Items pop up in the news that interest me. Sometimes they even relate to  SRI, ESG or other related topics.

During the summer of 2020, in the midst of COVID quarantines, economic shutdowns, and social and political unrest, one story jumped out to catch my attention. At the end of August Brookfield Asset Management announced that Mark Carney was joining their management team as a vice-chairman responsible for their environmental, social and governance (ESG) investment strategy.

Carney has been an advocate for active financial investment on environmental issues for a long time. This appears to be the perfect opportunity for him to continue that work.

In addition to his role at Brookfield, Carney is also the UN special envoy for climate change and finance.

When making the announcement, Brookfield chief executive said, “Building on our track record in renewable investing, Mark will help accelerate our efforts to combine better long-term outcomes for society with strong risk-adjusted returns… (his) insights and perspectives will add tremendous value to our global investing activities for the benefit of our investors.” Media “on both sides of the pond” made a note of the story and took the opportunity to discuss its meaning and context.

The Most Famous Chair of the Bank of Canada — Ever

Mark Carney is probably the most famous chair of the Bank of Canada there has ever been. If a central banker can also be a rock star, then Mark Carney is definitely that central banker.

Although he also has British and Irish citizenship, Carney was born in the Northwest Territories and grew up in Edmonton, making him a true Western Canadian. After 13 years with Goldman Sacks, Carney joined the Canadian Department of Finance and the Bank of Canada. Mr. Carney came into the role of Governor of the Bank of Canada just as the financial crisis of 2007-08 struck.

His role in handling that crisis helped Canada to survive the crisis more effectively than other countries. In 2011 he was even named Reader’s Digest “Editor’s Choice for Most Trusted Canadian.”

First Non-Briton as Chancellor of the Bank of England

Then, in a search for new challenges, Carney was appointed as the new Chancellor of the Bank of England in 2012 – the first non-Briton in bank history. And in that role, he served to calm financial markets hit by the uncertainty of the BREXIT decision. COVID-19 struck just as Carney stepped down in March of this year. Both times Carney was praised for his stickhandling (a quaint Canadian colloquialism) of the crisis. Troubling times were made a bit easier by his calm demeanour and sensibilities.

Carney Moves to Brookfield

Mr. Carney’s new role will allow him to continue to address the role that finance plays in society as a whole. It’s a commitment that appears to be central to Brookfield’s investment and business strategy. When describing their responsibility as a company, Bruce Flatt clearly states: “We operate long-term assets and businesses across the globe. This approach dictates both our investment strategy and our commitment to environmental, social and governance (ESG) practices. We believe that value creation and sustainable development are complementary goals. Throughout our operations, we are committed to practices that have a positive impact on the communities in which we operate.”

Just What is Environmental, Social and Governance

Brookfield calls it environmental, social and governance (ESG) investment strategy. Elsewhere you might see it called socially responsible investing (SRI). In the end it’s pretty much the same thing. According to Wikipedia: “Environmental, Social, and Corporate Governance (ESG) refers to the three central factors in measuring the sustainability and societal impact of an investment in a company or business.” In many ways, ESG puts meat on the bones of Socially Responsible Investing. ESG attempts to review and advocate specific corporate strategies it believes benefit humanity, the environment, and ultimately corporate success.

Environmental Concerns

Wikipedia lists climate change and sustainability as environmental concerns. As these issues grow in importance, their impact on the corporate bottom line will grow. When assessing a company’s environmental record and strategy, you are ultimately also evaluating its prospects for long-term success. “The long-term view is becoming prevalent amongst investors.”

Social Concerns

All companies play a role in society as a whole. The way that companies address that role also has an impact on their long-term profitability and corporate success. That can include:

  • promoting diversity in their recruitment and hiring practices,
  • addressing human rights concerns in their actions within local communities and in the wider supply chain,
  • ensuring effective consumer protection principles are in place
  • acting on concerns for animal welfare in the testing and development of products

Corporate Governance Concerns

Issues regarding the ultimate corporate climate are addressed here. This category includes the issues of corporate structure, employee relations, and compensation both for executives and employees.

