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How to invest for reconciliation – Investment Executive



“There are ample opportunities for investors to act in support and alignment with reconciliation,” said Katherine Wheatley, program manager with the Reconciliation and Responsible Investment Initiative, a partnership between the Shareholder Association for Research and Education (SHARE) and the National Aboriginal Trust Officers Association (NATOA).

Investors achieved a milestone in April, when SHARE filed a shareholder proposal related to Indigenous reconciliation and inclusion with TMX Group Inc. on behalf of the Atkinson Foundation as part of the Reconciliation and Responsible Investment Initiative.

TMX Group recommended voting for the proposal — the first time a proposal on reconciliation had been endorsed by the board of a Canadian company, according to SHARE. The proposal passed with 98% approval on May 12.

“As shareholders, we are in the early stages of awakening to the power we have nationally,” said Mark Sevestre, president of NATOA. He estimates that Indigenous communities in Canada manage, or could be eligible to manage, approximately $10 billion in funds.

Truth and Reconciliation Call to Action 92 defined reconciliation for corporate Canada by asking it to adopt the United Nations Declaration on the Rights of Indigenous Peoples. Doing so would involve actions such as ensuring equitable job access for Indigenous peoples and educating staff on Indigenous rights.

“The fact that people wear orange shirts [to raise awareness of residential schools] — that’s nice, but what does that really accomplish?” Sevestre said. “For us, the biggest impact we will have is connecting with investment managers and advisors who don’t think they have anything to do with any of the solutions in this area.”

From risk to opportunity

Indigenous organizations such as the Canadian Council for Aboriginal Business (CCAB) have developed metrics and indicators to aid investors interested in reconciliation (more details below).

Historically, companies have tended to look at Indigenous relations as a potential source of liability, Wheatley said, asking questions such as “What do we do if Indigenous people exercise their rights?” or “What if communities don’t agree with this development?”

“We are keen to explore and highlight ways to move beyond that risk lens,” she said. “There are great opportunities to advance economic growth together in ways that are sustainable, inclusive and resonate from the perspectives of Indigenous and non-Indigenous peoples.”

In addition to the TMX Group engagement, SHARE has engaged successfully on Indigenous issues with firms such as Sun Life Financial and Great-West Lifeco, Wheatley said. Both companies have agreed to provide additional disclosures on Indigenous relations, and Sun Life has signed up for CCAB’s Progressive Aboriginal Relations (PAR) certification. SHARE was also part of an investor group that influenced Edmonton’s CFL team to change its name to the Elks.

Wheatley attributes these successes to greater awareness of the need for reconciliation and broader disclosure trends around environmental, social and governance metrics.

During shareholder engagements, “one of the responses we’ll get from companies is ‘We didn’t know investors cared about this information,’” Wheatley said. “Things we didn’t use to perceive as highly material to companies’ success are [now] being amalgamated with financial disclosures.”

Representation of Indigenous peoples in the executive suite is becoming increasingly material, Sevestre said.

“‘Indigenizing’ the workforce and having those voices on corporate boards will lead to consideration of Indigenous issues,” Sevestre said. “A lot of the work we’re trying to do is increasing the opportunity for qualified Indigenous people to get into these roles and impact the decisions these companies make.”

For retail investors looking to allocate their funds directly to Indigenous businesses, there are only a few products, such as bonds issued by the First Nations Finance Authority.

Kevin Thomas, CEO of SHARE, said institutional investors’ interest in reconciliation should spur the development of more products for retail investors. Thomas noted the Raven Indigenous Impact Capital Fund, which launched earlier this year, attracted $25 million from institutional investors across Canada and the U.S. by the time it closed on Jan. 31.

Tabatha Bull, president and CEO of CCAB, encouraged institutional investors to consider funds like Raven that invest in Indigenous-led organizations that serve Indigenous communities. For example, Raven-funded OneFeather Mobile Technologies Ltd. launched a digital Indigenous banking app in July. The company also runs an online voting platform that has served 30% of Canada’s First Nations communities.

Investing according to Indigenous values

Sevestre said NATOA’s partnership with SHARE has helped Indigenous communities better understand their responsibilities as shareholders and demand more from their investment managers.

