Since 2000, the Acuity Social Values Funds have combined detailed financial analysis with environmental, social and governance research to select superior growth portfolios.

The Acuity Social Values Funds

Launched in 2000, the Acuity Social Values Funds seek to achieve long term capital growth by investing in a diversified portfolio of mid- to large-sized companies. All investments are analyzed based on proven, pre-determined financial and socially responsible investing criteria.

Socially Resposible Investing

Acuity's approach to Socially Responsible Investing (SRI) is based on our belief that environmental, social, and governance (ESG) factors can have a material impact on a firm's operations. Our examination of a company therefore encompasses its ESG performance within the context of rigorous financial analysis.

Investment Process

Acuity uses a proven and disciplined decision-making process to find the best investment opportunities for the Acuity Social Values Funds. Prospective investments are first evaluated based on an in-depth financial analysis by the investment team. We seek out companies that have strategic advantages, above average earnings growth potential, strong management teams, conservative balance sheets and favourable valuation levels.

Once financially attractive opportunities have been identified, we analyse the extent to which these companies are innovative and progressive in their treatment of key environmental, social, and governance (ESG) issues. An ideal investment is one that demonstrates best-in-class performance across all of our ESG criteria. A company that meets only our basic ESG standards, however, may still be selected for inclusion in the Fund, with relevant concerns being raised through dialogue with company management.

Companies that derive a significant portion of their revenues from the sale of weapons, nuclear power, tobacco, alcohol, and gambling are excluded from the Social Values funds.

While theoretically a zero tolerance standard would be used to exclude these product categories from the pool of eligible investments, in practice a revenue threshold is applied. This threshold recognizes the possibility that firms with overwhelmingly positive social attributes may derive a small portion of their revenues from these products through ownership in subsidiaries.

In our analysis of ESG performance, Acuity draws on leading third-party ESG research providers to complement our unique in-house expertise.

What We Are Looking For

In addition to conducting detailed financial analysis on investment opportunities, we look for companies that demonstrate the strongest performance or the greatest improvement across a variety of ESG criteria relative to their peer group. Criteria we look for in the identification of investment opportunities that deliver the best return within an ESG framework include, but are not limited to, the following:

Environment

Reporting and Disclosure: Where applicable, we search for companies that disclose their environmental policies for direct operations and suppliers and report performance against targets for environmental indicators.
Environmental Protection: We seek companies that have established reduction targets that are at or above industry standards across a variety of indicators, such as toxic emissions, hazardous waste, energy use, recycling etc., and integrate life cycle assessments into product-related decisions.
Climate Change: We look for companies that have proactive climate change policies and are employing innovative solutions to reduce their greenhouse gas emissions.

Social

Product Safety: We search for companies that make safe and beneficial products while avoiding those that derive a significant amount of their revenues from the manufacture of weapons, tobacco, alcohol, gambling, or nuclear power.
Labour Relations: We seek companies with strong diversity programs and labour relations throughout both their direct operations and across their supply chain.We avoid those with a track record of discrimination, unfair wages, and poor working conditions.
Human Rights: We look for companies that exceed both international and local human rights standards, such as those set by the International Labour Organization of the United Nations.

Governance

Independent Directors: We look for companies with boards that are controlled by a minimum two-third majority of independent directors.
Director Compensation: We seek companies that follow conservative guidelines for the granting of stock options and disclose the total value of director compensation.
Attention to Stakeholder Concerns: We search for companies that align the interests of management and boards with those of its broader stakeholders.

The Role of Ongoing Corporate Dialogue

In come cases, there may be a significant opportunity for improvement on specific ESG factors by a firm that has been selected for investment. As responsible and active shareholders, an ongoing dialogue with the company on these issues ensure that our views are known and addressed and is also consistent with Acuity’s position as a long-term investor.

Where corporate dialogue has not achieved the hoped for response from management, Acuity may support shareholder resolutions targeted at a key ESG issues to ensure that that it receives due consideration by management.

Divestment of the asset is undertaken where the financial outlook has changed substantially for the negative or where attempts at positive dialogue on an ESG issue have failed.

Our Commitment to SRI

International Involvement

Acuity was selected as the only Canadian member of the United Nations' Environment Programme Asset ManagementWorking Group. This unique group was established to advise the UN on integration of environmental, social, and governance criteria within institutional investment management.

For more information, please visit: http://www.unepfi.org/work_streams/investment/amwg/index.html

Canadian Leadership

Acuity is a founding member of the Social Investment Organization (SIO). Established in 1989, this organization is committed to advancing SRI in Canada. Through our membership in the SIO, Acuity is contributing to the growth of SRI within the investment community.

For more information, please visit: http://www.socialinvestment.ca

Acuity is heavily involved in sponsoring special events in the area of socially responsible investing and sustainability. Acuity has been a lead sponsor of Earth day since 1998 and has co-sponsored speaking arrangements by thought leaders such as Sir Nicholas Stern, Dr. Gro Harlem Brundtland, Arnold Schwarzenegger, and David Suzuki.

Credentials Are Key

Acuity Investment Management Inc., founded in 1990, has gained a well-earned reputation for disciplined investment management of Canadian and global portfolios. Using a team approach, Acuity successfully manages four fund families - Acuity Mutual Funds, Acuity Clean Environment Mutual Fund, Acuity Social Values Mutual Funds, and Acuity Pooled Funds - in addition to closed end funds, pension institutional and private portfolios. Acuity's success on behalf of the Social Values Funds has been the result of experienced management, rigorous research, and the agility and insight necessary to take advantage of market opportunities. The Acuity Investment Team shares a unique combination of financial and scientific expertise, allowing them to analyze companies from a unique perspective.

Acuity Social Values Funds provide investors with a disciplined approach to investing while integrating important societal concerns.