The Capital Regional District says nearly 90 per cent of its investment portfolio aligns with its social and environmental values.
Socially responsible investing (SRI) was one of four principles guiding the regional government’s investment policy, according to a staff report.
“The introduction of SRI as a priority added to the existing pillars of principal protection, liquidity and rate of return,” the report stated. But almost reaching the 90 per cent mark in 2021 has been the result of the CRD amending its policy since 2017, including a change made in early March.
In early 2021, the CRD board updated the district’s investment policy to make socially responsible moves a priority when they have comparable risk, liquidity and rate of return to other investments. SRI options that provided lower expected returns – but still met risk and liquidity standards – would be limited to no more than 10 per cent of the CRD’s portfolio.
Since B.C.’s Municipal Financial Authority released its Environmental, Social and Governance (ESG) framework late last year, the CRD has amended its policy to scrap the 10-per-cent maximum for lower-return investments. CRD holdings will now be considered responsible if they meet the criteria defined by the ESG framework.
That definition of socially responsible investments includes ones in institutions not directly involved in oil and gas production, extraction or transportation. The CRD says the Municipal Finance Authority continues to add investment avenues such as the Fossil Fuel Free bond fund, into which the CRD put $30 million in 2021.
One of the regional district’s non-ESG compliant holdings is a bond fund that’s been in the CRD portfolio for just over two decades and sees annual returns of about three per cent. Trying to build on the almost 90 per cent responsible portfolio would mean having to divest from this holding, the staff report said.
In 2018, 30 per cent of the CRD’s holdings wouldn’t have aligned with the Environmental, Social and Governance framework. That dropped to 11 per cent as of 2021.
The amended investment policy has been sent to the CRD’s member municipalities for consideration.
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