Have you heard of responsible investing (RI)? Maybe you’ve heard of socially responsible investing, or sustainable, impact, or ethical investing. They’re all the same great idea: a type of investing that aligns your values with your money to give back.

Responsible investing takes your social, environmental, and ethical values, and uses them to determine which investments are a good fit for your portfolio. With this type of investing, you can mitigate risk, improve long‐term financial performance, and contribute to social change.

In a 2019 poll of 1,000 Canadians, the Responsible Investment Association (RIA) found that 72% of people were interested in responsible investing. But only 23% of people said their financial institution or advisor asked if they were interested in investments that aligned with their values.

PenFinancial is a values‐based credit union that is committed to balancing purpose and profit, transforming banking, improving lives, and strengthening communities. We understand living by your values and giving back. All of our Credential Asset Management Inc. and Credential Securities advisors have their Responsible Investment Specialist designation to help you do the same.

Responsible investment basics

Responsible investing is a type of investing that allows investors to make money while also making a difference. Although it may not always follow these exact steps, the process usually breaks down something like this:

  • You work with a financial advisor to invest your money in ethical funds. These funds include shares in companies that exhibit sustainable and positive environmental, social, and governance.
  • You are given shareholder status in the companies in which you’ve invested.
  • The investment firm that manages your ethical funds acts as a proxy on your behalf. They engage with the companies to encourage corporate, economic, and environmental sustainability (some firms attend each company board meeting to vote on important issues).
  • The company’s stock values are hopefully maintained, or improved, by their positive environmental, social, and governance.
  • As the share values increase, your investments increase in value (aka: you make more money).

Responsible investment benefits

There are three notable reasons to consider responsible investing:

1.      Responsible investing can mitigate some investment risk.

Responsible investing aims to reduce exposure to risks that arise when a company is involved in poor environmental, social, and governance practices, which can have negative impacts on a company’s stock price.

2.    Responsible investing can boost long‐term financial performance.

Responsible investing can lead to better long‐term financial performance. A Carleton University study found that RI equity mutual funds in Canada outperformed their respective benchmarks 63% of the time.

3.    Responsible investing can contribute to positive change.

As an investor, you can choose to invest in sustainable companies that promote positive shifts, such as energy efficiency, green infrastructure, waste management, and sustainable agriculture, to name a few.

Giving back and getting more

PenFinancial is a Certified B Corporation, and a credit union that cares. We want you to live your best life, without compromising your values. We want to help you do more with your money.

Does your portfolio align with your values?

Make an appointment with a PenFinancial Advisor. We will help you align your values with your investments, build your wealth, and become a force for good.

Mutual funds are offered through Credential Asset Management Inc. Mutual funds and other securities are offered through Credential Securities, a division of Credential Qtrade Securities Inc. Credential Securities is a registered mark owned by Aviso Wealth Inc. The information contained in this article was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. This article is provided as a general source of information and should not be considered personal investment advice or a solicitation to buy or sell any mutual funds and other securities.

Sarah Bujacz

Written by Sarah Bujacz

Sarah is a Financial Advisor at the PenFinancial.