Courtesy of the Times Colonist
Photo: It is important that banks and pension funds invest ethically on our behalf, and that we urge them to do so, writes Trevor Hancock. SHUTTERSHOCK
So far, in examining what the World Health Organization calls the commercial determinants of health, I have been looking at private sector firms that produce products that harm health, such as tobacco, fossil fuels or unhealthy foods.
But the private sector does not just produce goods, it also provides financial services — such as banking and pensions — that support various industries by investing in them or providing loans.
Where these services are provided to companies that are producing products that are good for our health, such as healthy food or healthy housing, they contribute to health. But when they provide financial support to industries that produce harmful products they are harming health.
This issue comes under the broad heading of ethical investment, in which environmental, social and governance (ESG) concerns are a factor in making investment decisions. Ethical investors, for example, may choose not to invest in tobacco, fossil fuels or armaments for moral reasons.
In a recent article in Forbes Advisor, finance adviser Kat Tretina comments: “Investing solely to benefit from the highest possible returns is becoming somewhat passé.”
She cites a 2022 Stanford University study that found older investors were “overwhelmingly opposed” to the idea of forfeiting investment return in order to advance environmental, social and governance objectives. Young investors, on the other hand, claimed to be willing to give up moderate (five to 15 per cent) or large (over 15 per cent) amounts to bring about such changes.
But while ethical investment can be a personal decision about where to invest, most of us have large parts of our investments through our pensions (CPP and various other pension funds) over which we have little or no direct control. So it is important that banks and pension funds invest ethically on our behalf, and that we urge them to do so.
In the case of tobacco, as a result of persistent advocacy by anti-smoking groups around the world, a number of major pension funds have divested from tobacco. A 2020 report from Physicians for a Smoke-Free Canada noted several public pension funds have divested from tobacco, including California (2000), Aotearoa, New Zealand (2007), and Norway (2010).
But the report also notes: “Within Canada, with the notable exception of Alberta, governments have not consistently accepted responsibility for ensuring that the money under their stewardship is not invested in tobacco.”
Indeed, in responding to one of my columns, Pender Island resident Paul Hutcheson noted in a Jan. 22 comment in this newspaper that the British Columbia Investment Management Corp., which is an arm of the B.C. government, “has $124.25 million invested in the tobacco industry.”
When it comes to fossil fuels, the Canadian banking and pension sectors have been the focus of recent critical reports.
A report released this month by FinanceMap, part of a global non-profit think tank called Influence Map, found that the “Big Five” Canadian banks (Royal Bank of Canada, Toronto-Dominion Bank, Scotiabank, Bank of Montreal, and Canadian Imperial Bank of Commerce) “are undermining their own net zero commitments through their financing activities, lack of robust sector financing policies, and inconsistent policy engagement.”
Specifically, the report found, “the Big Five steadily increased their fossil fuel financing exposure from an average of 15.5 per cent in 2020 to 18.4 per cent in 2022” compared to “6.1 per cent for leading U.S. banks and 8.7 per cent for European banks.”
Moreover, none “have committed to a phase-out of financing thermal coal” or “publicly advocated for ambitious climate-related policy in Canada.” This in spite of the fact that they are all signatories to the Net Zero Banking Alliance.
The pension funds don’t fare any better. The 2023 Canadian Pension Climate Report Card from Shift Action for Pension Wealth and Planet Health noted that not a single pension fund had acknowledged “the urgent need to phase out fossil fuels.”
Indeed, it said, “Canada’s largest pension funds continue to invest their own members’ retirement savings in companies that are accelerating the climate crisis, while delaying efforts to confront this unprecedented threat.”
Isn’t it time the financial sector stopped investing in products that harm our health — and remember, there are many other industries out there that harm our health — and instead invested in our health and well-being?
thancock@uvic.ca
Dr. Trevor Hancock is a retired professor and senior scholar at the University of Victoria’s school of public health and social policy.