Last week, the Canadian Medical Association voted to withdraw its investment in fossil fuel-related companies, the latest in a series of divestments by organizations and investors looking to put their money in companies that are ecologically and socially responsible.
Yellowknife doctor Courtney Howard led the charge for the motion to divest from fossil fuel companies.
She says she was inspired by similar moves by the British Medical Association and the Royal Australasian College of Physicians in New Zealand and Australia.
Dr. Howard, a board member of the Canadian Association of Physicians for the Environment, said that doctors are beginning to understand that climate change is a public health issue, not just an environmental issue.
“It’s beginning to have profound effects on us,” she said.
Dr. Howard said the issue is particularly apparent in the Northwest Territories, as warming temperatures have disrupted even basic nutrition as they affect traditional hunting grounds and supply routes.
She said that doctors have a role as advocates to promote public health, and she compared their leadership on divestment from fossil fuels to the early years of the fight against cigarette smoking.
“It’s a small step, but we need to lead the way on putting this into a health care box rather than an environmental box,” she said.
Religious organizations, pension funds and individual savers are also in the market for sustainable investments, according Deb Abbey, who heads the Responsible Investment Association.
She said so-called responsible investing is going mainstream as younger, more socially conscious investors join the market.
“Greater awareness of environmental, social and governance risks, personal values and the generational transfer of wealth to millennials and baby boomers are key drivers of this growth,” she said in an email on Friday.
Last month, the United Church of Canada became the latest religious organization in the country to sell off its investments in fossil fuels because of concerns about the long-term impact on the planet.
In April the Church of England made a similar move, and Pope Francis called for a more socially responsible approach to investment and finance during a speech at the Vatican in June.
“It is important that ethics once again play its due part in the world of finance and that markets serve the interests of peoples and the common good of humanity,” he said.
The Canadian Pension Plan Investment Board has its own sustainable investing policy, and last Thursday the Royal Bank’s asset management arm announced that it had signed on to the UN’s Principles for Responsible Investment.
According to the RIA, investment in socially responsible assets surpassed $1 billion in 2013.
Abbey said the drive for socially responsible investing is gaining momentum in part because pioneers in the field have shown that investors can actually get higher returns by putting their money towards companies that work to maintain an ethical standard.
“Responsible investing offers investors superior risk adjusted returns and positive societal impact,” she said. “It’s a no-brainer for investors.”
Desjardins investment adviser Carol Smith said she steers most of her clients towards socially responsible investing because good corporate citizens are usually good investments.
“You can do well by doing good,” she said.
She said that the companies that have high-profile corruption or safety scandals usually have warning signs, and those types of companies won’t be a part of the investment she sells.
“You’re basically adding an extra layer of protection,” she said.
Smith said that there is still a ways to go in convincing Canadian investment advisers to embrace socially responsible investing and pass it on to their clients, as many are focused solely on getting the biggest returns.
Yet if investors are given all the information and given a choice between investments, she said, most of them will choose the sustainable option.
“Investors want something that aligns to their values and can actually effect change,” she said.
Michael Jantzi, CEO of responsible investing-focused research firm Sustainalytics, said understanding the environmental, social and human rights issues affecting a company is now a key part of any prudent investment strategy.
“They’re real investment risks now. They’re real business risks,” he said. “The world is a much more complex place than it used to be, so investors know that they need to understand all of the risks and how they can be managed.”
Jantzi said Sustainalytics uses an analytical framework to rate companies on their internal governance, social responsibility, environmental record and other factors.
“We’re not looking for perfection,” he said. “You look at the good, the bad and the ugly and you’re balancing those things to come up with a determination.”
Jantzi added that it’s not just investors who are looking to corporate responsibility, but that the large international corporations considered blue-chip investments are also concerned about risks from outside their business model.
“They understand that environmental, social, governance issues are important from a risk perspective and can feed in to client retention and employee prospecting,” he said. “What you’re now starting to see is the investors and the corporates coming together to work on these issues.”