Investment managers may not realize that Indigenous communities could have different priorities. “I’ve had an investment manager say to me, ‘Oh, you’re Indigenous, so you’re against oil.’ Well, some are, some aren’t,” Sevestre said.

However, many Indigenous communities do not want to invest in companies that may infringe on their rights or harm their territories. “Traditional and cultural values need to be included in our investment policies, because what goes into those portfolios needs to be a reflection of the values we hold,” he said.

Several Indigenous communities in North America have done just that.

The Oneida Tribe of Indians of Wisconsin Trust Fund’s investment policy, for example, states that the trust must invest in a manner consistent with Native American values and that it “prefers to invest in companies that make positive contributions to alleviating the problems facing society and the environment.”

The Carcross/Tagish First Nations, meanwhile, include their values of integrity, selflessness, honour, respect, courage and knowledge in the Dáanaa Jíli (Cache) Act, which governs investment and other policies.

Bull said she hopes awareness of and commitment to Indigenous reconciliation continues to gain momentum even after the headlines about atrocities committed against Indigenous peoples begin to dwindle.

“I’m really hopeful that this isn’t going to be a media blitz and then we go back to forgetting about our past,” she said. “Unfortunately, it will be a year of continuing to discover children’s remains. We know they are out there and that [the discoveries are] really just a confirmation, and it’s going to be hard for Indigenous people — but it is going to keep the conversation at the top of our minds.”

The 24-hour Indian Residential Schools Crisis Line, 1-866-925-4419, is available for those who need support.

With files from Mark Burgess

What to look for when investing for reconciliation

PAR certification

The Canadian Council for Aboriginal Business (CCAB) developed the Progressive Aboriginal Relations (PAR) certification in 2001 and has certified more than 150 companies.

“The PAR program is a process and a path to help corporations build their Indigenous inclusion strategy, and to help them move toward their own fulfillment of [Truth and Reconciliation Call to Action] 92,” said Tabatha Bull, president and CEO of CCAB. “My hope is that someday, a listing of TMX companies will also include their PAR certification.”

The PAR program verifies corporate initiatives and outcomes in four key performance areas:

  1. Leadership actions (e.g., policy setting, removing structural barriers)
  2. Employment (e.g., recruitment, retention, advancement)
  3. Business development (e.g., procurement from Indigenous firms, supply chain engagement)
  4. Community relationships (e.g., community investment, engaging with Indigenous stakeholders)

“In just Q1 of this year, we’ve brought on over 25 corporations,” Bull said. Many businesses that joined in the past few years, such as Uber, operate nationally and in urban centres, she added. “That’s a very different story than having to build a relationship with Indigenous communities because you’re impacting their land. [These companies] want to build better relationships and understand how they can do better.”

Companies can be either PAR Committed (taking steps to become certified) or PAR Certified. Certification has three levels: bronze, silver and gold. Gold companies have demonstrated “sustained leadership” to strong relationships with Indigenous stakeholders.

Bank of Montreal and Scotiabank are PAR Gold Certified companies. ATB Financial, CIBC and Sun Life are PAR Committed.

Business and reconciliation

The Reconciliation and Responsible Investment Initiative has released two reports on corporate Canada’s progress in advancing reconciliation. The second report came out in March.

The reports looked at indicators within six main categories:

  1. Diversity policies
  2. Employment and advancement
  3. Contracting and procurement
  4. Training and education
  5. Indigenous rights (e.g., whether the issuer acknowledges the need to seek free, prior and informed consent of Indigenous peoples)
  6. Community investment

The March report looked at 78 issuers’ disclosures from 2019 and found that 26% of companies stated that they prioritize employment of Indigenous people, up from 13% in 2016. The financial sector’s efforts, however, were lacking: “There is considerable space for improving reconciliation-related disclosures, with no more than three of the 13 sampled institutions reporting on any single indicator.”

Investment Executive analyzed the most recent financial and sustainability reports from 20 banks, insurers, asset managers and advisory firms that operate in Canada. Of those, nine identify the percentage of Indigenous employees, with five of those noting goals for Indigenous representation. Nine of the 20 companies mentioned Indigenous community investments and/or Indigenous-focused training programs for their employees.

