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An advisor's short guide to greenwashing – Investment Executive



To complicate matters further, people have different ideas of what “greenwashing” even means. Case in point: defines greenwashing as “a superficial or insincere display of concern for the environment that is shown by an organization.” On the other hand, Oxford defines greenwashing as “disinformation disseminated by an organization so as to present an environmentally responsible public image” (emphasis added). These definitions of greenwashing are materially different because disinformation — which is defined as false information that is spread to intentionally deceive an audience — is specified in one but not the other.

So, terminology is a huge issue. When different people are using the same words to mean different things, confusion and skepticism are likely to arise. We are seeing some of that play out in the market today.

It is worthwhile to note that the spreading of disinformation is a rare occurrence in Canada’s investment industry. Although there is no ESG-specific regulation in Canada, the industry is heavily regulated, and fund companies that engage in misleading sales or marketing practices risk facing penalties, regardless of whether a fund is marketed as ESG.

While there may be a small number of bad actors in the market, I would argue there are three much bigger factors contributing to rising concerns about greenwashing in the investment industry: complexity, subjectivity and fragmentation. Together, these factors combine to generate confusion and skepticism.

1. Complexity

RI is broadly defined by leading industry bodies – such as the Principles for Responsible Investment, Global Sustainable Investment Alliance and CFA Institute – as the incorporation of ESG factors into investment decisions. The terms “responsible” and “sustainable” are often used interchangeably, and the wording varies slightly from one definition to the next, but consideration of ESG factors is the key component.

RI is dynamic and complex because there are many different ways for asset managers to incorporate ESG factors into their investment processes. There is a tendency to incorrectly assume RI or ESG means screening or exclusions, but that is not necessarily the case. It’s important to understand that screening is just one approach to RI among many. The most prominent approaches are ESG integration, shareholder engagement, thematic investing, impact investing, negative or exclusionary screening, and positive or best-in-class screening. (See definitions here). Moreover, investment managers have different mandates and methods for implementing these approaches.

To be clear, responsible investing is not rocket science — a keen investment professional can learn the basic concepts in a few days. But, as shown in the data below, the leap is much bigger for non-investment professionals.

The Canadian Securities Administrators’ 2020 Investor Index survey of 5,000 Canadians found that 48% of respondents had “low knowledge” of investing, and only 20% demonstrated “high knowledge,” meaning they could understand basic concepts such as diversification and compound interest. So, general investment knowledge is low, which means knowledge of responsible investment is even lower. In fact, the RIA’s 2020 Investor Opinion Survey found that only 4% of 1,000 investor respondents reported that they knew “a lot” about RI.

With such low literacy, the dynamism and complexity of responsible investment can lead to confusion for many observers.

2. Subjectivity

Although industry bodies have defined responsible investment and the various approaches described above, words like “responsible” and “sustainable” can be subjective and open to interpretation. Many people have their own ideas about what these words mean, and that is particularly evident in dialogues around fossil fuels. For some, an RI fund should exclude oil and gas companies. For others, an RI fund should engage with oil and gas companies to promote environmental stewardship, since selling an oil stock does not change the demand for oil.

These two examples — exclusion and engagement — are both legitimate responsible investment strategies. Deciding between the two simply comes down to what the investor wants to achieve. (See my previous column for more on this topic).

It gets even more difficult with terms like “ethical investing” and “moral money,” since ethics and morals are inherently subjective. This subjectivity leads to confusion when people use the same words to mean different things

3. Fragmentation

In addition to complexity and subjectivity, there is also fragmentation, particularly with respect to ESG disclosures. There is currently no standardized disclosure framework for responsible investment funds to make ESG-related claims. The result is that it’s hard for advisors and investors to compare RI funds in a simple format.

The market needs standardization, and that means it also needs convergence. The industry needs to converge around common frameworks and common definitions. On this front, the CFA Institute is in the process of developing an ESG disclosure standard for investment products, which is scheduled to be released in November of this year. The Institute’s framework will play a vital role in promoting convergence in the industry.

However, the CFA Institute will stop short of creating a label or providing assurance that a fund has met certain criteria or performance thresholds. That is why the RIA is currently exploring a fund certification model that would leverage the CFA’s disclosure framework as an input, while also creating a label to show that a fund has met minimum ESG criteria. Together, the CFA’s global ESG disclosure framework and a Canadian RI fund certification could significantly reduce the fragmentation, complexity and subjectivity described above, which would go a long way to reducing confusion and promoting confidence in the market. I should note that this certification is not a forgone conclusion, and its fruition depends on support from a critical mass of industry participants. The RIA’s discovery process will continue well into 2022 and we will keep our members apprised of developments.

