'Responsible Investing' is it a fad or the future?
LONDON, ONT. -- Southwestern Ontario based Libro Credit Union has announced all of their Mutual Fund investments going forward will adhere to what is being called 'Responsible Investing.'
“Responsible investing at its basic definition, is using Environmental, Social, and Governance factors or ESG in the investment selection process,” says Vice President of Wealth at Libro Paul McQueen.
The move means investment managers at the credit union will steer away from companies that do not fit within that responsible framework regardless of the potential profit.
McQueen says focusing on companies that are paying attention to the environmental, social and governance impacts should yield better returns over time.
“They are starting to outperform, in the latest quarterly reports, it was well over 3 quarters of Canadian responsible investment funds are out performing their peers and relative benchmarks.”
Mike Tucker, a Professor of Business and Economics at Fanshawe College, admires the move Libro has made but says it is a risky one.
“Sometimes member or customer loyalty is only goes as far as their individual return on their individual investment,” Tucker says. “What I see here is a long term strategy, trying to deliver returns on investment that will appease everybody.”
Libro is considered a B-Corporation, a designation given by B-Lab, a global non-profit organization which certifies companies based on a score measured by Environmental, Social, and Governance markers and only accepts businesses that meet a minimum threshold score.
Tucker believes more companies may follow suit if this trend proves successful.
“If the current members or the current certified corporations truly start to benefit from this particularly from a financial perspective you are going to see other organizations go maybe we need to look into this.”
He adds, “From anyone looking from the outside looking in, to criticize that vision, and the fact that they want to action it is twice as impressive.”
According to Libro it is the first financial institution to declare its intention to focus on responsible investments.
“This is to us inevitable, and it’s important. And we’re ok, maybe going first if it encourages other financial institutions to do something similar,” says McQueen.