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Investing with the UN: Why investors are dumping oil and gas companies

(Getty)

Oil and gas stocks have no place in many portfolios.

A growing number of retail investors and big institutions are dumping them. Not because they’ve been relatively poor performers — but because of the large environmental footprint they leave behind. Fossil fuel divestments hit $8 trillion in 2018.

For many, it goes beyond energy companies. There’s a growing movement to invest based on the UN’s sustainable development goals (SDGs). The global impact investing movement is expected to reach $307 billion by 2020.

(United Nations)

Investors are looking for ways to align their investments with their values. Mike Thiessen, manager of sustainable research at Genus Capital, helps clients do just that. Thiessen says his firm measures against SDGs by how much their sales contribute to a goal. A company selling solar panels to businesses would have 100 per cent impact since all of its sales are linked to SDG #7  affordable and clean energy.

“Investors at Genus have a wide variety of causes they are passionate about, but SDG #6 – clean water and sanitation, SDG #3 – good health and wellbeing, and SDG #7 – affordable and clean energy, seem to be the most common,” Thiessen told Yahoo Finance Canada.

Clients come to Genus to get oil and gas out of their portfolios and banks that finance polluters like coal power plants. Making portfolios tobacco-free is also a popular request.

Thiessen says the trend toward sustainable investing has convinced corporations to be more transparent.

“Shareholders have voted for big oil companies, including Exxon Mobil, to disclose their climate risks after years of opposing these disclosures,” says Thiessen.

iShares also lets customers invest with their conscience, through the Jantzi Social ETF (XEN.TO).
It provides exposure to Canadian companies that meet a broad set of its own environmental, social, and governance rating criteria. It was launched in 2015 and has outperformed the broad TSX. (^GSPTSE)

XEN outperforming the TSX

 

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