Knowing that taking action on climate change means we need to stop investing in it, For Our Kids Toronto hosted a Climate Responsible Investing Forum in December. The session began with a reminder of how quickly the world is going to warm from here. It took 170 years from industrialization to warm the earth by 1 degree, but warming is going to accelerate so quickly from here that we’re on track for another 2-3 degrees by the end of this century.
Even though 1 degree doesn’t sound that bad (especially here in Canada), it becomes catastrophic because impacts can be exponential rather than linear. All this to say, climate change is going to disrupt business, and companies that aren’t adapting can add climate risk to your investment portfolio.
John Cook, CEO of GreenChip Financial, was the event’s guest speaker. Over 10 years ago, John launched a fund that predominately invests in companies whose products and services relate to climate solutions. This includes renewable energy, energy efficiency, clean tech etc.
John talked about how there are now more options for people who want to practice responsible investing, including fossil fuel-free funds that have returned just as much or more than their traditional counterparts.
He also discussed the importance of checking under the hood because not every investment branded as responsible will align with your values. A fund that measures ESG (Environmental, Social and Governance factors) may still have companies you’re uncomfortable with, they just might be the companies that are less bad than their competitors. John recommend people take a look at the top 10 companies in a fund or ETF to see if they’re the type of companies you want to own.
There are a number of boutique firms and credit unions that are experienced in responsible investing. The big banks are also starting to catch on that Canadians want more responsible investment options. Talk to your investment advisor about moving your money into the types of investments that reflect your values. If the investment advisor doesn’t deliver, then shop around. The Responsible Investment Association offers certification for investment advisors and provides a “marketplace” directory of members.
Today’s the perfect time to modernize your portfolio so you are investing in the kind of world you want. After all, that’s a key part of retirement too.