Sustainable Funds are Taking Off Under COVID

According to Morningstar, sustainable funds are seeing record growth. Growth was being seen in 2019, but it had grown even greater in 2020. By mid-year sustainable funds had witnessed a net inflow of $20.9 Billion, essentially equivalent to all of 2019 ($21.4 Billion). And far outstripping any other year on record.

The results for 2019 actually were 4 times that of the previous highest year. The uncertainty we have seen throughout 2020 emphasizes the impact that issues identified in ESG strategizing can have.

The Morningstar article closes by saying: “It won’t take much in the way of additional ESG fund flows to set a calendar-year record for the fifth consecutive year. Sustainable funds continue to perform well relative to conventional funds in a year of great uncertainty caused by the pandemic and other issues like the movement for racial justice and the upcoming election. These issues have underscored the need for investors to consider ESG-related risks in their portfolios and have affirmed the value of sustainability within the mainstream of investing.”

ESG and SRI can only grow in prominence

Fundamentally the issues being addressed under ESG reflect a good way of doing business. By following these principles, companies and these entities that invest in them can count on a smoother ride in the future with fewer public relations snafus or upset and diminishing markets. Addressing social and environmental issues head-on is an effective business strategy.

Businesses can lead the fight against racial inequality, help to address the growth in wealth inequality, and even pursue active solutions to climate change. The refreshing part is that in the long run good social policy is also good financial policy.

Were you as shocked as I was when they announced that Mountain Equipment Coop (MEC) had been sold to Kingsway Capital Management, an American investment firm, in the fall of 2020? I think it’s safe to say this shook many members deeply – how could that be?

My history with MEC goes way back

I have been a proud member of MEC for over thirty years and felt a very deeply personal sense of loss and disappointment as the news set in.

Many questions rushed through my mind as I read the news. How would my world ever be the same? Why did this happen? How did I not see this coming? Would MEC even survive? Would I recognize it if it did?

MEC Downtown Toronto was a landmark building

MEC’s downtown Toronto location was always a favourite destination. I used to enjoy an occasional sausage from the vendor just outside the King Street store entrance. I wondered about MEC’s move from King Street to Queen Street but accepted the idea that MEC knew what they were doing. And I watched as MEC set up a new store on Sheppard Avenue East to serve the wider community outside the downtown Toronto core.

I even marvelled at how the store offered a range of merchandise that kept on growing and was especially excited by their range of bicycle gear. And the friendly and knowledgeable staff were always available with the assistance and advice that I needed.

But the retail marketplace has changed

But we have witnessed a landmark change in the retail marketplace over the last few years, in Canada and around the world. There is a reason why Jeff Bezos, the founder of Amazon, is now one of the richest men in the world.

These were just the observations of an average member from downtown Torontonian who didn’t shop at MEC for any mountain equipment.

Somehow, because it was a “co-op,” I figured it was outside the usual rules of retail operations. But in the end, they still have to use sales proceeds to pay for wages, rent, overhead, and inventory, just like every other retailer. And if revenue doesn’t grow to cover expansion plans, then things are going to be difficult.

Others have observations, too

Then I came across some news stories about the sale of MEC and its reflection of events in the credit union movement in British Columbia and across Canada. In a blog post called MEC: The Success Delusion, Ross Gentleman criticized MEC’s “business strategy… defined by management’s ambitions and a conventional mantra to ‘grow’ the business”. He thought this growth strategy was rooted in managerial ambitions, not member needs. “The membership base was diluted to include a wide array of recreational ‘consumers’.”

I guess that as someone outside the MEC core membership (BC backcountry enthusiasts – as defined by Mr. Gentleman), I should be thankful for my thirty years of inclusion. And before I get too cranky or defensive, I want to reflect more deeply on Mr. Gentleman’s argument.

Common problems for many social movements

The argument Mr. Gentleman is making is common to many different progressive movements. This includes credit unions, cooperatives, political parties, and social causes.

During the birth of the credit union movement in the mid 19th century in Germany, fundamental arguments grew about how credit unions should be run, how they should be structured, and how their success should be measured. Differences between rural credit unions centred in their community, and their urban counterparts offering banking services that local merchants could not get otherwise did not stop the movement from growing, across Germany, throughout Europe and eventually around the world.

