An Important Note

We write our newsletters several weeks in advance, as we must get a pre-screening required by our regulators on anything we circulate.  I wrote this piece before the abhorrent and tragic events of the last few weeks.  While our article focuses mainly on the Environmental side of the ESG movement in the context of Responsible Investing,  the other two aspects – Social Equality and Governance both speak to the heart of the ongoing protests, and are more relevant than ever.  If you would like to learn more on these other areas of Socially Responsible Investing, drop me a line at ryan@quietlegacy.com , and I’d be happy to share more resources with you.

 

Our youngest  (in the red shirt above), wasn’t always happy to join us on our nature hikes, until a recent experience gave him new perspective.  That got me thinking about how we can better incorporate our value system into our financial planning….

 

One of the great unexpected and joyous moments of the last 90 or so days of isolation has been watching my youngest son Haydn develop into the exact same avid reader that I was at his age. As isolation dragged on, we became increasingly concerned that he would end up tuning himself out watching videos on YouTube, and never heading outdoors. My wife Bridget brilliantly decided to read him the first chapter of Harry Potter – and a monster reader was born!

Over the last three weeks, Haydn has read all seven Harry Potter books, a five-book series by Ric Riordan, and has now started onto the famed Narnia Chronicles by C.S. Lewis. We have to take his books away because otherwise he’d read from dawn to midnight every day.

Still, as happy as we are to have him reading, it is not terribly healthy to do so every waking hour. I finally managed to get him to put his book down by playing the entire Lord of the Rings movie trilogy, suspecting if he had enjoyed the other fantasy series, that he would love this one too. We sat down over the weekend to watch it together. There is something remarkable about taking something you love, and sharing with your child for the first time.

Haydn particularly enjoyed the scenes with Treebeard, the Ent.  If you’ve never seen nor read Lord of the Rings, Ents are living trees, who steward forests and encourage the spread of nature. They also occasionally stomp on the nasty Orcs who try to cut down trees – that was a particularly enjoyable scene for our young son..

 

From Movies to Nature Walks . . .

We managed to channel Haydn’s love of the Ents into encouraging him to get out and join us in birdwatching. As it turns out, our little guy shares my love of photography and also has a keen interest in observing different birds as they have migrated through our backyard and local (still open!) natural areas. With his keen wit, he’s let us know that bird photography is all about the “3 Ds: Determination, Disappointment and Despair”. Despite the latter two Ds, we’re seeing a rekindled love of nature in our son. For the last few days, he’s been outdoors almost all the time, adventuring and reading in the forest behind our house.

We hope that Haydn will grow up sharing our love for the environment and nature, as it is a huge aspect of our lives. I’m encouraged that, even in the midst of our newly isolated lives, we are able to encourage this spark in his life. I hope that next time we are able to venture out into the backcountry to camp that he’ll be chomping at the bit to join us.

For us, as I know it is for many of you, it is extremely important to pass along our cherished values to our kids.

 

Matching your personal values to your financial goals

In our practice, we often talk about the importance of incorporating your personal value system into your financial planning. For Bridget and I a huge part of that revolves around our love of nature. A large majority of my own investments are in Socially Responsible Investments (SRI) that have a mandate to look not only at returns in financial terms, but also at the environmental, social and governance factors of their underlying investments. In the majority of my holdings, for example, I have selected mandates that emphasize environment as one of the primary considerations.

I’m not the only one however – in our practice, one of the greatest trends we have seen is an increasing interest in this area, particularly from our clients who have strong ties to environmental charities.

I was surprised and humbled to have found out last month  that I was named a finalist for the 2020 Wealth Professional Award for Advisor of the Year for Responsible Investments. When the announcement was made, I was very taken aback at receiving a large number of congratulatory emails from colleagues across the country in the industry. I hadn’t realized what a big deal these awards were within our industry. We’re called Quiet Legacy because we like to stay off the radar – I sure wasn’t ready for that kind of attention. However, it was lovely to find out one of our industry partners thought the way we worked with our clients on values-alignment was worthy of a nomination and that the judging panel saw fit to put us on the short list. We’ll find out in September (depending on how the lockdown goes) if we have won.

 

The future of responsible investing

I’m excited to see the progression of responsible investing in Canada.  Responsible investing practices take more than investment returns into account when selecting investment choice. More and more firms across Canada are signing onto the United Nations Sustainable Development Goals, which is a great first step. This framework is designed to provide a minimum standard which ensures that signatories are taking into account 17 different sustainability issues when choosing investments.

Even more exciting are those investment companies that are using their voting privileges to make an impact on particular sectors or companies to improve standards on everything from environmental issues to gender equity on boards and fair treatment of workers. Many will argue that the higher level of involvement and inspection of companies should lead to a better outcome both financially and for society. At the very least,  a recent summary of over 100 academic papers concluded that the extra work and research being done in this area by investment firms does not impact returns and, in some cases, may have helped lead to better results .

A decade or two ago, as a retail investor, it would have been very difficult to have a social impact through investment.  Today, however, even someone with a relatively small portfolio can find ways to align their personal values with their retirement planning. It is a very exciting time as more and more companies come around to this way of thinking. Today, anyone, not just large institutional investors, has more ability than ever to ensure that their investment portfolio can take an active, positive approach on many societal and environmental issues.

 

Make Treebeard (and Haydn) Happy

If you haven’t looked at your own portfolio lately, it might be time to start asking yourself if your own personal values are incorporated in your investment decisions. In our house, we’re hoping that our love for the environment will be  one of many values that our kids will inherit from us  – in more ways than one.  We feel pretty good knowing our values and our investments are well aligned.

I think Treebeard would be happy too.

Ryan

The information provided is accurate to the best of our knowledge as of the date of publication, but rules and interpretations may change.  This information is general in nature, and is intended for informational purposes only.  For specific situations you should consult the appropriate legal, accounting or tax advisor.