Ethical 30

We’ve been working on this article for 30 years

Robert Walker
Vice President, Ethical Funds and Environmental, Social and Governance (ESG) Services


The Ethical Funds were established in 1986 on the premise that an investment incorporating environmental, social and governance (ESG) factors would be superior to one narrowly focused on share price only. Yet such investments struggled to gain relevance with mainstream investors.

Fast forward thirty years and more than 1,380 asset owners, investment managers and research firms with almost $78 trillion in assets under management globally are claiming adoption of responsible investment practices 1.  In Canada, responsible investing assets have increased from $600 billion to over $1 trillion, representing a 68 per cent increase between 2011 and 2013.2 As the ethical investing philosophy migrates more and more into mainstream investing, it appears that Socially Responsible Investing (SRI) is poised for even greater growth and success. How did we get here?

It wasn’t exactly easy. Thirty years ago, Ethical Funds and a few other brave souls undertook the task of developing the market and the infrastructure necessary for screening, incorporating ESG factors into decision-making and, crucially, corporate engagement. That infrastructure took the form of what is now a global network of research firms selling profiles of the ESG performance of public companies, industry sector overviews, issue briefs and proxy information to help socially responsible investors analyze and vote on boards of directors, executive pay and shareholder proposals.  This infrastructure would not have existed without the early demand from firms like Ethical Funds.

Along this 30 year journey, Ethical Funds has accepted its SRI leadership status as a responsibility to move first and advocate for this growing industry.  We were the first mutual fund family in Canada to disclose its Proxy Voting Guidelines and in 2002 took the world stage addressing the United Nations on socially responsible investing.

We could have not done this alone and have fostered partnerships along the way with organizations, such as the Responsible Investment Association, Shareholder Association for Research and Education (SHARE), the Boreal Leadership Council and Interfaith Center on Corporate Responsibility.  Today, we can now see similar industry associations in every major market in the world.

Perhaps, our most impactful achievement over these 30 years has been the advancement of corporate engagement as a core responsible investment strategy. We were the first in Canada to build a large and comprehensive program designed to engage every company in our portfolio, with a special focus on our 50 most important holdings. It’s where we continue to stand apart in this industry as we firmly believe that engagement is the most effective way for investors to influence public companies. Not only has it been an effective investment tool, but it has helped bring the important issues of society to the forefront.  Issues such as excessive executive compensation, energy transition and corporate board diversity have become part of the public forum, where even the casual observer now knows about them.

Next year marks the 30th anniversary for Ethical Funds. What’s next?

Looking ahead it’s impossible to avoid the challenges of climate change and the need for a transition to a new, low carbon energy system. So far, Ethical Funds has been at the forefront of this effort, divesting from the climate change deniers and the least progressive companies and industries, engaging with the supply and demand side of the energy equation and working to advance a price on carbon with provincial and federal government as well as international agencies. This work will continue, down the road, with a heavier emphasis on investing in companies working directly on clean energy solutions as well as technologies designed to reduce and eliminate adverse environmental impacts in water, waste and food industries. This is the future of responsible investment.  Won’t you join us?

1 According to UN Principles for Responsible Investment….

2 According to the Responsible Investment Association




Leave a Reply

Your email address will not be published. Required fields are marked *

1 Comment

  • Claudio Marsala on December 3, 2015 said:

    Looking foward to another 30