As the love child of a former accounting prof and present-day bookkeeper, I shouldn’t equate financial planning to a day under the dentist’s drill, but I do. And looking at our messy debt loads, most Canadians clearly feel the same.
Regardless of how much you hate number-crunching, don’t let your bank deposits and last-minute RRSP feed oil-spill disasters and dirty tar sands. But how can you guarantee a cushy future and still plant your banknotes so they flourish fairly and with Mother Nature’s blessing?
HOW GREEN IS YOUR BANK?
How are the Big Five faring on the planetary front these days? Since our last sustainable bank ranking, there’s been a lot of shifting in this neck-and-neck horse race, according to Heather Lang, research director at Jantzi-Sustainalytics. There are no saints here, but TD did emerge as the clear leader on all ESG fronts (environmental, social, corporate governance).
But Royal Bank, Canada’s biggest, is running a close second, thanks in large part to the activists at Rainforest Action Network who’ve been campaigning against RBC for its tar sands financing. Peace recently broke out when RBC raised a white flag.
Just weeks after Canada signed on to the UN Declaration on the Rights of Indigenous Peoples (hooray!), the bank quietly announced a groundbreaking new enviro and social risk policy that, for one, makes loans for logging, drilling, mining, pipelines – you name it – contingent on free and prior indigenous consent.
Does that mean RBC or any of the other Big Five are going to stop pouring billions into the fossil fuel biz? Not a chance. But RAN’s Brant Olson says, “At least it’s not a free-for-all any more.”
Meanwhile, BMO, which was at the back of the pack in our 09 ranking, has been playing catch-up, on the enviro side anyway. (It, like TD, went carbon-neutral in 2010, at least in terms of operations.)
CIBC has raised a good $3 billion in capital for renewable energy since 2002, which earns the it points.
But sorry, Scotiabankers: for all the culture money it’s tossing around, it’s at the bottom of the enviro pile.
If your bank’s backdoor finances are driving you batty and you’re daydreaming about ditching it, where should you be storing your funds? Well, let me warn you that my grandfather-in-law used to stash his savings in random nooks and books until his house burned down. Twice.
Credit unions like Alterna and DesJardins are a much more prudent option and always come out smelling like roses compared to the Big Five, since they only lend money to the community, not to chemical giants or oil titans. For a rough gauge of your bank account’s carbon footprint, check RAN’s climatefriendlybanking.com.
Wish I could still tell you to do business with our former first-place favourite national bank, the ethics-first Citizens Bank of Canada, but it’s shuttering all its active bank accounts and transferring them over to TD by the end of the month.
The good news is that you can still get a Citizens Bank Shared Interest Visa card. Every time you use it, 10 cents goes to support not-for-profit initiatives worldwide through the Shared Interest Fund ($1.4 million so far). FYI, interest charges on the card are as little as 11 per cent. Still paying 19 per cent? Fool.
PORTFOLIO FOR THE PLANET
Nothing like an earth-shattering disaster to crystallize the obvious planetary and monetary value of investing green. Case in point: the devastating BP oil spill smothered not just the Gulf but also the financial outlook of British Petroleum (aka BillionairePolluters or BadPeople, depending on the protest sign).
No wonder more people are eye-balling sustainable investments, from mutual fund buyers like you and me all the way to major institutional investors. By the fall of this year, the number of signatories to the UN-backed Principles For Responsible Investing had jumped 30 per cent over the year before, and now 800 institutional investors have agreed to encourage better ESG performance in firms they’re vested in.
In the last year alone in Canada, the assets of ethical RRSP funds have grown by 11 per cent to nearly $13 billion. No wonder major investment firms have been buying these funds out, as Kevin Ranney at Sustainalytics points out.
But don’t get the wrong idea. SRI funds (sustainable and responsible investments), as I say every year, aren’t free of oil and gas companies. Eugene Ellmen of the non-profit Social Investment Organization says the funds screen out egregious polluters like Esso and lean on “best affecters,” aka best-in-sector companies, in finance, retail, mining, oil and gas that are amenable to the suggestions of eco-minded investors.
Case in point, in 2010 NEI Ethical Funds pushed tar sands companies to fund biodiversity monitoring and disclose their carbon emissions. The company also divested from Vedanta when it wanted to open a bauxite mine in India.
Keep in mind, too, that the SRI funds you can get at most major banks are really SRI-lite. They do zero activism/shareholder resolution-type stuff, which isn’t great, considering the top holding in BMO’s Sustainable Opportunities Fund is Nestle. Eesh. And Scotiabank’s Climate Fund pro-nukes, for Gaia’s sake. RBC’s Jantzi fund is considered the only good Big Fiver and the only one that’s an SIO member.
You’ll get quality funds from credit unions and the independent advisers at socialinvestment.ca. But I know what you really want to know: how have SRI funds been performing?
Quite well, in fact. Here’s a rundown of some of the top players: RBC Jantzi Canadian Equity (annual return 14.7 per cent), Acuity Social Values Canadian Equity (14.5 per cent), Ethical Special Equity (13.2 per cent).
As Kevin Towers of SRI-oriented GP Wealth Management says, “If the numbers of people who got out of the market when it bottomed and stayed out knew what they’ve missed, they wouldn’t sleep at night.” The next five years should be good for the progressively positioned.
Yes, there’s still a big-time lack of RRSPs for those who want to take that extra step and invest in strictly green-to-the-core companies, but hopefully that will change in coming years. For locavores, community investing will be your best bet (see Happy Returns).
ecoholic@nowtoronto.com
