Despite the turmoil in public markets over the past year, ethical investing has never been more popular. Being the curious investment adviser that I am, I recently set out to find local companies that would fit the bill and quickly discovered that B.C. is a hotbed of innovation in one particular segment of ethical investing: environmental technology. Ethical investing goes by a number of names; you might hear reference to “triple-bottom-line” investing, where environment and social benefits are given equal weight with financial returns, but the broader term is socially responsible investing (SRI).
The origins of SRI go back thousands of years to biblical times when Jewish laws laid down directives on how to invest according to ethical values. In the 18th and 19th centuries, religious movements such as the Quakers and Methodists followed the principles of SRI. But SRI has only come into mainstream modern consciousness in the past few decades.
Today I find that a big focus of SRI is reducing our carbon footprint and properly managing the world’s resources, and many governments are joining individual investors in common cause. Look no further than President Obama’s commitment to reduce the U.S.’s reliance on traditional oil, China’s recent multimillion-dollar subsidies for its alternative energy companies or, closer to home, B.C.’s groundbreaking carbon tax.
Investors can track the social and environmental performance of more than 60 large publicly traded Canadian companies using the Jantzi Social Index. The firm employs a rigid methodology according to which companies are included, excluded, downgraded or upgraded based on a number of screens. For access to these companies, investors can buy an exchange-traded fund patterned after the Jantzi Index or various other mutual funds. Most of our B.C.-based public companies, however, aren’t big enough to fit the Jantzi criteria, but the few that do include Telus Corp., Canfor Corp. and Teck Resources Ltd.
Green-conscious investors have many smaller B.C.-based companies to choose from, depending on where they want to invest. If you are interested in wind energy, for example, there’s Western Wind Energy Corp. or NaiKun Wind Energy Group Inc. If you are thinking solar energy, there’s Day4 Energy Inc. Biomass or geothermal? Try Magma Energy Corp., Nevada Geothermal Power Inc. or Sierra Geothermal Power Corp. For fuel cells, there is, of course, Ballard Power Systems Inc. – one of Canada’s first fuel cell technology companies – but also Western Lithium Canada Corp. and Rodinia Minerals Ltd., which are involved in the battery-power technology used in everything from laptop computers to electric cars.
B.C. is also a hotbed of innovative environmentally focused technology companies, including Carmanah Technologies Corp., which designs and manufactures solar-powered LED lighting systems, and Bioteq Environmental Technologies Inc., which has a patented water treatment process to clean up waste waters from mine operations. It’s no wonder that even large pension and investment plans such as the Canada Pension Plan, B.C. Investment Management Corp. and the UBC Endowment Fund have invested in some of our local envirotech companies.
Like the rest of the market, the track record of SRI has not been great over the past year, although the Jantzi Social Index, for example, has slightly outperformed the TSX Composite Index. However, I believe that with confidence returning to stock markets, investors will add money to their pocketbooks by including some of our B.C. green-focused companies in their portfolios.
When it comes to the environment and socially responsible investing, we can be proud to know that we are at the forefront of the movement and that you really can do well by doing good.
Jennifer Fabre is an investment adviser and certified financial planner at Canaccord Capital Corp.
