companies are not considered while investing. However, this has been a very difficult proposition in Canada as the scenario in the Canadian marketplace is that 80 % of the Toronto Stock Exchange comprises of oil & gas and mining sectors. However, investors are now able to identify mutual funds that exclude firms that are directly dealing in fossil fuel.

Recently a novel specialized fund has been introduced by Wolverton Securities in British Columbia and Alberta. This specifically excludes firms that are involved directly in oil and gas. These developments reiterate the fact that there is an increasing demand by investors to avoid companies directly responsible for climate change.

Institutional Investors Are Welcoming the New Trend

It is believed that Norway’s US Sovereign fund amounting to $850-billion, has actually divested from oil sands, fossil fuel and coal mining companies. In Canada many renowned professors at several prominent universities have been influencing their institutes’ endowment funds to start divesting from fossil fuels. However, some responsible investment experts are thinking in a different wavelength. They are encouraging the concept of responsible companies, involved in the manufacturing process of oil and gas, to devote their attention to expand their renewable energy volume. Moreover, more and more organizations are supporting the cause of social and environmental justice. Going green is the latest trend in Canada and it is here to stay for quite some time now.