Canadian clean energy financing and investment company CoPower has shown that it’s not only easy to be green, but it’s also a way for investors to make some money along the way.
CoPower launched in 2013 and offered its first fund the following year. Its biggest success came when the company launched its full-scale Green Bond in March 2017, which sold out in a little under a year. The initial Green Bond launched in February 2016 had seen similar success.
“We had an overwhelming response. We sold out of that bond in about six weeks. I think that really helped us understand just how much pent up demand there was and is from individual investors,” Trish Nixon, managing director and head of capital for CoPower, tells Yahoo Canada Finance.
CoPower is part of the impact investment movement, which Nixon describes as “trying to solve a social issue or environmental issue while making a financial return.”
Making a difference
It’s an offshoot of a larger concept called responsible investing where investors screen their portfolios for companies and industries they don’t want to support with their dollar; however Dustyn Lanz, CEO of the Responsible Investment Association (RIA), says the concept has also evolved significantly in recent years.
“Responsible investing today is about going beyond traditional financial metrics to protect and enhance shareholder value,” he says. “A growing number of investors are seeking to align their investments with the UN Sustainable Development Goals. The rise of these frameworks reflects a major evolution in responsible investing.”
The concept goes far beyond investing in environmentally-friendly options. It can also include considering investment opportunities that put social and governance factors first.
Neville Joanes, CIO of online wealth management platform WealthBar says ETFs like SHE, the SPDR SSGA Gender Diversity ETF, and HERS, the Evolve North American Gender Diversity Index ETF, which focus on companies that strive to provide gender diversification and equality in the workforce, are popular options. He says interest in responsible investing has significantly increased.
“We’re going to see more attention to social responsible investing as we go forward,” he says. “If [investors] can make a choice that gives them good investment returns and still supports the betterment of humanity, then people will make that choice.”
Who’s getting involved
Responsible investing is resonating particularly well with millennials. According to RIA research, millennial investors are 65 per cent more likely to consider responsible investing than baby boomers.
“This is in part because millennials are more likely to believe that companies with good social and environmental practices can provide investors with better protection against downside risks,” Lanz says.
Nixon says CoPower has noticed that millennials make up about 40 per cent of their retail investor base, but also that people are choosing to become responsible investors because of other trends.
“I think we’re seeing trends towards conscious consumerism and conscious living broadly, and I think it’s only natural and important that would extend to people’s investment portfolios,” she says. “When you invest, you’re voting with your dollar. You’re supporting the companies, the sectors, the industries that you’re investing in.”
However, some investors have been hesitating to jump on the responsible investment bandwagon fearing that they might underperform, but Lanz says responsible investments can perform just as well or better than traditional alternatives.
“It really makes sense when you think about it: If a company is well-governed and managing its exposure to environmental and social risks and opportunities, it’s more likely to be a better performing company overall,” Lanz says.
That’s something Joanes says he has already seen with some ETFs.
“Last year was a good bull market run, and we saw a lot of socially responsible ETFs outperform the market,” he says, citing PZD, the PowerShares Clean Tech ETF, as an example.
And for some responsible investing options out there like those from CoPower, they hope to help the planet without compromising returns.
“CoPower falls in this camp where we’re saying, ‘no, you can have it all,’” Nixon says. “You can earn a really strong competitive return, you can reduce volatility in your portfolio, and you can do good for the planet. So we’re certainly focused on the win-win-win.”
After selling out of bonds this February, the company plans to issue another round of bonds in May, with further plans to offer an entire suite of green options.
“We have investors from 15-year-olds in Alberta to large insurance companies and credit unions, so we really do have a broad range of investors,” Nixon says. “I think there’s a lot of demand for these types of projects that offer good returns, good risk mitigation as well as [a] positive impact for the planet.”