In the meantime, here are some useful tips for advisors who are navigating the ESG space. This is certainly not an exhaustive list, but it’s a good start.

  1. Development – The first and most important step is to acquire knowledge of ESG issues and the RI market. Advisors who are interested in taking a course can do so via the RIA Digital Academy, which has enrolled over 2,000 investment professionals to date.
  2. Strategy and process – Gain an understanding of a fund company’s strategy and process for incorporating ESG factors into investments. Determine how the fund manager performs ESG analysis and which of the RI approaches (listed above) they use.
  3. Voting – Check to see how a fund company votes at annual meetings. Do they vote in favour of leading ESG practices? Is their messaging consistent with their votes? Voting records are often published online.
  4. Engagement – Does the fund company engage directly with issuers to encourage leading ESG practices?
  5. CollaborationStudies have shown that investor collaboration can enhance engagement outcomes. Does the fund company collaborate with peers and industry bodies to amplify engagements and identify best practices?
  6. Advocacy – Not all institutions engage in policy advocacy or lobbying. But if they do, are they advocating for policies that are conducive to good governance and a sustainable and inclusive future?
  7. “Impact” should be measured – If a fund is marketed as an impact investment, the impacts should be measured. Look into how the impacts are measured and reported.
  8. Resources – All of this work requires resourcing. Check to see if the fund company has an ESG team to make it all happen.

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Israeli developer of popular apps for creators nabs $130m investment – The Times of Israel



Lightricks, a Jerusalem-based software startup that makes photo and video editing apps, raised $130 million in a Series D investment round at a valuation of $1.8 billion, the company announced on Sunday.

The round was co-led by New York-based global private equity and venture capital firm Insight Partners and Hanaco Venture Capital, with participation from existing investors Goldman Sachs Asset Management, Clal Tech, Harel Insurance and Finance and Greycroft. New investors Migdal Insurance, Altshuler Shaham and Shavit Capital also participated in the round.

Founded in 2013, Lightricks developed a number of photo and video editing tools that are widely popular with content creators on social media networks, especially Instagram, the highly visual content platform owned by Facebook. The company’s suite of 11 apps including Facetune, Facetune Video, and Videoleap has over 500 million downloads worldwide across Android and Apple users, Lightricks has said.

Facetune, the company’s flagship app used to enhance and retouch photos (think tooth whitening and blemish removal) has previously earned accolades such as Apple’s App of the Year and Google Play’s Best of the Year. The app VideoLeap, which offers powerful editing tools for video content, is one of the most widely used tools to create Tik Tok content, the company indicated.

The apps are geared for individual consumers, beginners and professionals, as well as businesses and brands. Lightricks uses a freemium model for the tools, which offers some functions for free while other features require payment to unlock.

Dr. Zeev Farbman, co-founder and CEO of Lightricks, told The Times of Israel on Sunday that business and brand customers present a huge opportunity for the company as it establishes itself “not just as a toolmaker but also a service provider for content creation.”

“We are looking to help people and businesses draw in their audience and engage with them,” he said.

The company said in a statement that it will use the fresh funding to expand and create new platforms and tools for content creators in an effort to “become a one-stop-shop for resources including creative tools, services, and monetization opportunities.”

Farbman said the funding is a sort of “war chest” with which to acquire similar or related companies and startups to leverage their user base for Lightricks’s growth.

He estimated that the company might be “ready for IPO [initial public offering] in about a year.”

Lightricks’ Facetune app. (Courtesy)

“Our mission has always been to continuously strive to bring creators the most advanced technology and help them find new ways to express themselves,” Farbman said in the company statement. “The rise of the creator economy has only exacerbated the need of mobile users to streamline the content creation and monetization processes. With this latest funding, we’re able to help elevate our users’ creativity and capabilities with continued advancements to our technology and offering.”

The creator economy — an industry of bloggers, influencers, brands, photographers and videographers monetizing their online presence — has an estimated total market size of $100 billion and has seen $1.3 billion in funding for US creators in 2021 alone, according to New York-based research firm CB Insights.

Lightricks reported “tremendous growth” over the past year with the COVID-19 health crisis driving people to tap their creativity “to express themselves and earn income during the pandemic.” The company says it saw a 90 percent increase in app usage across its creativity tools in the US alone.

Worldwide, it says, its users develop over a billion creations per year on the company’s apps.

Farbman confirmed that Instagram is the biggest platform for users of Lightricks’ tools “with Tik Tok playing a bigger part overall and Snap seeing a resurgence.”

