In this new series, we interview members of the RIA board of directors to share their stories and journeys into the field of responsible investing. It’s also an opportunity for RIA members to get to know the board. In June 2018, the RIA board elected Roger Beauchemin as the new vice chair of the RIA. In addition to his role with the RIA, Roger is also President & CEO of Addenda Capital.
RIA: How did you become interested responsible investing? Was there a catalyst that led to a shift in your perspective?
RB: While I’ve been involved with Responsible Investing (RI) for most of my career, much of that was with what I’d call an “RI 1.0” approach that involved a “do-no-harm” methodology, with client-driven screens. Addenda is part of The Co-operators, the financial services co-operative. So right from the start, that co-operative mindset gives us a slightly different perspective. We are encouraged to think longer-term, and more broadly. On top of that, our parent is an insurer, so we’ve come to understand that climate change is real and a material factor to consider because the frequency and severity of weather-related events is increasing globally.
At Addenda, we’ve moved the focus to “RI 2.0”: investing better by integrating environmental, social and governance (ESG) matters into all our decision-making processes. And with impact investing, we’re now aiming to “do good” by making investments that provide market-like financial returns and good outcomes, in Education and Community Development for example.
Over the past few years, we have witnessed an important shift: more and more clients are moving their assets to funds that integrate ESG matters and some are funding 100% impact portfolios. This is very encouraging and gives a whole new sense of purpose to investments, which is great for our clients, our employees and for society. And finally, as a parent, it’s very rewarding to think that we’re helping shape better outcomes for our children and future generations.
RIA: What’s the greatest challenge to the widespread adoption of RI in Canada?
RB: The reality is that it’s hard work. For us as asset managers, but also for issuers and, frankly, for clients too! As investors we can’t take any shortcuts. We often cannot get our hands on standardized and comparable information. For issuing companies it’s a lot more reporting and governance. And consumers might feel overwhelmed by all the information out there and they cannot tell who is really “walking the talk”. So, there is an important need for education, and I think that the RIA plays a key role there and I’m proud to support the organization’s efforts.
Thankfully, the overall trend is quite positive. Internationally there’s a growing understanding that this information is material for investors. For instance, a huge effort is being made to normalize corporate climate-related financial disclosure, with the Bloomberg Task Force and now the Eurozone leading the charge to adopt its recommendations. Here in Canada, the Expert Panel announced earlier this year by the Federal government will, we hope, help set standards, raise awareness and support better capital allocation so that we can transition our economy.
RIA: Where do you imagine ESG/RI will be in the next 5 to 10 years?
RB: In 5 to 10 years, my sense is that Sustainable Investing, as we call it, will be the “new normal”. We can already see signs of this happening. There are more and more signatories to the United Nations’ Principles for Responsible Investment (PRI). ESG is a growing component of the CFA program’s “Body of knowledge” and more university programs are including it in their curriculum.
Boards of directors and management teams are beginning to understand that ESG information is material to investors and there is no turning back. Climate-related financial disclosure, for example, is becoming a regulatory requirement in a growing number of jurisdictions. It has to.
Most tellingly, investor preferences are shifting, and funds are being allocated differently. There is growing acceptance that incorporating ESG research improves the understanding of the potential risks and opportunities related to an investment. And there is an openness to the idea that investments, properly made, can deliver robust financial returns and improved societal outcomes. There needn’t be a trade-off. Honestly, younger investors simply cannot imagine an approach that doesn’t integrate ESG research and they are motivated by societal outcomes, by purpose.
RIA: Do you have any advice for market participants who are just getting started with responsible investing?
RB: Go for it! I’m convinced that RI is going to make you a better investor. But don’t be fooled: it is not an easy road. A strong understanding of ESG issues complements fundamental financial research and provides a better grasp of risks and opportunities related to an investment. So, it can be hard work, but the approach is worth the investment in time and resources. Also, don’t be afraid to reach out to others and to get involved. We need to work with one another and collaborate with other like-minded industry players to effect meaningful change.
RIA: What’s the best concert or live performance you’ve ever attended?
RB: One event that really stands out was seeing my first Cirque du Soleil show. I think it was Alegría, in the mid-nineties. It was really a breathtaking performance, like nothing I had experienced before. The acts, the music, the choreography, the costumes… everything about it made every single spectator feel like he or she was part of something extraordinary. Now Cirque du Soleil is a global powerhouse, but it started in our own backyard, so to speak. To this day, whenever I think about it, I feel very inspired by its story of defying the status quo and raising the bar for standards of excellence.