Investing with a greater purpose

Our values are at the core of every choice we make. Making decisions with greater purpose helps the world become a better place for everyone, which is why so many people are choosing to align their financial goals with their personal values. 

As a leader in responsible investing, RBC Wealth Management is committed to a better future. Like many of our clients, we’re focused on community involvement, diversity and inclusion and environmental responsibility as a way to support both current and future generations. To help you create positive social and environmental impact, we offer a broad range of solutions designed to align your values with your financial goals.

 
Looking for additional insights about responsible investing?

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A growing trend

Responsible investing assets have skyrocketed to $17.1 trillion as of 2020, a 42 percent increase in two years, according to the US SIF Foundation.1 This is projected to grow in the coming years. 

Responsible investing is an umbrella term encompassing the approaches used to deliberately incorporate environmental, social and governance (ESG) considerations to an investment portfolio. This encompasses a number of investing approaches, including ESG integration, ESG screening & exclusion, Thematic ESG investing, and Impact investing. 

ESG integration - ESG screening & exclusion - Thematic ESG investing - Impact investing

 

ESG Integration

Systematically incorporating material ESG factors into investment decision making to identify potential risk and opportunities and improve long-term, risk-adjusted returns. 

ESG integration happens at the same time as traditional financial analysis. ESG integration is about understanding the material factors that are important to a company as it helps create a clearer picture in order to better understand the potential impacts to long term value. A few examples of ESG factors include:

Hand with leaf Environmental concerns - Including climate change, natural resources conservation, pollution and waste management, and water scarcity.
Comments icon Social issues - such as corporate philanthropy, community and government relations, workplace health and safety, human rights and diversity.
Capitol building icon Governance topics - Including accounting practices, board accountability and structure, disclosure practices, executive compensation, corporate ethics, regulatory compliance and transparency.

 

ESG Screening & Exclusion

This is applying positive or negative screens to include or exclude assets from the investment universe. This is often referred to as investing in line with values or values alignment. 

ESG exclusions and screening can include positive/negative screening, socially responsible investing (SRI), inclusions/exclusions, norms-based investing, best-in-class, and seeking leaders’ strategies. 
 

Negative screening

Negative screening: Tobacco, Alcohol and Weapons
 

Positive screening

Positive Screening: Social housing, Renewable energy and human rights

 

Thematic ESG Investing

Identifies a social or environmental impact or theme that the portfolio wants to measure and report progress in alongside risk and return. With thematic investing, there is an intentional allocation of capital to a specific investment theme (e.g. climate change, gender equity, sustainability-related categories). 

There is significant investment into technologies that alleviate the threats to sustainability. At RBC Wealth Management, we call the technologies that help tackle the threats to sustainability “SusTech”—Sustainability through Technology. 

These include: 

a chart featuring susTech Techologies and what threats to sustainability exists in each Green Tech: Climate Change, Waste management; AgriTech/Food Tech: Climate change, fresh water scarcity, waste management and lack of social progress; FinTech: Lack of coial progress; Health Tech: lack of social progress; Smart cities: Climate change, freshwater scarcity, waste management and lack of social progress. Source: RBC Wealth Management

Impact Investing

Impact investments are made to Support social or environmental issues with the expectation of achieving measurable results alongside traditional financial risk and return. An impact investor wants to earn a return on their investment, but they may also be willing to take a capital loss as long as some tangible result for the investment can be seen. In that way, it is essential to be able to measure the impact of this investment. An example includes investment in low-income housing loan assistance, where a tangible impact is measurable (i.e., number of households able to afford housing).

Impact - a third dimension of performance

Comparison between traditional investing and impact investing illustration chart show that impact investing takes a deeper look at the impact versus only considering financial return and risk.

 

"We recognize our clients' growing interest in aligning their investment with their deeply held personal values. That's why we are proud to help clients include any number of responsible investing options in their wealth planning decisions."
 

- Michael Armstrong, CEO of RBC Wealth Management - US

A workbook for the values-driven investor cover art

A workbook for the values-driven investor

We've created a resource to align your portfolio with your personal values and what you feel is best for your community, neighbors and our planet.

Download the workbook

Next Steps

Today, more consumers are making a difference with their dollars. Sustainable products and solutions are more important than ever, and moving toward sustainable operations is now the standard across many industries.

If you are interested in learning more about investing with greater purpose, please contact us today and ask how you can integrate responsible investing into your portfolio.

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