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Investing inside a corporation: what you need to know – MoneySense



FPAC responds:

Congratulations on your successful retirement! At a stage when most people are focussed on decumulation, you’re asking about establishing an approach for long-term, tax-efficient investing inside your corporation. Let’s walk through these important considerations:

Investment decisions: robo-advisor or DIY—and ETFs or bank stocks?

A robo-advisor is a great choice for automated, tax-efficient and low-cost investing. A robo-advisor will be able to set you up with a portfolio of low-cost, widely diversified ETFs. Regular rebalancing, quarterly reporting and ease of use will make this option attractive if you are looking for a hands-off approach. Most of the leading robo-advisor platforms in Canada will help you set up a corporate account. 

If you’re comfortable being a little bit more hands-on, you might consider implementing a multi-ETF model portfolio. This approach will require you to open an account at a brokerage and do some regular investment maintenance, including allocating cash, reinvesting dividends and rebalancing

Alternatively, you could also consider implementing an asset-allocation ETF solution. These “all-in-one” ETFs are available in different stock/bond allocations to suit your risk preferences, and they are globally diversified. 

You mention tax-efficiency being important to you. Broad index-based ETFs track an underlying market index. The stocks and bonds in these indices do not change often, so there isn’t a lot of buying and selling of stocks—also known as “turnover”—happening inside of your ETFs. A portfolio with low turnover will not stir up a lot of unwanted capital gains in years that you don’t want to take money out of your accounts, and less turnover means less tax payable year-to-year, leaving more of your money working for you. All in all, tax efficiency is a huge benefit of an index fund ETF approach to investing, especially if you’re investing inside of a corporation. 

You also mentioned bank stocks as an alternative. I can understand the appeal of this approach, as buying stocks of Canada’s large financial institutions has proven to be an effective strategy over the past several years. Unfortunately, the past performance of any investment strategy does not tell us much about its performance in the future. And, in the case of bank stocks, your investment will be very concentrated on a single sector, in a single country. This approach to investing carries risks that can be easily diversified away by using broad, globally diversified index-based ETFs. (In fact, Nobel Prize laureate Harry Markowitz famously called diversification “the only free lunch in investing.”)

Understanding the ins and outs of corporate investing

Investing inside of a corporation can be complicated. A corporation is taxed differently than an individual in Canada. As individuals, we are taxed based on a progressive income tax system, meaning higher amounts of income are taxed at higher rates. In your case, if you are earning (or realizing) a lower income in retirement, your last dollar of income is likely taxed at a lower rate than it was while you were working. When you combine lower tax rates with other benefits that the tax system provides to seniors—such as pension income splitting and age credits—it is possible that you will not be taxed at the high end of the marginal tax table in retirement. 

Passive investment income generated inside a corporation, on the other hand, is taxed at a single flat rate of around 50% in Ontario, or close to the highest marginal tax rate. Passive income tax rates are so high because the Canada Revenue Agency (CRA) doesn’t want us to have an unfair tax advantage by investing our portfolios inside corporations.

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Poland Belittles Media-Law Impact as US Warns on Investment – BNN



(Bloomberg) — Poland played down the impact of a draft law ousting U.S.-based Discovery Inc. as a senior Washington official warned that a perceived erosion in media freedom could hit investment sentiment toward the nation.

The ruling party wants to pass legislation that will force Discovery to sell control of its Polish unit TVN, the largest privately owned television group in the country. The media regulator has also for more than a year not extended the broadcasting license for TVN24, the group’s news channel whose award-winning investigative reports have unveiled corruption at various government levels.

The draft law proposes to ban companies from outside the European Union, as well as the associated economic areas of Iceland, Liechtenstein and Norway, from directly or indirectly controlling television and radio stations. That would only impact Discovery, one of the biggest U.S. investors in Poland.

“This law only imposes the obligation to find a capital partner in the European Economic Area, and does not infringe anyone’s freedom of expression,” Marek Suski, a ruling party lawmaker and promoter of the TVN bill, told public radio on Friday. “I think that great American lawyers will find a way to do this.”

