Ethical investing offers opportunities for Canadian advisers

Mon Dec 17, 2012 4:07pm EST
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* Socially responsible investing remains a niche

* Clients seen as loyal, committed to long-term

* Product offerings still slim, focus on activism

TORONTO, Dec 17 (Reuters) - While Canadian financial advisers are struggling to lure investors, in part because of lackluster returns, those promoting "socially responsible investing" say they've got an edge on the competition as shareholder activism heats up.

The din of the Occupy Wall Street movement has faded, but the controversy over pipelines, oil sands and climate change remain hot topics in Canada, where C$530 billion ($536 billion) - or nearly a fifth - of investable assets have a "socially responsible" earmark.

"It is definitely a good time to be in socially responsible investing," said Sterling Rempel, a financial planner at Future Values in Calgary, a city where the energy industry and environmentalists go head to head on a daily basis.

While ethical investment once meant cutting tobacco companies and arms producers from portfolios, investors are now turning to self-described socially responsible investing (SRI) funds to influence companies on anything from executive pay to climate change and labor issues.

Such funds often buy shares in industries as diverse as banking and oil and then lobby to force change from within as activist shareholders. The SRI industry takes credit for forcing so-called "say on pay" votes on executive compensation at 100 companies in Canada, power that was unheard of five years ago.

"A key part of our strategy ... is owning imperfect companies and then sitting down with the management of those companies, and engaging and encouraging them to be leaders within their industry," said Gary Hawton, president of the Social Investment Organization in Canada, a membership-based group that includes banks, fund companies, financial advisors and others interested in socially responsible investment.   Continued...