In a post-recession world where a sustainable economy is valued more and more, investors are searching for investment options that bring financial returns, but also focus on key social environmental benefits, says Canadian fund manager Thomas George.
The co-manager of the TD Global Sustainability Fund says there is growing interest in socially responsible investments (SRI) that reflect trends in areas such as climate change volatility, organic and natural goods, as well as sustainability and technology.
"The pillars of sustainability are environmental, social and governance," says George, vice president at TD Asset Management. "The same factors that are driving people to buy hybrid cars or eat organic foods, these are the same people that are going to buy SRIs."
His comments as some 192 countries celebrate Earth Day on Monday, a day supporting environmental protection.
The Earth Day Network, which coordinates Earth Day, aims to bring together civil, corporate and government leaders to debate a transition from a traditional, fossil fuel-based economy to one based on renewable energy, energy efficiency and other sustainable development principles, the organization says.
George's $8.3-million fund was launched in 2007 and is down some 6.4 per cent since inception. The fund was battered during the financial crisis, down some 33 per cent in 2008, but has since clawed its way back.
As of the end of February, the fund has returned 5.2 per cent, but is still trailing its benchmark Morgan Stanley Capital International World Index Net Dividend that has returned 8.7 per cent for the same time.
It is lagging partly due to uncertainty in global markets during the recession that resulted in weaker energy demand, but George says the long-term view is that environmental specialists and clean energy will play a growing and more important role in the overall energy mix.
"Efficiency will just be that much more important in a world that is tight on natural resources and, more importantly, in a world that is seeing more regulation, not less," he says, noting scrutiny over proposed projects like TransCanada Corp's proposed Keystone XL pipeline, which aims to take Alberta oil sands crude to U.S. markets, is not expected to let up.
Socially responsible investing
The fund offers a mix of large-cap companies like tech-titan Google Inc and Toyota Motor Corp, as well as so-called environmental specialist companies such as Lindsay Corp, which manufactures and markets irrigation equipment.
Having small and big companies in the fund across a range of sectors will see investors gain in the long run. "We're taking a long-term view. It's an area that where we're committed," he says.
Socially responsible investing is a growing phenomenon that aims to balance social concerns with long-term returns.
Some 20 per cent of all assets under management in Canada are now invested in SRI funds, which represents some $600.9-billion in Canadian capital, according to report by the Toronto-based Social Investment Organization published earlier this year.