Renewal investee Michael Jantzi discusses socially responsible investing in a July article in The Globe and Mail.

Investing the socially responsible way 

By RICHARD BLACKWELL, The Globe and Mail - July 24, 2011

Michael Jantzi is one of the pioneers of socially responsible investing, the concept that taking into account environmental, social and governance issues can give investors an advantage, and not just soothe their consciences.

His clients are mostly forward-thinking institutional investors, who use his firm’s detailed research to help make their decisions.

Mr. Jantzi’s firm became a global player in the socially responsible investing game when it merged with Europe-based Sustainalytics in 2009.

Why should investors buy socially responsible investments?

A company is like an iceberg. An investment manager should know as much about the risk of investing in that iceberg as they possibly can. If they are using only the tools that fit into the financial toolbox, they are only getting what is above the surface. In today’s world, if you don’t understand environmental issues, the social issues and the governance issues that confront a company on a day-to-day basis, then you are investing without full knowledge, and the risk-return equation can be completely misaligned.

I’ve never said that if you integrate environmental and social issues into an investment process you’ll make more money. But I’m perfectly comfortable saying that there is no reason to go into that exercise with the thought that you are going to lose money.

How have investor attitudes toward social investing changed in the past decade?

Now there is a much better understanding in the mainstream investment community that environmental and social issues can be material, especially over a longer investment time frame. Some of the largest, most sophisticated investors in the world are coming into the responsible investment camp, not because they think it is the right thing to do, [but] because they believe it gives them better insights and mitigates the risks.

Where is Canada on this issue?

Well, not on the leading edge, unfortunately. If you talk to investors in the U.K. or on the continent, or in Australia, you tend to have conversations that are a little bit farther ahead of the game. [But the] Canada Pension Plan Investment Board, British Columbia Investment Management Corp., and the Caisse de dépôt [et placement du Québec] are leaders here, and globally.

Are there some less tangible benefits to social investing?

It provides you the opportunity, to a partial extent, to align your own personal values and goals with your investment decisions. That is an empowering and powerful exercise in and of itself. [That’s important for] religious organizations and environmental groups – any organization that has a mission at its core. It has long perplexed me that [some] organizations try to do everything with care and consideration and in line with their mission and values, except when it comes to their investing.

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What are the biggest environmental, social and governance concerns in Canada?

Canada has a pretty good balance between the social and the environmental. From the outside, I hear sometimes that Canada is focused on environmental issues. It is true, but by the same token Canada has taken the lead globally on some really critical social issues [such as] land mines and cluster munitions. Diversity issues, especially as they pertain to indigenous or native rights, have long been something that we’ve focused on here, and they are now gaining some prominence in other parts of the world.

About Michael Jantzi
Chief executive officer, Sustainalytics

Career highlights

- Founded Jantzi Research in 1992

- In 2000, launched the Jantzi Social Index, a 60-stock index of companies that meet environmental, social and governance criteria

- In 2009 merged his company with Netherlands-based Sustainalytics

Read the full article online