ESG and responsible investing
Investing with a greater purpose.
“We recognize our clients’ growing interest in aligning their investments with their deeply held personal values. That’s why we are proud to help clients include any number of responsible investing options in their wealth planning decisions.”— Michael Armstrong, CEO of RBC Wealth Management - U.S.
Our values are at the core of every choice we make. Making decisions with greater purpose helps the world become a better place for everyone, which is why so many people are choosing to let their beliefs guide the way they invest.
As a leader in ESG investing, RBC Wealth Management is committed to a better future. Like many of our clients, we’re focused on community involvement, diversity and inclusion and environmental responsibility as a way to support both current and future generations. To help you create positive social and environmental impact, we offer several ways for you to invest that align with your values.
A growing trend
Responsible investing assets have skyrocketed to $17.1 trillion as of 2020, a 42 percent increase in two years, according to the US SIF Foundation.1 This is projected to grow in the coming years.
Responsible investing is a process that applies environmental, social and governance (ESG) data to an investment portfolio. This encompasses a number of investing approaches, including socially responsible investing (SRI), ESG integration and impact investing.
Support companies that perform well on environmental, social and governance metrics.
Socially responsible investing
Create or withdraw support for companies/sectors in portfolio that do/don’t meet personal values.
Support social or environmental issues with the expectation of measurable results.
ESG: Integrating environmental, social and governance into your portfolio
ESG integration seeks investments in companies with leading environmental, social and governance metrics compared to their peers. These metrics may include:
Including climate change, natural resources conservation, pollution and waste management, and water scarcity.
Such as corporate philanthropy, community and government relations, workplace health and safety, human rights and diversity.
Including accounting practices, board accountability and structure, disclosure practices, executive compensation, corporate ethics, regulatory compliance and transparency.
Socially responsible investing
Socially responsible investing (also known as values-based or ethical investing) allows investors to use ESG data to align their personal values with their investment choices. This involves both negative and positive screening of companies, industries or sectors to eliminate or select investments.
Impact investments are made to generate social or environmental impact rather than just profit. An impact investor wants to earn a return on their investment, but they may also be willing to take a capital loss as long as some tangible result for the investment can be seen. In that way, it is essential to be able to measure the impact of this investment. An example includes investment in low-income housing loan assistance, where a tangible impact is measurable (i.e., number of households able to afford housing).
A third dimension of performance
Due diligence processes do not assure a profit or protect against loss. Like any type of investing, ESG and responsible investing involves risks, including possible loss of principal.
Today, more people are using their money to make a difference. Sustainable products and solutions are more important than ever, and moving towards sustainable operations is now the standard across many industries.
If you are interested in learning more about investing with greater purpose, please contact your RBC Wealth Management financial advisor and ask how you can integrate responsible investing into your portfolio.
- “2020 Trends Report,” US SIF Foundation, https://www.ussif.org/files/Trends/2020_Trends_Highlights_OnePager.pdf.