Scotiabank Impact Story: Empowering Customers with Sustainable Investing Tools

Read Scotiabank’s 2016 Corporate Social Responsibility (CSR) report 

For Patrick Metzger the need for a tool to help make investment decisions based on responsible business practice predates this story by at least a decade:

“Personally, I wanted something like this 10 years ago, when I was just starting to invest. At that time there were already a few sustainable mutual funds on the market — which I wasn’t super impressed with. So I wound up doing a ton of research by myself, but that wasn’t very effective. I found that there really was no easy and efficient way to research the kinds of companies I wanted to invest in.”

Fast forward to 2017. Patrick and his Scotia iTRADE® co-worker Reame Isaac-Daniel have spent the past 18 months working with Sustainalytics[1] to offer a tool to provide customers with relevant, up-to-date information about the socially responsible practices of a number of companies.

The link between ESG and investing

Corporate environmental, social and governance practices (ESG) have the potential to impact a company’s financial performance, both positively and negatively. Corporate data on ESG practices has also been used by institutional investors and fund companies as part of their investment management. According to the Global Sustainable Investment Alliance, in Canada alone, the number of sustainable investment assets jumped from CAD$589 billion in 2012 to CAD$945 billion in 2014 — a staggering 62% increase in just a few years.

Professional investors have had access to this data for several years

 “This kind of information has been available to institutional investors and other portfolio managers for some time now,” explains Reame. “Many fund companies look at ESG data.” This makes sense, since environmental, social or governance risks could have an impact on corporate performance long-term.

However, until very recently ESG data has not been readily accessible for direct investing customers who want to choose which companies to invest in for themselves. As Patrick learned 10 years ago, if customers want to make an investment based on ESG considerations, they would usually purchase some type of managed fund — such as a mutual fund or exchange traded fund. While these types of investments certainly account for ESG factors, do-it-yourself investing customers may not have the independence to decide what kind of ESG data matters most to them.

Scotia iTRADE’s new tool

With this in mind, Scotia iTRADE has partnered with Sustainalytics, an ESG research firm, to develop a first-of-its-kind tool in Canada that provides retail customers with real-time ESG data to guide investment decisions.

Rather than building a new ESG-based investment tool from the ground up, Patrick and Reame chose to integrate ESG information into a familiar platform that Scotia iTRADE customers already use — Scotia iTRADE’s online trading platform.

Reame explains, “We already have a lot of research and tools on our trading site. We positioned this new tool as something that interacts with all of the other tools we have. We want customers to be able to use this in addition to all of the other resources at their disposal when making an investment or trading decision. It’s one more layer of information that they can use to inform their investments.”

Benefits

Patrick and Reame’s work has opened up entirely new ways for customers to inform their investment decisions. Using the ESG data available through the Scotia iTRADE tool, customers can now:

• Incorporate ESG research into investment decision-making
• Generate information about investments that consider positive societal impact
• Make investment decisions consistent with personal values

Upholding the right to become better off

So far, the reception to the new tool has been overwhelmingly positive — from both customers and other employees at Scotiabank. And, as Patrick sees it, the connections between the new ESG tool, the Bank, and its customers are all based on the Bank’s core beliefs: “Scotiabank believes that every customer has the right to become better off. But ‘better off’ often means a lot more than just extra dollars in a customer’s pocket.

“‘Better off’ also means that customers are able to invest their own way — according to their values and wants. And whether you’re doing that because you think there’s a financial benefit, or because you want to invest in companies that share your values and you believe in the power of shareholder influence, or whether you’re doing it for both reasons; we want to be able to provide customers with an opportunity they didn’t have before.

[1] Sustainalytics is an ESG research provider and its role is limited to providing research and analysis in order to facilitate well-informed decision-making.

Scotia iTRADE® (Order-Execution Only Accounts) is a division of Scotia Capital Inc. (“SCI”). SCI is a member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund. Scotia iTRADE does not provide investment advice or recommendations and investors are responsible for their own investment decisions. ®Registered trademark of The Bank of Nova Scotia, used under license.

Read Scotiabank’s 2016 Corporate Social Responsibility (CSR) report