When it comes down to the nitty-gritty these days, Canadian investors seem to be heeding the advice of those financial advisers who are working tirelessly to promote socially responsible investments. That will empower initiatives across the country which are designed to strengthen environmental, social, and corporate governance principles. I have written much about the growing interest in and expansion of the SRI industry in Canada, and I would like to return to this theme in order to touch upon some fresh evidence that illustrates the rising prominence of social responsibility in Canada. In the past year, there have been pivotal actions by institutional and private investors to support increased transparency in the resource extraction sector, which happens to be one of the most important sources of revenue for the Canadian economy. With the Toronto Stock Exchange and its subsidiary, the TSX Venture Exchange, hosting almost 60% of all publicly-traded mining companies in the world, the importance of this industry cannot be underestimated in the Canadian context. The recent declaration of support from shareholders at NEI Investments – who represent over $362 million in assets under management – to support the work of the nascent Resource Revenue Transparency Working Group, is a sign that Canadian investors are progressively moving to hold Canadian corporations accountable for their actions on the local and international levels. The Canadian SRI Review 2012, drafted by the Toronto-based Social Investment Organization ArtClip and released in January, also depicts the positive growth of socially responsible investment assets across Canada. The report highlights a 16% growth of total assets under SRI management since the publication of the previous SRI Review in June 2012, with the dollar value of SRI assets jumping from $517.9 billion to $600.9 billion, which clearly signals the financial opportunities of socially responsible investing. Most importantly, the report goes on to observe that “today, there is a much broader acceptance among fund managers and individual investors about the growing importance of environmental, social, and governance (ESG) factors to investment returns.” The Canadian experience in growth of socially responsible investing is not merely a local anomaly. The Global Sustainable Investment Alliance (GSIA) also released a report in January discussing the size and trends of what it calls the “sustainable investment industry,” noting that “at least $13.6 trillion worth of professionally managed assets incorporate environmental, social, and governance concerns into their investment selection and management.” Increasing pressure and activism around the globe is contributing to the surge of investments in SRI assets, and even national governments are gradually endorsing socially responsible investment principles and practices, as seen with the example of the Government Pension Fund of Norway. Indeed, investing in the right assets is not the only point of contention for ethical investors, as the folks at NEI Investments have shown. The ongoing controversy surrounding the gargantuan compensation awarded to Canadian corporate executives has been taken up as a rallying point for socially responsible investors with NEI, a cause that directly resulted in shareholder proxy resolutions with five of Canada’s biggest banks, “calling on them to consider ending the practice of setting CEO pay by benchmarking it against pay at rival banks.” The growing influence of socially responsible investors in Canada became immediately clear in this case, as three of the five banks offered to consider concerns around executive compensation straight away.
Steering back to socially responsible investing, Bullion Management Group (BMG) recently became the first Canadian precious metals enterprise to join the membership roster of the Social Investment Organization. The company is already noted for its commitment to accountability and transparency efforts, and with recent reports on SRI underscoring the growing profitability and benefit of the SRI industry, it is no wonder that BMG jumped on board the SIO management team. On the flip side, the acquisition of Canadian ESG leader Nexen by CNOOC – a state-owned Chinese company – in late February, has ethical investors worried that CSR and SRI commitments may come under threat from foreign ownership. The contrast between the movements of these two dedicated Canadian SRI leaders is ultimately indicative of the continuing see-saw which pits companies between the ethical demands of investors and questions of overall profitability emerging from the offices of corporate bosses and government lawmakers.
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