Socially Responsible Investing A triple-bottom-line strategy I nvestors are starting to realize that they can help make companies more ac- countable to environment, social and governance issues. One of the fastest growing invest- ment concepts to emerge in the last few years is in the area of Socially Respon- sible Investing (SRI). SRI investment, in Canada, has been growing, and now exceeds $500 billion – up from $65 billion in 2004. Simply put, SRI is the practice of incorporating a person’s values into their investment portfolio. This can refl ect an investor’s wishes to exclude a particular industry from their portfolio – e.g., tobacco or military contractors – or to exclude companies with poor records on human rights – e.g., sweatshops – or environmental impact. MOTIVATION FOR SRI An investor’s motivation for SRI may be purely personal, or it may stem from a societal- impact view. On the personal side, someone who has witnessed the negative effects of gambling may choose to exclude, from their portfolio, any companies that earn revenue from the gaming industry. From the societal-impact side, an investor may want to look for companies that respect the environment, or the diversity of our society as a whole, and others may choose this approach because of their religious convictions. Most SRI mutual funds are activist shareholders in that they act on behalf of their investors to persuade companies to become more socially responsible. Whatever your motivation, the number of SRI investment approaches has never been larger than it is now. What was once a niche movement is quickly becoming mainstream. Michael S. Magreehan, BBA (Hon), CFP, is a Certified Financial Planner with Lysnes/Magreehan Wealth Management at Canaccord Capital in Waterloo, Mike can be reached at 1-800- 495-8071,or mike_magreehan@ canaccord.com. Ontario. WHICH COMPANIES SHOULD I SUPPORT? Some people believe that there is no perfect company – in fact, every company can be seen as a mixture of good and bad, depending on one’s perspective. So, does someone throw out the concept because they cannot find perfect companies? No. In fact, Jantzi Research, which is Canada’s leading provider of social and environmental research, recommends that investors take a Best of Sector (BoS) approach. The BoS framework is one approach, and it is consistent with the underlying philosophy of the SRI movement. Instead of eliminating entire industries from investment eligibility, BoS provides an incentive for companies to improve their social and environmental per- formance. Companies understand that social investors are not holding them to a perfect standard and they will have access to social capital if their social and financial performance reaches certain standards. Jantzi Research measures a company’s social record against those of its industry counter- parts. Jantzi Research does not expect that each company demonstrates “perfect” behaviour. For example, a company within the forestry sector is not expected to eliminate all negative environmental impact, because it is measured against the standard of best practices in its in- dustry. By taking this approach to SRI, investors can own a diversifi ed investment portfolio across all sectors of the economy, instead of eliminating entire industries altogether. 30 • CANADIAN CHIROPRACTOR | MAY 2008 www.canadianchiropractor.ca Michael S. Magreehan, BBA (Hon), CFP feature
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