Canadians not connecting corporate social responsibility to social investing

(June 14, 2005) Although the vast majority of Canadians believe the financial community should be paying more attention to social and environmental performance at the company level, researchers say that has not translated into greater interest in socially responsible investing.

GlobeScan regularly surveys the approximately 46% of Canadians who own shares, either directly or indirectly. Their research reveals that Canadian shareholders strongly believe that the investment and financial community should be taking corporate environmental and social performance into account when valuing companies.

At the same time, only 26% of Canadians say their investment decisions are ethically-based — and those numbers haven’t changed for five years, says Chris Coulter, director of corporate social responsibility at GlobeScan, who spoke Monday at the Social Investment Organization’s biennial conference in Toronto.

Further, there’s obvious confusion as to how to define social responsibility at the corporate level. When asked to name a socially responsible firm, most Canadians couldn’t even come up with a name. The most frequent answer was Wal-Mart, which, perhaps not surprisingly, was also cited as the most socially irresponsible company.

And Canadians don’t know where to go for information on corporate social responsibility. Only one-third of those surveyed said the best way to determine whether a company was socially responsible was to ask their financial advisor. Two-thirds had not broached the topic with their advisor.

GlobeScan also surveys those who define themselves as “ethical” or socially responsible investors. They tend to be older, male and wealthy, says Coulter.

More CSIC 2005 Coverage:

•Advisors form SRI marketing group •Canadians not connecting corporate social responsibility to social investing •Popularity eludes SRI funds •SRI: Learning from the U.K. experience •Talking to Clients: Socially responsible investing

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Still, there appear to be a number of potential social investors untapped by the financial advisor channel, according to research conducted by Environics Analytics.

“Ethically conscious investors don’t always wear their values on their sleeves,” says Environics Analytics CEO Jan Kestle, who also presented at the SIO conference on Monday.

Tapping into Environics’ Canadian Financial Monitor report, an annual survey of more than 25,000 Canadians, Kestle identified nine target groups of ethically-minded consumers with a propensity for owning mutual funds.

The groups included wealthy, middle-aged city dwellers; young, upscale ethnic families; and upscale small-town couples.

“This technique allows us to get at the mindset of people who are more concerned about ethics and find out where they live so fund companies and investment advisors can do a better job of targeting them,” says Kestle.

The Environics research went as far as creating a fictional investment firm, called Fair Winds, which offered the Global Village fund. Environics Analytics then created a marketing strategy for Fair Winds, including a media campaign.

Analysis indicated the fund’s best prospects tended to live in upscale neighbourhoods, including the Beach and Bloor West Village in Toronto, Mount Royal and Beaconsfield in Montreal, and West Vancouver and Kitsilano in Vancouver.

“They’re on the higher income side among Canadians, but not the highest by any means,” says Kestle.

And despite this city focus, Environics also found that SRI prospects also exist in smaller towns, such as Barrie, Oshawa, Guelph and Kitchener-Waterloo.

Environics also suggested that Fair Winds arm its team of investment advisors with maps, postal codes of qualified leads, telemarketing scripts to reach prospects and financial support to hold information seminars promoting the new fund.

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com

(06/14/05)

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