CIFSC releases framework to help advisors, investors identify responsible investment funds

As the mainstream appeal of responsible investing grows and the number of funds proliferates, investors are increasingly spoiled for choice. The Canadian Investment Funds Standards Committee (CIFSC) issued its new framework Tuesday to help investors and advisors suss out responsible investment funds and avoid confusion.

The CIFSC’s new framework — which was developed with input from asset managers, industry groups, research and data firms — aims to make it easier for investors to spot funds that are committed to various forms of ESG investing.

Funds that pledge to take responsible approaches to investing in their prospectuses’ investment objectives, or other disclosures, will be captured under the framework.

The framework covers six basic types of responsible investing: impact investing, ESG integration, ESG thematic investing, ESG exclusion, positive screening, and ESG engagement and stewardship. Funds may fall into more than one category.

“This framework is a huge step in helping Canadian investors find products that suit non-financial investment preferences. Moreover, having an identification framework recognized across the Canadian landscape will allow for easier comparability,” said Ian Tam, CIFSC chair, in a release.

The CIFSC will compile a list of funds that fall into one or more of the framework’s categories, and that list will be updated on a monthly basis as new funds are launched, existing funds are closed and others shift objectives.

The new framework doesn’t create any new standards for labelling funds, and it doesn’t attempt to assess funds’ performance against their objectives. Instead, its aim is to serve as “a pragmatic identification standard that assists Canadian investors and their advisors, and allows for investors and fund manufacturers to align on common language and definitions,” the framework noted.

“As responsible investing quickly evolves, it is vitally important that investors understand the concept spans far beyond just excluding certain sectors or industries in a portfolio. This framework, which defines six non-mutually exclusive approaches, will add clarity for investors who wish to invest in a responsible manner,” Tam added.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.