“The creator economy has changed the way we, as a society, experience social networks,” said Pasha Romanovski, co-founding partner of Hanaco Ventures. “Audiences constantly consume information through the different content channels daily. Lightricks’ platform enables creators to have a broader, more professional and higher-quality set of tools to optimize content.”

Lightricks was founded by Farbman, Nir Pochter, Yaron Inger, Amit Goldstein, Itai Tsiddon, almost all with a computer science or artificial intelligence background. The company is headquartered in Jerusalem with offices in the UK. Most recently, Lightricks opened an office in China to focus on tapping into the country’s huge potential user base. The company employs approximately 500 people.

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Applications now open for 2022 Halton Region Community Investment funding – Oakville News



Community organizations can now submit applications to the Halton Region Community Investment Fund (HRCIF) for non-profit human service programs and initiatives that enhance the health, safety and well-being of Halton residents. Applicants must describe how they will incorporate the latest COVID-19 public health guidance and how their program or initiative aligns with Halton’s overall approach to community safety and well-being.

“We are pleased to support the important work of local non-profits through the Halton Region Community Investment Fund,” said Regional Chair Gary Carr. “I would like to thank these organizations for delivering vital services to some of our most vulnerable residents and working alongside us to keep Halton a safe and healthy community.”

Funding is available in single year and multi-year grants through two categories:

  • Category One: Provides up to one year of funding, to a maximum of $30,000. Non-profit, charitable or unincorporated community organizations can apply to fund short-term, small capital and/or innovative projects.
  • Category Two: Provides up to three years of funding to registered charities for programs and initiatives.

Organizations that meet eligibility criteria may submit one application in each funding category. The initial application deadline for both categories is Monday, November 1, 2021 at 2 p.m. Additional opportunities to apply for HRCIF funding will be available in 2022 for programs and initiatives that help respond to emerging community needs.

The Region will host three virtual information sessions to help community organizations learn about the HRCIF and the application process:

  • Friday, September 24 from 10 a.m. to noon
  • Wednesday, September 29 from 2 to 4 p.m.
  • Tuesday, October 5 from 6 to 8 p.m.

For more information about HRCIF guidelines, upcoming virtual information sessions and the application process, please visit the HRCIF webpage on or call 311.

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Don't know how to invest your extra cash? Let a robot do it for you. – USA TODAY



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Stock Market 101: Basic strategies investors use to profit off stocks

Before jumping into the market, here’s what first-time investors should know about stocks, capital gains and mistakes to avoid.

For My Money, USA TODAY

Let’s say you have a pile of cash that you’re ready to invest.

If you’re like me, you probably don’t want to spend all your time with your eyes glued to a screen, actively trading on Robinhood. You want your money to grow, but you don’t want to think about it all the time. Maybe the idea of interacting with an investment professional gives you anxiety, or the fees sound like a lot.

You’re not alone.

A study of 3,000 U.S. adults conducted by Vise, a technology-powered investment management platform built for advisers, that was given exclusively to USA TODAY found that the biggest barrier to working with an adviser is concern about how much it would cost (43%).

Here’s what I did: I skipped the personal investment adviser and got a robot to build my portfolio.

Roboadvisers, digital apps that use algorithms to build investment portfolios​​​​​​, are an increasingly popular vehicle for investing, especially for young adults who want a tool that is uncomplicated and mobile-friendly.

You can download an app and fill out a survey about yourself with questions like your age, income and risk tolerance. Based on those responses, roboadvisers generate a portfolio of stocks and bonds for you to maximize your long term returns.

These investment vehicles can scale dramatically with little marginal cost because the portfolio is generated by algorithms. Since they cut out the human element of investing, they can service millions of customers at once with just a few lines of code.

Many roboadvisers are designed with young investors in mind, specifically millennial and Gen Z clients. 

Gen Zers, born between 1997 and 2012, began entering the workforce shortly before the COVID-19 pandemic hit and when unemployment rates were at historic lows. Jobless rates subsequently skyrocketed and then have leveled off. And those workers are starting to save for retirement at an unprecedented young age, according to Transamerica Center for Retirement Studies, a nonprofit organization.

Similar to millennials, born between 1981 and 1996, these young Americans are saddled with student loans and credit card debt but want to invest for retirement and build up savings.

Study reveals: Student debt is a potentially crippling liability for college grads

“Millennials and Gen Z grew up digitally native, and they expect to be able to manage their money the same way they order stuff from Amazon or call a car on Uber,” says Kate Wauck, chief communications officer at Wealthfront, a roboadvising company. “These young investors don’t want to have to pick up the phone or walk into a stuffy office to manage their money.”

