Globe editors have posted this research report with permission of Canaccord Genuity. This should not be construed as an endorsement of the report’s recommendations. For more on The Globe’s disclaimers please read here. The following is excerpted from the report:
Socially Responsible Investing
In today’s capital markets environment, more and more investors are looking beyond a compelling growth profile or investment thesis. They are demanding that companies also have a demonstrated commitment to Environmental, Social and Governance (ESG) mandates. Our research indicates that more than two-thirds of asset managers now employ one form of ESG investing over a portion of their investment mandates. With Canadian ESG assets under management growing over 20 per cent in the last two years, we believe momentum continues to build within the ESG investment landscape.
How Is ESG Defined?
While there is no formal definition of what makes a particular investment suitable for an ESG portfolio, we looked at a number of elements that we believe can provide a framework for ESG investing. These include: promotion of environmental sustainability and reducing a company’s carbon footprint; promoting social justice and responding to concerns of local communities; having an independent Board of Directors and a diverse management team; and consistently allocating capital effectively to the benefit of shareholders and stakeholders.
We believe companies that are leaders in ESG can provide compelling investment opportunities. Within our Canadian research coverage universe, our top picks for ESG investors are as follows:
Consumer and Retail: We believe Maple Leaf has established itself as a leader in sustainable protein production.
Financials: With a corporate citizen platform in place called “The Ready Commitment”, TD Bank is our ESG pick in the financials space.
Industrials: Air Canada was named Eco-Airline of the Year in 2018. Meanwhile, Stantec is an industry leader in climate change mitigation and sustainability.
Pipelines: Keyera has demonstrated a track record of strong environmental awareness.
Real Estate: Through its commitment to renewable energy and engagement with local communities, Brookfield Asset Management is our top real estate ESG pick.
TMT: Telus is our top telecom ESG pick, while CGI Group offers clients green IT and sustainability solutions, investing in educating youth through STEM programs.
Energy: While many energy companies have increased their commitments to improving energy efficiency and reducing their emissions, we highlight Gen III Oil, Secure Energy, Tervita, Suncor, and Vermilion as leaders in the space.
Metals and Mining: B2Gold, Teck Resources, and TMAC Resources are our top mining and metals ESG picks, having demonstrated favourable community relations and commitments to reducing their environmental impacts.
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