This month we have the pleasure of speaking with Kevin Ranney. As Director, Advisory Services at Sustainalytics, Kevin has a unique perspective on impact investing, and investments that align with values. He is also one of the early members and investors in CED Co-op. Kevin shares why he invests with CED Co-op, and his thoughts on the state of the sustainable and responsible investing (SRI) sector.
Let’s start with an easy question. How did you get involved with CED Co-op?
I first heard about it from the Brubacher-Cressman family (Dale is a member of the Board). It was relatively early in the process of developing CED Co-op, so there was a push to grow the membership. I was quite happy to join, given that it was a co-op with a focus on renewable energy. It was a pretty easy sell for me!
So, the co-op model is important to you?
There is a lot of investment going on in the renewable energy space, but for me personally I’m especially happy to be involved in a co-op. Investment at the community level is an important part of the way forward. It gives people a more personal connection with their investment, and a greater sense of ownership. That clearly adds value for many members, including myself.
After becoming a member, why did you choose to invest?
Initially I was interested in putting some support and money behind my membership. It was a relatively small amount at that point. The second time I invested a bit more, because it was possible to make it RRSP eligible through the CWCF. Recently I have invested in the new Bond Series N1-5. By today’s standards it’s a pretty good return, as well as an opportunity to support renewable energy. It was kind of a no brainer to invest.
What do you look for when investing personally? How does CED Co-op fit in?
Like most people, I do think about return, but that’s always accompanied by the question, “what are my investment dollars being used for?” Although the field of sustainable and responsible investing (SRI) has been around for a while, the opportunities to invest where there is a direct positive impact from your investment are still relatively few. That’s something I look for in an investment is making that clear and direct link to positive impact.
You have a unique perspective on this industry because of your work with Sustainalytics. Can you elaborate on your role?
As a Director on our Advisory Services team I work with institutional investors to help them implement strategies to incorporate environmental, social, and governance (ESG) factors into their investment management. Our clients range from church pension funds, to foundations, to mainstream investment managers, to mutual funds that bill themselves as ethical. As a team, we define their goals with respect to sustainable investing. We then help them create policies and processes to implement those goals.
I’m also involved in projects developing customized methodologies and frameworks to evaluate companies with respect to a certain ESG issue.
When you’re working with a client, what do you look at when creating goals and evaluating investments?
We aren’t prescriptive, rather we provide options in an attempt to provide something aligned with the client’s own goals. It really varies. If we’re working with a church pension fund they’re likely to align their investment management with the values and principles they hold. We have worked with environmental foundations that are particularly concerned with climate change and want to avoid exposure to fossil fuel industries. It’s all based on the perspective of the investor.
We also work with mainstream money managers that approach this from a risk management perspective. They recognize that the ESG aspects of a company often have implications for their financial performance. Prudent investment requires attending to the ESG of companies. This angle is relevant to all of our clients.
That’s right, I think the public doesn’t often think about the fact that ESG criteria also plays into the risk of an investment. It’s about performance, not just value alignment.
Are we seeing growth in this sector, or a growing interest in ESG criteria for investing?
Well it’s certainly changed a great deal since I started in this industry. About 20 years ago it was very much a niche market. Growth was driven by values-based institutions like churches, foundations, and SRI funds.
Since then, there has been tremendous growth among more mainstream investors, including large institutions such as pension funds. Of particular note are some of the large pension funds in Europe that are leaders on sustainability and are pushing the agenda from an investment perspective. They’re recognizing that attending to sustainability issues is important for both prudent management of their own portfolio, as well as the ways companies create impacts on the economy and society as a whole. The decisions they are making are contributing to the resilience and sustainability of our world.
Climate change has become a focal issue for investors. There is growing recognition that a transition to a lower carbon economy is desirable, and inevitable. Investors need to figure out how to navigate their way through that transition – contributing to it, and managing the risks and opportunities. In my mind, that’s a really positive development that we have seen.
What do the next 5 years, and the future of responsible investing look like?
I think that there is going to be increasing attention on the part of investors, and many companies, to their impacts on both the environmental and social side. There are some forward-looking companies that are already doing this, and in the next 5 years that number will grow.
At the same time, the transition to a sustainable economy will be challenging. There is a great need for mitigation and adaptation. Some companies are going to be well positioned to do that, but some are not. In some cases, industries will face massive disruption and challenges.
There will be some pain, but I think that increasingly investors will be looking for opportunities to make a positive contribution through their investments, and that notion will become more mainstream.
Accompanying this, there will need to be far better reporting on the part of companies in order for investors to do the proper analysis on their contributions to climate change. There are some initiatives underway looking at how to improve reporting relating to carbon and climate change. It has already been a trend for a number of years, and will continue to be an important area of change.
I love to hear that it’s a growing trend. Our members who are investing not just for returns, but for impact are at the front line of this shift!
For those that are looking for other opportunities to align their investments with their values – do you have any suggestions of what to look for, or who to approach to learn more?
I would encourage people to visit the website of the Responsible Investment Association of Canada. They have information on funds that are out there.
With respect to targeted investment opportunities that are focused on positive impact, Oikocredit is a great organization. It is an international development organization that provides financing to micro-finance institutions and small enterprises in developing countries.
Kevin, this has been a fantastic chat. Any last thoughts for current or prospective members?
Investing in renewable energy may seem as a niche area, but anyone investing in CED Co-op is part of a rapidly growing movement. This is the future and it’s going to grow massively in the coming years. We need to invest trillions of dollars in renewable energy and infrastructure to make our economy more sustainable.
It’s noteworthy that it’s aligned with the sustainable development goals. There is a lot of interest among forward-looking investors in the these goals, and how investments can be aligned for positive impact. Investors in CED Co-op can think about what they’re doing not just as renewable energy investments, but in terms of a broader agenda to shift our economy and society to sustainability and social equity.
Thanks Kevin. It’s great to know that our members are leaders and can be proud of their involvement in this global shift.
It was a pleasure to hear your insight about CED Co-op investments, and the broader world of socially responsible investing.
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Each month we feature a member profile. One of our members explains what made them choose CED Co-op, and why they believe in community minded professional investment. Share your story, emailinfo@cedco-op.com
