Getting oil, tobacco, and guns out of your RRSP isn’t easy

If responsible investing sparks your interest, do not wait for your financial advisor to discuss the subject with you in detail. Because you must never hold mutual funds or stocks that respect the principles you hold dear.

Posted at 6:30am

Even if the media has published an unmanageable amount of texts on responsible investments and ESG criteria (environmental, social and governance), it is clear that information does not always get where it is supposed to.

A survey conducted by Léger for ÉducÉpargne, the results of which will be announced on Monday, shows that 65% of Quebecers who entrust their money to a financial professional have never heard of the subject. Worse, only 9% were entitled to explanations worthy of the name. While climate change is worrying and the values ​​of sound governance are at the heart of concern, it is quite worrying.

At ÉducÉpargne, a non-profit dedicated to financial education for Quebecers, general manager Louis-Alexandre Lacoste agrees that “a lot of effort needs to be made” on the part of financial institutions to better inform savers. “I get the impression that those who deal with responsible investing are not necessarily in direct contact with clients,” he says.

Avoiding the topic leads to a vicious circle. The less advisors talk about responsible investing, the less interest and curiosity their clients develop. At the limit, the lack of enthusiasm and promotional efforts can even inspire suspicion.

The silence is all the more unfortunate given that, according to ÉducÉpargne, 53% of Quebec workers say they are very (11%) or somewhat (42%) interested in responsible investment strategies and products. That’s a lot of people who keep an appetite when it comes to investing.

According to a report published by the Association for Responsible Investment (AIR) at the beginning of the year, experts justify their lack of ease with a lack of information. The reason “I don’t know much about it” was chosen by 70% of the consultants.

The vast majority are right to avoid the subject. Imagine if, of the 539 advisors who took part in the study in Canada, only 32 (6%) of ten statements about responsible investing were able to identify the three correct ones.

“Furthermore, some consultants appear to overestimate their knowledge, with nearly one-fifth of consultants who report having excellent or very good knowledge of RI failed to correctly identify one of the three true statements,” reports the ‘AIR. It’s not reassuring.

The consultants interviewed also expressed a certain level of concern about greenwashing (green washing), lack of standards, financial performance, quality of the products offered, lack of fund certification, etc. Admittedly, these are very valid questions.

Nevertheless, “50% of investors do not receive the information they want from their advisors,” calculates the AIR.

The ÉducÉpargne survey also reveals significant disparities in Quebecers’ interest in financial products and investment strategies that incorporate ESG criteria.

In the Montreal region, 63% of respondents would like to know more about the topic. In the Quebec region, the rate drops to 34%. Quite a gap.

“Respondents with a college degree, a native language other than French, and non-Canadian natives in particular have a significantly higher interest in responsible investing. These profiles of people are more likely to live in Montreal,” explains Roxanne Bazinet, Research Director at Léger.

As for the ESG acronym, it’s in dire need of viral promotion to raise awareness.

Less than one in four people (23%) can understand the meaning of the three letters, even when answer options are offered! And 40% of respondents didn’t even dare to choose an answer. These figures show that there is still a long way to go before environmental, social and governance criteria are a natural part of the discussions.

The question of returns from responsible investment products must also be clarified once and for all. Roughly half of Québecians believe responsible investing yields the same or better returns.

The other half believes the opposite or ignores the answer. Opinions are very divided. However, for years, studies have concluded that incorporating ESG factors has a neutral or positive impact on returns.

I agree, removing guns, oil, tobacco, or pornography from your RRSP is far from obvious. But there are efforts to make life easier for savers. Desjardins, for example, has summarized its policy and approach to creating its responsible investment funds in five short pages.

On the ÉducÉpargne site we will host a webinar on September 23 on this question which we promise will allow everyone to understand it and then ask the right questions. But you still have to find the right answers.

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