The ethics of investment

The ethics of investment

The ethics of investment More so than most countries, Canada finds itself in a catch-22 situation regarding environmental issues. The resource sector has a dominant position in the overall economy, so simply deciding to eliminate fossil fuels is a non-starter. Compromise clearly is the best way forward – and the
Trudeau government’s first step in that direction was to sign on to the Paris Agreement in December 2015, promising to take steps to help limit climate change.

Socially responsible investing using environmental, social and governance [ESG] practices is on the rise throughout the wealth management industry. Robert Walker is the vice-president of ESG services for NEI Investments, where he helps drive the firm’s Responsible Investing Program in its mission to boost returns and create long-term sustainable value for investors.

Central to Walker’s job is meeting with corporate leaders and explaining the merits of ESG practices. Often, he says, these meetings can go either way.

“In 2004, Enbridge announced its intention to build the Northern Gateway Pipeline from Edmonton through BC to the coast,” he says. “I was with Ethical Funds at the time, and we owned stock in Enbridge, which in many ways is an excellent company on a variety of fronts, including its renewable energy portfolio.”

Like the conflict between the resource industry and environmental groups, the schism between native populations and big business is another of Canada’s major conundrums. The problem is not unique to this country, however, which is why the UN has set guidelines on this issue.

“We engaged in dialogue with the company almost right away,” Walker says. “We asked them to observe the concept of free prior informed consent in the context of the UN Declaration of Indigenous Peoples. They just didn’t want to go there, so we ended up divesting in 2012, and the pipeline still hasn’t been built.”

The Enbridge case is far from isolated, as many newspaper headlines over the last two years attest. For Walker, the fact that these disputes still rumble on is a national shame. 

“The opposition to pipelines has spread beyond the Northern Gateway and beyond indigenous peoples to TransCanada’s Keystone pipeline, Energy East,” he says. “There is a real pipeline crisis now in this country. It is not all about indigenous issues, but a lot of it is, and I think it’s a real failure by this country.”

That’s not to suggest that progress isn’t being made – far from it, in fact. Building bridges between Canada’s corporate interests and those who are most affected by new developments such as pipelines or mines is a priority for a great deal of people. Walker is one such individual, but his voice isn’t alone. The Boreal Leadership Council [BLC], founded in 2003, is a collection of leading conservation groups, First Nations, resource companies and financial institutions that have an interest and a stake in the future of Canada’s Boreal Forest.

In Walker’s view, groups such as the BLC are vital to maintaining good relations before any disagreements turn sour.

“The levels of ignorance around this history are pretty high,” he says. “Much of it is not very pleasant for Canadians, but we need to face up to this as a country. We need to find a way to move forward on these projects. The idea of going to court for the next 30 to 40 years doesn’t make much sense, so the BLC is finding ways to come together.”

The BLC includes environmental groups such as the Canadian Parks and Wilderness Society, First Nations representatives like Kaska Nation, resource companies like Goldcorp, as well as financial institutions like NEI Investments. Having one of Canada’s Big Five banks on board was a clear goal for the BLC, so when TD Bank joined, it was a real coup.

The institution has made ESG investment a priority, demonstrated by its appointment of environmental scientist Karen Clarke- Whistler as chief environment officer in 2008.

“We were the first major asset management group to belong to the UN Principles for Responsible Investing,” Clarke-Whistler says. “In 2008–2009, we came out with a couple of dedicated sustainability funds before it came into vogue. We have since wound those down because our approach now is on mainstreaming ESG so it is part of everything we do.”

Clarke-Whistler considers Canada’s signature to the Paris Agreement reason to be hopeful after many false dawns. In her view, the different sides are largely in concert regarding the world’s pressing environmental concerns.

“I have taken a lot of heart from Paris,” she says. “I don’t think I have ever seen such willingness and alignment among federal, provincial, municipal, corporate and environmental groups. I think that means good things will happen, and we are all very excited about it.”