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The aim is to combat the existential threat of climate change by shifting away from a fossil fuel economy and toward a green, carbon-neutral one. EarthDay.org, the global organizer of Earth Day, calls for individuals, governments, businesses and institutions to “collectively push away from the dirty fossil fuel economy and old technologies of centuries past—and redirect attention to creating a 21st century economy that restores the health of our planet, protects our species, and provides opportunities for all.” So, what does that mean for your investments?
What is sustainable investing?
Sustainable investing takes into consideration a company’s practices and policies for environmental, social and corporate governance (ESG) and how they could affect long-term performance and investment returns.
In March, a survey conducted by Pollara Strategic Insights on behalf of Mackenzie Investments found that 81% of Canadians think “it is important to use their investment dollars to influence positive societal change.” In addition, 92% of respondents who hold sustainable investments said they plan to increase their sustainable holdings in the next few years, up from 71% last year. Investors are, however, also casting a critical eye on companies’ sustainability claims, with many respondents concerned about greenwashing, poor access to information and not being able to hold businesses accountable for their social and environmental impact.
Sustainable investing is also referred to as responsible investing (RI), socially responsible investing (SRI), ethical investing, green investing and impact investing.
What ESG factors do investors consider?
Below are many of the non-financial issues that investors and other company stakeholders look at to assess ESG performance:
- Environmental: Carbon emissions, air and water pollution, energy efficiency, water usage, waste management, deforestation, commitment to biodiversity, sustainability of supply chains
- Social: Gender and diversity, labour standards, human rights, customer service, community relations, data protection and privacy, employee engagement, occupational health and safety
- Governance: Board management practices; board diversity; regulatory compliance; executive compensation; succession planning; diversity, equity and inclusion; bribery and corruption; lobbying; political contributions
Learn more about responsible investing
If you’re curious about aligning your investments with your values, don’t miss these helpful reads:
More ways to celebrate Earth Day
On April 22, you can join other concerned citizens to support the planet, whether you pitch in at a local cleanup, take environmental actions at home or attend a virtual Earth Day event.
The first Earth Day was observed in 1970 in the United States, marking the beginning of the modern environmental movement. In 1990, Earth Day went global, mobilizing millions of people to take action for the planet; that year also marked the founding of Earth Day Canada.
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