Earth Day 2022: It’s time to invest in our planet

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Every year on April 22, the global Earth Day campaign brings attention to environmental issues and issues a call to action. This year’s theme is especially relevant to us: Invest In Our Planet.

This year’s Earth Day focuses on combatting the existential threat of climate change in a tangible way: by shifting away from a fossil fuel economy and toward a green, carbon-neutral one. EarthDay.org, the global organizer of Earth Day, calls for individuals, governments, businesses and institutions to “recognize our collective responsibility and to help accelerate the transition to an equitable, prosperous green economy for all.” So, how does that translate to your investments? Let’s break it down.

What is sustainable investing?

Sustainable investing takes into consideration a company’s practices for environmental, social and corporate governance (ESG) and how they could affect long-term performance and investment returns.

Many Canadian investors are including ESG issues in their investment analysis and decision-making. Responding to an Ipsos poll conducted for SunLife Financial in August 2021, two-thirds of Canadians said that ESG factors play a “somewhat important” or “very important” role in deciding which investments they’ll buy. A survey conducted by the Responsible Investment Association in September 2021 found that 73% of Canadian investors were interested in responsible investing, and 77% said they wanted their financial services provider to inform them about responsible investments that are aligned with their values.

In addition to sustainable investing, investors also use these terms: responsible investing (RI), socially responsible investing (SRI), ethical investing, green investing and impact investing.

What ESG factors do investors consider?

Below are many of the non-financial issues that investors and other company stakeholders look at to assess ESG performance:

• Environmental: Carbon emissions, air and water pollution, energy efficiency, water usage, waste management, deforestation, commitment to biodiversity, sustainability of supply chains  
• Social: Gender and diversity, labour standards, human rights, customer service, community relations, data protection and privacy, employee engagement, occupational health and safety
• Governance: Board management practices; board diversity; regulatory compliance; executive compensation; succession planning; diversity, equity and inclusion; bribery and corruption; lobbying; political contributions

Learn more about responsible investing

If you’re curious about aligning your investments with your values, don’t miss these helpful reads:

• Why sustainable investing is important An investment advisor explains key details about sustainable investing, its different approaches (impact investing, purpose-driven investing, divestment, etc.) and how to get started.

• The cost of socially responsible investing What options are available to Canadians who want to start investing responsibly? MoneySense columnist Jason Heath explores products, performance and fees.

• Two simple and cheap portfolios for sustainability-minded investors Writer Tim Nash shares two model portfolios—using Vanguard and iShares exchange-traded funds (ETFs)—that incorporate both financial strategy and social/environmental good.

• Halal investing in Canada Canadian Muslims have unique investment needs. Jason Heath shares options that are compatible with Shariah law, including Halal mutual funds.

• Invest your conscience Socially responsible investing has come a long way in Canada. This 2017 article looks at Canadian attitudes toward SRI and how to research potential investments.

• Is ethical investing good for your portfolio? Portfolio manager John de Goey shares his thoughts on ethical investing and investment returns.
• 5 ways to invest sustainably for Canadian investors If you want to make a positive impact with your investing choices, here’s how to consider ESG factors as part of your approach. (Paid content from Fidelity.)

More ways to celebrate Earth Day

On April 22, you can join other concerned citizens to support the planet, whether you pitch in at a local cleanup, take environmental actions at home or attend a virtual Earth Day event.

The first Earth Day was observed in 1970 in the United States, marking the beginning of the modern environmental movement. In 1990, Earth Day went global, mobilizing millions of people to take action for the planet; that year also marked the founding of Earth Day Canada.

Now, more than 50 years after the inaugural campaign, Earth Day engages one billion people each year in environmental efforts large and small. As the devastating effects of climate change become increasingly clear around the world and right here at home, Earth Day’s message has never been more urgent.

To find Earth Day events near you, visit the global campaign’s official website or Earth Day Canada.