More and more people are looking to not just invest but purchase in an ethical and socially responsible way – and investors can capitalize on this shift in consumer attitudes.
“We surveyed about 1,100 investors last year from coast to coast, and 92% said that it was important for them to invest in products that are consistent with their own personal values,” says Chris Nickerson, senior vice president, sales and distribution, NEI Investments. “And 71% of Canadians want their investments to help change or make companies better.”
And it isn’t a specific demographic that is pushing the numbers higher, but a sentiment shared from twentysomethings right up to those in their 60s.
“It is natural for us to think that it is the baby boomers driving this movement, but what is surprising is that it is across all demographics,” Nickerson told WP
, “from the twentysomethings to the boomers who are nearing retirement.”
Nickerson says that the company’s Ethical Funds proves that it is possible to invest with a conscience, and that advisors should make every effort to open a discussion with clients on how they can invest in companies that combine strong financial performance and meet rigorous environmental, social and governance (ESG) practices.
“We’re looking at the impact that the organization or company is having on the environment,” says Nickerson. “It is an area that bridges the gap for financial advisors. They do a very good job of managing risk tolerance, expectations, helping people achieve their goals – and even in some cases defining those goals. Socially responsible investing bridges the gap from generation to generation – and it is a way to separate themselves from their competitors.”
In fact, being able to provide advice on ethical investing raises the advisor’s position a lot higher in the mind of the client.
“We’ve noticed it can increase not only the calibre and quality of the conversation, but it also increases the value the investor places on the advisors and their advice,” says Nickerson. “One of the questions we asked in the survey was where do investors look for socially responsible investing – 70% looked to their financial advisor.”
Socially responsible investing is more than just wind turbines and solar panels, marrying traditional financial analysis with ESG analysis uncovering hidden risks not reflected in financial statements, providing an extra layer of risk protection for portfolios.
“We’ve engaged 47 companies in dialogues with senior management, working to improve their organizations going forward,” he says. “We’ve actually voted over 6,900 proxy proposals, with 33 progressive results from our dialogues, five shareholder proposals filed at shareholder meetings, and we actually withdrew five proposals because we got the resolutions we were looking for.”