►Millennials quit their jobs to day trade: Here are the risks and rewards

►Gen Z turns to TikTok for financial tips: But regulators warn of investment schemes

Most investors want a financial adviser but don’t trust robos

Despite familiarity with digital tools among young investors, the same study by Vise showed that nearly half of Americans (48%) trust human financial advisers, compared with just 11% of Americans who trust roboadvisers.

Two percent of total respondents and 4% of 18- to 24 year-olds used roboadvisers. Three percent of respondents from 25 to 49, 1% from 50 to 64 and 0% of 65 and older had tried roboadvisers.

By contrast, 41% of people over 65 say they work with a financial adviser, compared with 26% of Gen X, 17% of millennials and 14% of Gen Z.

“People, young or old or anything, trust a human being, especially with their most personal asset, which is money,” explains Samir Vasavada, founder and CEO of Vise and a member of Gen Z himself.

Robo options to consider

Despite low adoption rates, a wide variety of roboadvising options exist depending on your investment goals.

SoFi Invest allows customers to invest with just $5 and charges no management fee, according to The RoboReport from the second quarter of 2021. On average, the roboadvisers in the report charged a 0.35% management fee.

InteractiveAdvisors is another option that provides portfolios for sustainable and socially responsible investments if you care about buying from companies that share your values. Betterment also has some options for ESG (environmental, social and corporate governance) investing, including Climate Impact, Social Impact, and Broad Impact.

Betterment is great for first-time investors with its “intuitive dashboard” and “excellent suite of educational tools,” says The RoboReport.

Wealthfront has the best financial planning tools, according to the report, including features to model one’s home purchase and future net worth.

Axos Invest and SigFig have the best annualized performance, according to Nerdwallet data from December 2017 to June 2020. 

Other roboadvisers aim to change the financial landscape for new investors, including women. Ellevest, for instance, is a roboadviserbuilt by women and tailored for female investors.

Roboadvisers: pros & cons

To be sureroboadvisers have their fair share of benefits, as well disadvantages. 

Roboadvisors tend to charge fairly low rates and employ Nobel-prize winning algorithms on your money.  However, unlike traditional financial advisers, roboadvisers aren’t as personalized to your specific goals, says Vasavada. They also don’t have a long track record to prove their success.

So far, roboadvisers have mixed annual returns from 1% to 5%, according to NerdWallet.

“I would give roboadvisers about 25 years before comparing their returns to the traditional method,” says Danetha Doe, financial expert and creator of Money & Mimosas, a financial wellness platform.

Despite uncertainty around roboadvisers, Doe encourages women to invest as early as possible.

“Roboadvisers have made investing accessible to more people. As we move into a more inclusive economy, I am in full support of folks who choose to work with a roboadviser,” Doe says. 

Roboadvisers are heavily regulated and are considered a safe investment vehicle. They must register with the Securities and Exchange Commission and are subject to the same securities laws and regulations as human advisers. Most roboadvisors are also members of the Financial Industry Regulatory Authority, a brokerage watchdog and Wall Street’s self-regulatory arm.

►Gen Z takes on debt to invest in market boom: Here are the risks

►Millennial parents join crypto craze: Should you? Here’s what experts say

Vasavada believes that the future of the personal investment industry lies in a hybrid approach, where technological solutions like roboadvising are paired with human investment advisers.

On one hand, advisers will have to evolve by incorporating technology and tailoring their services to younger investors. On the other hand, roboadvisers are beginning to incorporate more human services to their platforms, Vasavada points out.

For instance, E*TRADE built in a 24/7 online chat on its mobile and web platform, while Merrill Guided Investing added educational resources and financial planning tools.

“I think that the future of the space is still with financial advisers. However, I think there’s a place for roboadvisers. And I think that roboadvisers are here to stay,” Vasavada says.

Ultimately, the key draw of roboadvisers is their convenience. You could set one up on a Sunday just sitting in your bed on your phone, which is precisely what I did.

When conducting research on young investors, Wealthfront found that many of them enjoyed not having to interact with anyone.

“We’ve designed our product so everything can be done right in our app through software,” says Wauch, “Since day one, our clients have told us, ‘We pay you not to talk to me.'”

As a young investor and roboadvising client myself, I couldn’t agree more.

Michelle Shen is a Money & Tech Digital Reporter for USATODAY. You can reach her @michelle_shen10 on Twitter. She uses Wealthfront as a roboadviser.

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