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It’s easy for Canadians to feel overwhelmed by all of the challenges we face in the world we live in. The strength, sustainability and security of our communities can feel threatened by the effects of climate change, the prevalence of some of the most powerful and deadly firearms mankind has created, and the long journey still ahead of us to create a fair and just society where everyone feels welcome and included.

The silver lining to the challenges around us is that our collective awareness and desire to own the responsibility for affecting change has never been greater.

As Canadians, we understand much more clearly how the choices we make today will shape the world we live in tomorrow. These choices include important decisions we make on a daily basis with regards to our money.

Up until recently, impact with our dollars has been largely regarded only in a consumer context. But, the mindset we have about how we act as consumers can also be applied to how we invest. As Canadians, we really can impact the world we live in by choosing investments that reward companies who are the best stewards of our communities and our planet.

An investment approach that integrates environmental, social and governance (ESG) factors allows Canadians to have such an impact on the world. An ESG approach typically assesses all companies in an investable universe based on a broad range of factors. These factors include environmental (e.g. carbon emissions, carbon footprint, raw material sourcing, emissions and waste), social (e.g. labour management, health and safety record, privacy and data security), and governance (e.g. board independence, executive compensation, tax transparency and anti-competitive practices) considerations that are relevant to the management team of every company. A robust approach, at the very least, reduces the weighting of those companies that score the weakest through the assessment process, if not excluding them altogether.

Of course, there are some industries that Canadians simply do not want to support. The most tangible way to act on this is by choosing an investment approach that excludes such companies or industries from investment capital. Some of the industries that elicit the strongest preference for exclusion amongst Canadians are tobacco, firearms (manufacturing and distribution) and controversial weapons (manufacturers of cluster bombs, landmines and chemical and biological weapons). A robust responsible investing approach takes these exclusions into consideration and combines them with an ESG approach to the remaining investable universe.

Directing investments towards responsible stewards of our society also resonates with Canadians across generational lines. A report published in 2017 by the Responsible Investing Association of Canada highlighted that over 80% of all Canadians were interested in a responsible investing solution, with support the highest among millennials (85%), followed by those identified as GenX (36-54 years of age, at 80%). Support among baby boomers (55+ years of age, at 69%) was also strong considering this investment category is still in its nascent stages.

We’re seeing similar cross-generational support for the new Responsible Investing Portfolio we introduced in May of 2019 and interest in this new option has been nothing short of phenomenal. Learn more about how RBC InvestEase builds its Responsible Investing portfolios in our white paper.

Another point in favour of responsible investing: returns do not necessarily have to be sacrificed when considering these solutions. In its 2017 report titled, Total Societal Impact: A New Lens for Strategy, the Boston Consulting Group concluded ‘companies that outperform in industry-relevant environmental, social, and governance (ESG) areas boast higher valuation multiples and margins, all other factors being equal, than those with weaker performance in those areas.’

There’s no doubt an enormous number of challenges are facing our communities and our planet. But, we all have an opportunity to truly make the difference we want to see in the world through our choices. Responsible investing solutions are a means to also make this true for our investment choices.

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RBC InvestEase Inc. provides online discretionary investment management services. Other products and services may be offered by one or more separate corporate entities that are affiliated to RBC InvestEase Inc., including without limitation: Royal Bank of Canada, RBC Direct Investing Inc., RBC Dominion Securities Inc., RBC Global Asset Management Inc., Royal Trust Corporation of Canada and The Royal Trust Company. RBC InvestEase Inc. is a wholly-owned subsidiary of Royal Bank of Canada and uses the business name RBC InvestEase. In addition, the RBC iShares ETFs in which RBC InvestEase Inc. clients invest are managed by BlackRock Asset Management Canada Limited. RBC Global Asset Management Inc. and BlackRock Asset Management Canada Limited have entered into a strategic alliance to bring together their respective ETF products under the RBC iShares ETF brand, and to offer a unified distribution support and service model for RBC iShares ETFs.

The services provided by RBC InvestEase are only available in Canada.