Fossil Free and Impact Solutions for

Greater Sustainability


Fossil Free Investing




Vestas: Responsible Investing in Global Energy

From small beginnings as a Danish blacksmith shop in...

Change is in the air as investors gain interest in sustainable investing like never before. According to the Responsible Investment Association, global responsible investment assets reached US $21.4 trillion in 2014, a remarkable increase of  61  percent from 2012 . One reason for this explosive growth is that increasingly  investors are recognizing environmental, social and governance (ESG) issues are financially material. In fact, a growing body of evidence suggests that sustainable investing can help enhance portfolio safety and returns.

Beyond seeking additional financial returns, a growing number of people and organizations now prefer sustainable investing because it better aligns with their values. According to KPMG’s 2014 report Investing in the Future: “Environmental awareness has continued to grow and is becoming an increasingly important purchasing criteria.”

Approaches to Sustainable Investing

1. Product Exclusion — Products and services that negatively impact the environment or society can also result in financial liabilities and unsustainable business models. Therefore, to help avoid investment risk, we start by eliminating unsustainable products and services. Since it is now widely accepted that climate risk is real and that it has negative environmental and social impacts, many investors now want to eliminate fossil fuels from their portfolios. The main reason being that fossil fuels present a “stranded asset” financial risk. Long-dated energy reserves, such as coal, oil and natural gas, may lose substantial value due to changing regulations and renewable energy substitution. As an example of changing investor behaviour, in 2015, Norway’s sovereign wealth fund, the world’s largest at $860 billion, sought to reduce its financial risk by divesting from fossil fuel assets.

In 2015, Norway’s sovereign wealth fund sought to reduce its financial risk by divesting from fossil fuel assets.

2. Low ESG Exclusion — In addition to screening out risky product categories, at Genus we also avoid companies across all industries who have demonstrated poor general ESG performance. As a further step, businesses significantly involved in ESG controversies are instantly sold. Research from Deloitte found that in each of the past three decades, investors have responded more strongly to negative ESG news. Additionally, given the growing societal interest in sustainability and transparency, we expect financial market focus on ESG performance to expand further.
3risks 3. Positive ESG Integration — While ESG can be useful in risk mitigation, we have also found it has merits if used positively to help identify better investment opportunities. In fact, a Harvard Business School study found that companies that included sustainability in their business strategies tended to achieve superior stock market returns 1, while a Deutsche Bank report showed that high ESG ratings led to a lower cost of capital. We try to capture the portfolio benefits of these effects by combining high ESG scores with other financial rankings when determining which stocks to buy.

1 Robert G. Eccles, Ioannis Ioannou, and George Serafeim, Harvard Business School: The Impact of a Corporate Culture of Sustainability on Corporate Behavior and Performance, Working paper, 4 November, 2011

4. Shareholder Action — As owners and managers of significant capital, we can work together to help influence the mix of business activities that occur in the economy. Our shareholder action programs seek to catalyze industry improvement, and we seek to do this through ESG proxy voting, management communication and shareholder resolutions. Each of these programs is designed to use our power as shareholders to change how companies are run and to increase levels of corporate social responsibility. With respect to shareholder action, Genus is quite unique in that our clients can collaborate with us to shape program objectives.

5. Thematic Impact — Thematic strategies are another positive application of sustainable investing. The idea here is to find and profit from the long term trends that are unfolding. For instance, at Genus we look at population growth and how it may affect demand for scarce resources such as food, water and energy. Since supporting life for more people will increase the strain on our planet, we also like to thematically emphasize products and services that offer sustainable solutions to these challenges. We believe in the concept of win-win as well and think sustainable economic global growth can only occur if the benefits are shared more equally among everyone. As such, we strive to invest in companies who help tackle areas of inequality such as access to education, healthcare, financial services and technology. At Genus, our thematic strategy is very unique since it aims to add financial performance while helping to expand positive social and environmental impact globally.

In 2014, a Responsible Investment Association study recognized Genus as offering funds that: “meet the criteria to place in the most robust subcategory of Fossil Fuel Free products.”


Innovative Sustainable Solutions

Genus offers a range of specialized solutions to meet the needs of sustainable investors. Each of the following portfolios can be customized to further improve the fit:

Fossil Free Multi-Manager Portfolios — We believe great investing happens when experienced experts collaborate to develop and execute aligned strategies. Genus Fossil Free Multi-Manager Portfolios bring together our expertise in developed market stock selection and asset allocation with the complementary skill-set of our institutional-quality sub-advisor, Addenda Capital. Montreal-based Addenda is one of Canada’s leading bond houses. They manage our high-quality fixed income mandates that can include green, corporate and government bonds.

