Noting an increasingly strong demand for responsible investment vehicles, the Desjardins Group is once again enhancing its offering in this regard with the addition of a dozen new products.
“We can feel this pressure from our members and clients for responsible finance, for financial actors to have an even greater impact in the fight against climate change”, launches the great head of the organization, Guy Cormier.
He says that he has noticed this in a particular way for 18 to 24 months. “Banking competitors around the world, and even in the UN, there is a movement that has been created and I feel a seriousness, a growing commitment, variable from one institution to another. »
The organization, which launched its first “environmental” investment fund some thirty years ago, in the early 1990s, will announce on Monday the addition of new SocieTerra Funds to incorporate its range of responsible investment products.
And the question of the yields of these products, Guy Cormier is often asked.
“There is still a myth about the performance of ESG, environmental and sustainable development funds. It doesn’t matter what you call them,” she says.
Yields are on point. And increasingly, people are balancing the pursuit of profit with making a conscious choice about the impact they want to have on society.
Guy Cormier, CEO of the Desjardins Group
The return after management fees of the SocieTerra Canadian Equity Fund, for example, has been 6.9% over three years and 5.5% since the fund’s inception in 2017.
Over a 5- or 10-year horizon, responsible investment funds perform as well or better than traditional mutual funds, across all major asset classes, argues Marie-Justine Labelle, director of responsible investing at Desjardins.
Guy Cormier argues that the behavior of members and customers does not show that performance or the expectation of worse performance worries them “so much” because the demand is there. “We feel the appetite, and the numbers attest to it,” he says.
Desjardins now has more than $12 billion in silver assets invested in its responsible investment products. Assets under management growth reached 20% from 2020 to 2021. Last year, members injected an additional $2 billion into responsible investment products.
“And it has continued to progress since the beginning of the year,” says Guy Cormier. People want to feel like their invested dollars are having an impact on the planet. They want to have access to an even wider range of products and feel that ESG integration is really at the heart of Desjardins’ strategy. They increasingly want to contribute to a green recovery. »
Context of the “energy transition”
Marie-Justine Labelle explains that the SocieTerra Funds allow Desjardins to carry out “sophisticated” portfolio management. “In our network of Caisses, 95% of people buy turnkey responsible investment solutions, so the portfolios are already made for their profile and risk tolerance. »
Guy Cormier adds that the client knows that his money is invested in a SocieTerra portfolio, but the allocation and reallocation are done by asset managers who are more likely today in terms of non-oil and non-pipeline funds.
It is the policy of the Desjardins Land Society Funds line not to invest in a company whose revenues from the extraction or production of oil, gas, and thermal coal represent more than 10% of total sales.
Desjardins sometimes refuses to grant financing to companies. “It fits in a context of the energy transition,” says Guy Cormier. “Before denying funding to a medium or large company, we look at whether it has ESG criteria in its operations, whether it has integrated climate risk into its operations, and whether it has set targets to reduce its carbon footprint,” he says.
“We humbly claim to influence management teams to adopt ESG factors in their management,” says the CEO.
Guy Cormier on…
Ways to limit the rise in gas prices
“I have just returned from Europe, where I spent eight days on business, and one of the things that I take away from my stay is how much what is happening today is spurring Europe to make an even faster turn towards wind, solar and renewable. energy to be less dependent on oil. This will eventually help relieve price pressure. You have to work on people’s habits and behaviors, and not just on the offer. Mr. Cormier cites the example of the installation of charging stations for cars. “We think it reassures people to buy electric vehicles. It is now that we are even installing charging stations for bicycles. »
“We haven’t seen a drop in applications since the beginning of the year. The volume is still there as people try to get ahead of their trades in anticipation of upcoming rate hikes. But yes, we certainly anticipate towards the end of the year and the beginning of 2023 a different volume than in 2020 and 2021. Until then, the market remains active and people can pay. Rate hikes are likely to lead to a decline in demand even though rates remain historically low. The available real estate supply also affects the dynamics. There are fewer properties on the market. »
Individuals and SMEs
“People still have a lot of cash in their accounts and sometimes they only get a 3%, 4%, or even 5% raise. They lived two years spending less. The savings have accumulated. Credit card balances are not at historically abnormal volumes. The unemployment rate is at its lowest point. Rates are still relatively low. Businesses continue to move full steam ahead. Small business order books are full. There are labor and supply chain issues, but government agencies have supported SMEs well during the pandemic. »
economy in general
“We are optimistic for 2022. There could be a slowdown in 2023 and 2024, that is clear. But it is still difficult to quantify. How will the war in Ukraine evolve? What will happen to the price of oil? Will wage increases generate more inflation? You have to give yourself a few more months to do a better reading. It is currently difficult to have quality forecasts for 2023 and 2024 because there is a lot of noise, and it remains to be seen what impact the actions of the central banks will have. »
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