Many Vancouverites want to invest their retirement savings in environmentally sustainable enterprises.
But according to Dermot Foley—who spent 17 years as a sustainable investment–portfolio manager and shareholder-advocacy analyst—it’s not always easy for the average person to figure out how to do this.
“It’s not a putdown of people, because we’re all extremely busy,” Foley told the Straight by phone. “We don’t want to spend a lot of time thinking about where our retirement money is being invested, mainly because it’s one more thing in the great juggling act that we all do day to day.”
Moreover, the former Vancity employee said that there’s a broad spectrum of activities that are being described as “sustainable”, depending on the lens that is being applied.
No industry organization or government in Canada has set a standard for a “sustainable investment”.
“Just as an example,” Foley said, “I can imagine the government talking about sustainable oil, you know, or uranium.”
According to him, even tobacco companies or weapons manufacturers could, theoretically, obtain a high sustainability rating, depending on their business practices. Then they could be included in a mutual fund that scores well on a chart prepared by a rating agency.
Prior to his retirement last year, Foley said, he became involved in “a little bit of an argument” with people who prepared ratings of investment funds with one well-known agency.
“I looked deeper at the methodology and had a lot of things confirmed as to how they were doing this,” Foley recalled. “It really isn’t about sustainability. It’s more about coming up with a standard for the industry that the industry can live with.”
Find the right adviser
So where does that leave the average retail investor who doesn’t want their money contributing to planetary ruin?
“I think it’s really important to have an investment adviser who understands your concept of sustainability,” he said. “What are you concerned about?”
As for himself, Foley is particularly keen not to invest in the fossil-fuel sector. It’s not just because of the havoc that this industry is causing with rising greenhouse-gas emissions. It’s also because he doesn’t think the industry is sustainable.
“We’re going to see a transition away from fossil fuels, and I would like to help see my limited resources go toward helping that transition, investing in funds that have a substantial number of renewable-energy companies or clean-water companies,” he said.
Back in the early and mid-1990s, Foley was one of Vancouver’s more vocal advocates for addressing climate change.
As a one-term park commissioner and as a case manager with the B.C. Energy Coalition, he frequently spoke out about the need for proper planning to take into account all the social and environmental costs of capital projects.
“I got involved in climate-change debate in the 1990s,” Foley noted.
Back then, the concentration of greenhouse-gas equivalents in the atmosphere was 354 parts per million.
Last October, NASA’s Jet Propulsion Laboratory reported that the concentration of carbon-dioxide equivalents stood at 412 parts per million. That’s 47 percent higher than the beginning of the Industrial Age and 16.4 percent higher than 1990, the year Foley was elected to the Vancouver park board.
Climate-related financial disclosures
Since then, concern over the climate has expanded from hard-core environmental activists to the money-management industry.
The Task Force on Climate-related Financial Disclosures, known as TCFD, is pushing for increased corporate reporting in this area. The organization, which is chaired by billionaire Michael Bloomberg, wants money managers to be in a better position to evaluate climate-related risks and opportunities.
Foley pointed out that there are trillions of dollars in institutional investment pools such as the Canada Pension Plan, the B.C. Investment Management Corporation, and other entities around the world.
“Financial-risk disclosure is really important for these much bigger pools of capital,” he said.
That’s because the Canada Pension Plan, for example, has to be able to think on a much longer time horizon than an individual who is investing to save up for a down payment on a home.
In 2020, the Canadian stock market, as a whole, fared much worse than many other markets because the Toronto Stock Exchange is so heavily weighted toward fossil-fuel and banking companies.
“Those areas have lagged a bit,” he said, “whereas the more future-looking companies—the Googles, the Apples, the Microsofts, even Amazon—have done much better."
Then there’s the electric-vehicle manufacturer Tesla, whose stock rose 695 percent in 2020, briefly making its CEO, Elon Musk, the richest man in the world.
“The notion of a visionary is, I think, what people are investing in,” Foley said.