ESG Provides Better Outcomes

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    Looking at and paying attention to ESG (environment, social, and governance) factors will provide investors with better outcomes and risk mitigation, says Brian Minns, sustainable investing, Addenda Capital. In the session ‘Approaches to Incorporating ESG Factors into Investment Decision Making’ at the RiA Conference Toronto 2016, he said ESG integration is one aspect of sustainable investing which is a core belief at Addenda. It is “why we are in the business,’ he said, and that is to allocate capital to different investment opportunities and making investment decisions to help create a productive society. Client attitudes to ESG vary, said Andrew Sweeney, senior institutional portfolio manager, at PH&N Investment Management. For some, it is a “box ticking” exercise whereas for others it is very much front of mind. And that is the case at the Ontario Teachers’ Pension Plan, said Deborah Ng, its director of strategy and risk and head of sustainable investing. Teachers are a “thoughtful group” and interested in labour issues and climate change. Teachers’ does a lot of dialogue with its members to explain what it does to manage risks and how, for example, it approaches climate change. Vincent Felteau, a portfolio manager at Presima Inc., said ESG is very important when it comes to investing in real estate. The building sector produces 40 per cent of greenhouse gases, uses one third of resources, and produces waste. As a result, it faces challenges going forward and more risk as regulations evolve rapidly. However, green buildings have higher occupancy rates and generate higher rents which means investors in these project can earn higher returns.