I’ve seen the future of socially responsible investing, and it’s here. Well, if you live in Europe it’s here, but we’re still quite a bit behind the times in Canada, if you’ll let me explain.You see the traditional, and still prevalent approach to socially responsible investment in Canada, is to purchase an ‘ethical’ fund from one of the four or five companies in Canada that provide this kind of investment. There is nothing wrong with this strategy, and one can put together a top-flight portfolio by selecting from amongst the best offerings of Acuity, Meritas, Ethical Funds, and others.
Yet there is a certain vanilla-like quality to what is available in the Canadian marketplace, because virtually all of these funds begin constructing their portfolios with the same basic foundation. That is to start with every stock that is listed on Canadian, or US, or foreign exchanges, depending on the mandate of the fund, and then apply various screens to weed out those companies that derive their income from what are deemed to be ethically unsupportive pursuits. Think bombs, cigarettes, sweatshops, etc. Take out the bad guys, choose those companies that have demonstrated best practices and profits from what’s left, and vόila, you have an ethical mutual fund.