Cheryl Crowe: Linking investments with values

Most people are interested in socially responsible investing, says expert Cheryl Crowe, which means advisors have much to gain by being knowledgeable.

After 18 years of building expertise in socially responsible investing (SRI), Crowe is still puzzled by attitudes to SRI. A speaker at this year’s Distinguished Advisor Conference, Crowe finds advisors slow, even reluctant, to recommend SRI products, yet the evidence is overwhelming that clients are interested.

“When advisors raise the topic with their clients,” says Crowe, referring to a national survey done by Ipsos Reid on behalf of Standard Life, “87% of clients express interest in the topic.”

To add weight to her argument, Crowe quotes other findings from the survey, which was done a year ago: “Satisfaction with SRI vehicles amongst investors holding them in their portfolios stands at 92% (15% very satisfied, 76% somewhat satisfied); equally, a majority of Canadian investors holding SRIs express satisfaction with their performance relative to non-SRI vehicles in their portfolios (16% more satisfied, 70% equally satisfied).”

SRI integrates environmental, social and governance factors — ESG — in the selection and management of investments. So, in addition to analyzing a company’s financial statements, a SRI manager will run screens that measure the company’s commitment to ESG. In Canada, there are almost 70 SRI mutual funds, segregated funds offered by Standard Life and one exchange-traded fund (ETF).

Often, investors seek out SRI products because they share those ESG values. But, Crowe points out, those extra levels of analysis add a “due diligence” perspective that makes SRI products even more attractive. “When managers pay attention to ESG issues as well as financial issues,” she says, “there are fewer risks and liabilities.”

Crowe’s social consciousness was awakened on a trip to Africa when still a student. She visited an orphanage for children left parentless by AIDS. That took her down a path that included AIDS volunteer work and a career educating people about SRI. She now works with Assiniboine Credit Union in Winnipeg training advisors on the value of including SRI in their practices.

So, why haven’t advisors embraced SRI, given the clear indications of clients’ interest? Crowe says it is a combination of three reasons:

• advisors aren’t educated;
• advisors don’t like SRI;
• there is a belief that an investor has to sacrifice returns.

“None of those reasons stand up to scrutiny,” say Crowe, who will explain why when she takes the stage at the Distinguished Advisor Conference on Tuesday, Nov. 13. The conference runs from Nov. 11-14 in Naples, Fla., and the theme is “Navigation! Charting a New Course.” Crowe will chart a course for SRI investing in this new world.