(Dow Jones) It's not only clients who ask Betty-Anne Howard how to align their investment choices with their values. Other financial advisors often go to her for tips on socially responsible investing, a growing trend in Canada.

"advisors are asking questions, they are turning to me because they know this is my thing," says Howard, a Kingston, Ont.-based advisor with Independent Planning Group Inc. She finds many advisors have misconceptions about SRI, a problem she hopes will be offset by a new guide she helped design for the Social Investment Organization.

Socially responsible investment (SRI) involves bringing environmental, social and governance (ESG) considerations into the investment process. While in the past it meant avoiding companies that produced items like guns or tobacco, or engaged in dubious human-rights practices, it now includes such issues as community investing, or the use of shareholder power to influence corporate behavior.

Advocis, the country's association for financial advisors, and the Social Investment Organization, or SIO, are holding a series of seminars across the country to teach advisors about SRI and how to guide interested clients.

"Despite the growth in demand and despite the growth in product offerings, we find that advisors are not aware of these trends," says Eugene Ellmen, executive director of the SIO. "One of our challenges in the retail area is to educate advisors on it."

Those advisors who understand the principles behind SRI stand to build a bigger book of business, says Sucheta Rajagopal, an advisor with Hampton Securities who specializes in such investments. "There's a huge demand," she says. She finds many clients seek her out because they're dissatisfied with their previous advisor's lack of knowledge about SRI. "If more advisors knew about it, it would definitely help them deal with their clients," Rajagopal says.

Socially responsible investing has grown rapidly in Canada, representing C$609.2 billion in assets in 2008, up from C$503.6 billion in 2006.

The SIO guide includes a Globescan report showing 36% of investors "strongly agree" they are interested in the social and environmental performance of companies in their investment portfolio, while only 7% "strongly disagree." Moreover, 13% said they brought up the issue with their advisor.

The SIO estimates that up to 70% of Canadian investors will want their portfolios to reflect a Corporate Social Responsibility (CSR) approach, while 10% are committed to SRI. Another 10% could be open to the idea, and only 10% would be staunchly against it. Ellman says interest has grown since 2005, when discussions about climate change began to dominate the public agenda.

According to the advisor guide, SRI can be an effective means to "identify and manage risk," and can generate long-term value. As an example, it points to the financial crisis of 2008, noting that "lack of attention to social issues such as predatory lending can come back to haunt investment managers." It also notes that when clients feel strongly about ESG issues, using SRI can be "a means to protect yourself against claims of unsuitable investments."

First « 1 2 » Next