Our Fossil Free Multi-Manager Portfolios can be customized in a number of ways. Firstly, your investments can be set up to match your specific needs for income, growth, liquidity and capital preservation. For those who want a tactical approach, we can proactively tilt portfolios toward the most attractive asset classes, and away from areas that present more risk. We can also tailor the safety and yield characteristics of your holdings through our industry leading low-volatility, high-dividend mandate.

Best of Best Around the World — Our Fossil Free CanGlobe and Fossil Free Dividend strategies provide strong diversification and are designed to maximize risk-adjusted returns. These stock mandates combine Canada and the rest of the world into a single optimized strategy that emphasizes top industries in each region. They are invested at around 40% Canada, 60% global, and are tilted toward the most attractive countries on a monthly basis. Fossil Free CanGlobe seeks to maximize exposure to our highest-ranked stocks with market-levels of risk, while the Fossil Free Dividend strategy provides better income and safety.

Impact Equity Strategy — Thematic mission-based investing is another significant growth area in sustainability. Our strategy seeks to make positive social and environmental impacts in addition to generating better financial results. This mandate focuses on investing in global companies who are leaders in areas of sustainability such as: renewable energy, energy efficiency, water and waste management, low negative impact products, sustainable agriculture, as well as access to healthcare, education and technology. This global solution is a one-of-a-kind in Canada.

Custom Sustainable Strategies — For portfolios over $20 million, Genus offers fully customized ESG investment strategies. So, if you have a specific idea about a sustainable approach that’s of interest, we can use our research technology (RAMKit) to develop, test and execute a strategy matching your philosophy. These solutions are designed from scratch to integrate your ESG and financial security selection preferences. Genus Sustainable Strategies seeks to deliver “perfect fit” investment solutions grounded in solid research, robust risk management and innovative design.

ESG Competitive Advantage

Knowledge is power, and in the ‘information age’ it’s essential to have a systematic way to gain insights from the mega data available. Over the past 25 years, we’ve built and continued to enhance our leading-edge investment research and analysis platform called Genus RAMKit. This proprietary software equips us to collect and continually interpret vast amounts of new information from many sources around the world. Through RAMKit, we can find determinants of performance, integrate ESG scores, develop and test asset allocation strategies, and explore new security selection and portfolio construction techniques. RAMKit contains more than 1.5 terabytes of economic, market and stock data from around the globe. Through this system, we’ve found over 300 proven investment factors and used them to develop more than 40 investment models. RamKit enables Genus to continually improve and executive sound strategies for our clients.


Principles for Responsible Investing

As part of our commitment to sustainable investing, Genus became a signatory to the United Nations Principles for Responsible Investment (PRI). This organization’s objective is to help asset owners and managers make better investment decisions through an improved understanding of sustainability.
The PRI believes that: “An economically efficient, sustainable global financial system is a necessity for long-term value creation. Such a system will reward long-term, responsible investment and benefit the environment and society as a whole.”

As signatories to the PRI


At Your Service
In addition to managing your money, we provide complimentary access to a wide range of value-added resources. These can include financial planning, as well as financial education events. As a client, you can receive:

• Direct service and money management through a dedicated Portfolio Manager;
• A customized Investment Policy Statement that establishes your investment goals;
• A comprehensive quarterly reporting package that can be tailored to meet your needs;
• Quarterly consultations via phone or in-person;
• Quarterly online video commentary and newsletters from our investment team;
• Secure web access to your account information;
• Prompt response to your calls and emails, usually within two business hours;
• Invitations to Genus-sponsored educational seminars;
• Complimentary Genus cash-flow analysis;
• Access to answers from our knowledgeable panel of experts.

Your Money is Secure

When Genus acts as your manager, we never hold any of your cash or securities. Our clients’ savings and investments are always held in trust, safeguarded by an independent custodian. RBC Investor Services Trust acts as our fund custodian. RBC is among the top 10 global custodians in the world and the leading provider of investor services in Canada.

Learn More

We welcome your questions and enquiries. Please feel free to contact us. We would be pleased to meet with you to discuss your needs in more detail.

Wayne Wachell, MBA CFA
CEO & Chief Investment Officer (Founding Partner)

John-Paul (J.P.) Harrison, MBA
President (Partner)

Sue-May Talbot, CIM
Portfolio Manager, Director of Client Service (Partner)

Mary Lou Miles, FICB CFA
Portfolio Manager (Partner)

Nicole Neuert
Manager, Fossil Free & Impact Solutions