I believe in the general goals of many progressive causes. AND I believe in bringing those goals to the wider public and looking for ways to get a wider range of citizens, participants, or consumers interested, involved and committed.

Speaking to a wider audience is essential

But my belief is that when activists try to appeal to a wider audience they are often placed at loggerheads with others seeking change.

How do you resolve the fundamental argument between growth, through wide appeal, and purity, through a commitment to principles? Each side criticizes the other for not understanding the real issue. But each side has a role to play.

While these arguments can get tiring, they also serve a deeper purpose. When we discuss these issues amongst ourselves, we find the arguments that resonate with a wider audience and trigger the changes we are looking for.

Courage, my friends; ’tis not too late to build a better world.

Tommy Douglas

World events at the moment might suggest that things never change. But progress has been made on many causes over time. The abolition of slavery, the granting of universal suffrage, the overthrow of apartheid, and the recognition of same-sex marriage are all causes that, at one time, seemed impossible to achieve. Other causes like climate change have achieved general acceptance but have still not been fully acted upon.

I want to create a larger tent by bringing more people inside. And I want to do this because I believe in the universal appeal. I’m sure Mr. Gentleman does too. The struggle continues. We will see success, and we will see setbacks. But remember Barack Obama’s favourite quote from Martin Luther King Jr: “The arc of the moral universe is long, but it bends toward justice.”

by Todd Race

Postal banking – say what?

Last year, I read about an effort to bring basic banking services back to US post offices. There have been efforts in Canada in the last few years to re-introduce postal banking here as well.

Postal banking is not a new idea. According to Wikipedia, the Brits introduced the first postal bank in 1861. That article listed postal banks in 31 countries around the world. While some of those services are not running anymore, many are still serving their communities.

For instance, postal banking was introduced in Canada in 1868 and then dissolved in 1968-69.

Bringing postal banking back in the US

While introducing the Postal Banking Bill last fall, Senator Gillibrand cited the problem of banking deserts across the United States. She described the impact the lack of basic banking opportunities has on almost 10 million American families, especially as stimulus cheques and child support payments begin rolling out.

In many neighbourhoods and communities in the United States, there are no banking options available. Instead, residents have to go to a cheque cashing operation charging usurious rates just to cash a cheque. These fees roll over into the income tax applications that could provide additional support, costing the taxpayer as much as 25% of their refund.

At the same time, the US Postal Service is running into financial difficulties. Regular mail is being replaced by email, and FedEx and Amazon handle more package deliveries. A return to postal banking offers the beleaguered postal service an additional source of revenue while providing vital service to the community.

Postal banking is an issue in Canada too.

And none of this is new to Canada either. The Harper government tried to cut back services offered by Canada Post, citing cost overruns and inefficiencies. In the end, very little changed.

But in 2016, the Canadian Union of Postal Workers (CUPW) and the Canadian Postmasters and Assistants Association (CPAA) started a campaign to bring postal banking back in Canada. Many of the reasons for restarting postal banking in Canada mirror the ones described in the United States.

Good economic and social policy serves people – not faceless financial institutions. While banks may not benefit from maintaining branches in marginal neighbourhoods, it does not mean that people in those neighbourhoods don’t need banking services.

Providing postal banking provides basic banking services in settings and communities where full-service bank branches don’t make sense.

Like banking, everyone deserves good internet access – even in the country

These are the same concerns that drive the need for a national broadband internet strategy – being slowly adopted here in Canada and proposed through the current infrastructure bill in the United States. Everyone deserves fair and equal access to public resources and services. Heck, that was the argument for rural electrification under Franklin Roosevelt in the 1930s.

As society becomes more global (as witnessed by the rapid expansion of COVID-19 and each successive variant), it becomes increasingly local. Work from home means being at home. Being at home means being in your neighbourhood, talking to your neighbours and using local resources. Postal banking, both in Canada and the United States, is a great way to promote the social community cohesion we are all looking for these days.

Postal banking played a vital role in societies in the past and has the opportunity of playing a vital role in today’s society.

It’s time to make an old idea new again.