Socially Responsible Investing (SRI)
Investing responsibly doesn’t have to come at the expense of performance
The IA Clarington Inhance SRI Funds, managed by SRI pioneer Vancity Investment Management Ltd. (VCIM), can help you meet your wealth-building goals in a socially responsible and environmentally sustainable way.
VCIM uses a three-pronged approach to responsible investing:
To identify potential investments, the VCIM team assesses companies based on seven ESG criteria viewed through the eyes of four key stakeholders:
3 Employee relations
5 Community relations
6 Environmental performance
7 Human rights
The ESG screening process has two key dimensions:
- Negative screening
- Positive screening
Negative screening means eliminating from consideration all companies that fail to meet VCIM’s stringent ESG criteria. Examples include companies whose primary line of business involves the following:
Positive screening means actively seeking out companies with a strong commitment to high ESG standards. This involves screening on the basis of the seven ESG criteria outlined above as well as the United Nations’ Sustainable Development Goals (UN SDGs).
Bringing all these elements together, VCIM’s ESG screening process looks like this:
Fundamental financial analysis
To ensure the funds offer investors strong potential for long-term wealth creation, the VCIM team employs a fundamental, bottom-up approach to assessing prospective holdings.
The screening process incorporates an in-depth checklist covering more than 100 criteria. To be considered for inclusion in the funds, a company must have a strong competitive advantage and be led by a management team with an exceptional track record. The company should also exhibit strength across a wide range of metrics, including:
- Relative valuation multiples (e.g., price-to-earnings ratio)
- Profitability ratios (e.g., return on equity, return on invested capital)
- Earnings growth
- Free cash flow
Only securities that satisfy the stringent requirements of both the ESG and fundamental analysis teams are eligible for inclusion in the IA Clarington Inhance SRI Funds. The end result of this rigorous, multi-stage process is a portfolio of attractively valued, responsible investment opportunities with excellent potential for strong risk-adjusted outperformance.
VCIM continuously monitors portfolio holdings to ensure that companies maintain their commitment to high ESG standards. When a company appears to deviate from these standards, the VCIM team actively engages with management, either one-on-one or in concert with other shareholders or stakeholders. VCIM also engages with industry leaders to encourage them to elevate and expand their commitment to ESG. The goal is to create a positive ripple effect across the broader industry.
Detailed examples of VCIM’s engagement initiatives can be found in the Dialogue to Action report, available in the Support Materials section on the right-hand side of this page.
Options for any investor need
The IA Clarington Inhance SRI suite consists of four standalone mutual funds and five all-in-one portfolio solutions:
IA Clarington Inhance Balanced SRI Portfolio was awarded the 2021 FundGrade A+® Award in the Canadian Neutral Balanced category for the 2021 calendar year ending December 31, 2021. Performance for Series A of the Fund for the period ended December 31, 2021, is as follows: 6.1% (1 year), 11.5% (3 years), 7.3% (5 years), 6.7% (10 years). IA Clarington Inhance Growth SRI Portfolio was awarded the 2021 FundGrade A+® Award in the Canadian Equity Balanced category and the Responsible Investing Balanced category for the 2021 calendar year ending December 31, 2021. Performance for Series A of the Fund for the period ended December 31, 2021, is as follows: 7.5% (1 year), 13.6% (3 years), 8.8% (5 years), 8.0% (10 years). The FundGrade A+® Award is given annually to investment funds and their managers who have shown consistent, outstanding, risk-adjusted performance through the year. As such, the FundGrade A+® Award provides investors, advisors, and fund managers with a single, reliable, easy-to-understand fund-performance rating based on up to 10 years of history, notes financial data firm FundData which grants the FundGrade A+ Award.
FundGrade A+® is used with permission from Fundata Canada Inc., all rights reserved. The annual FundGrade A+® Awards are presented by Fundata Canada Inc. to recognize the “best of the best” among Canadian investment funds. The FundGrade A+® calculation is supplemental to the monthly FundGrade ratings and is calculated at the end of each calendar year. The FundGrade rating system evaluates funds based on their risk-adjusted performance, measured by Sharpe Ratio, Sortino Ratio, and Information Ratio. The score for each ratio is calculated individually, covering all time periods from 2 to 10 years. The scores are then weighted equally in calculating a monthly FundGrade. The top 10% of funds earn an A Grade; the next 20% of funds earn a B Grade; the next 40% of funds earn a C Grade; the next 20% of funds receive a D Grade; and the lowest 10% of funds receive an E Grade. To be eligible, a fund must have received a FundGrade rating every month in the previous year. The FundGrade A+® uses a GPA-style calculation, where each monthly FundGrade from “A” to “E” receives a score from 4 to 0, respectively. A fund’s average score for the year determines its GPA. Any fund with a GPA of 3.5 or greater is awarded a FundGrade A+® Award. For more information, see www.FundGradeAwards.com. Although Fundata makes every effort to ensure the accuracy and reliability of the data contained herein, the accuracy is not guaranteed by Fundata.
|Fund name||CIFSC category||Fund count||FundGrade start date||FundGrade calc date|
|IA Clarington Inhance Balanced SRI Portfolio||Canadian Neutral Balanced||290||1/31/2012||12/31/2021|
|IA Clarington Inhance Growth SRI Portfolio||Canadian Equity Balanced||244||1/31/2012||12/31/2021|
|RI Balanced Category|
|CIFSC category||Fund count||FundGrade start date||FundGrade calc date|
|IA Clarington Inhance Growth SRI Portfolio||Canadian Equity Balanced||112||2/1/2012||12/31/2021|