The legislation — which the ruling party wants to approve in parliament next month — has already prompted concern from the U.S. and the EU.

U.S. companies have invested more than $62 billion in Poland, second only to Germany, and provide employment for 267,000 people, according to the American Chamber of Commerce.

”This is a very significant American investment here in Poland,” Derek Chollet, a counselor at the State Department, told TVN24 in an interview during his visit to Warsaw on Thursday.

Failure to extend the Discovery unit’s broadcasting permit “will have implications for future U.S. investments. But it’s also a question of values” as “media freedom is absolutely crucial — a free press is important to empowering society,” he said.

©2021 Bloomberg L.P.

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Martin Pelletier: How anti-vaxxers can impact your investment portfolio – Financial Post



Three things to watch for to gauge the sustainability of the post-COVID recovery

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Equity markets appear to be taking a breather as we move from early to mid-cycle in the post-COVID recovery, with market participants trying to figure out what that means and where we go from here. Many are wondering if we have seen peak earnings and peak growth, and if the rise of the variant will cause another shutdown.


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You can see this in the muted reaction to some recent impressive quarterly earnings reports in the United States, with some high expectations already priced into share prices. And then investors hit the panic button on Monday, taking the S&P 500 and S&P TSX down to 3.5 per cent from its recent high, while the Canadian dollar has now lost all of its gains and is now flat on the year.

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During these times its important to remember that markets don’t always go up and near-term volatility doesn’t necessarily imply that a looming meltdown is on the horizon. For example, did you know that we’ve counted that the S&P 500 has fallen more than two per cent eight times this year alone?

However, market corrections are quite common and can actually be quite healthy as they flush out those participants on the margin (excuse the pun) without the wherewithal to stand by their longer-term convictions. In that regard, looking ahead there are three main factors worth watching, not only as to the sustainability of this post-COVID recovery but also overreactions allowing for the opportunity to rebalance portfolios.


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The bond market

We continue to believe that this very much is still a central bank-driven market environment. Macro policy will weigh heavily as markets react to indications of where the Fed and other central banks are positioning. For example, markets corrected more than 15 per cent when Bernanke signalled tapering back in 2010, and some argue that the tech bubble was burst when Greenspan indicated hikes were coming in early 2000.

That said, this time around central banks are in a bit of a pickle with rising inflationary pressures offset by the need to keep debt servicing costs down for massive government fiscal programs currently being funded by printing money. In addition, we’ve read that there are a record amount of job openings, but wages aren’t high enough to entice those unemployed going off government assistance.


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This is where the bond market can be a good indicator and worth keeping a close eye on, but at the same time recognizing they don’t always get it right. More recently, long-term U.S. Treasuries (20 year +) have rocketed nearly 12 per cent from their May lows, nearly recouping all of their losses this year-to-date. For those overweight bonds, especially longer-dated ones, we wonder if they’re being given a rare second chance?

Oil prices

Don’t kid yourself. Despite the plethora of talk around the transition to clean energy, high oil prices still have a material impact on the economic recovery in the U.S. Five of the last six recessions have been preceded by a spike in the price of crude oil, with the only exception being the recession in 2020 caused by the COVID lockdowns.


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The good news is that WTI oil prices have fallen from last week’s highs of nearly $75.50, down more than 11 per cent to below $67 a barrel on Monday. This couldn’t come at a better time as main street is in the midst of struggling with supply chain shortages causing inflationary pressures in key household staples such as food, clothing and gasoline.

Household spending & anti-vaxxers

We received some good news out of U.S. retail sales last Friday, showing a rebound month-over-month in consumer spending, which is a primary driver of GDP growth. People are tired of being locked up and have now been given a taste of what it’s like to experience a pre-COVID world again. This also appears to be in its early stages, as U.S. households are still sitting on quite the nest egg, having accumulated trillions in excess savings during the pandemic.


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  1. Suddenly, the mighty EV is our path to salvation. Yet in the U.S. 62 per cent of the country's electrical grids run on fossil fuels and are the second-largest contributor of GHG emissions at 25 per cent.

    Want to save the planet? Invest in oil and gas stocks instead of indirectly supporting OPEC and Russia

  2. A recent Abacus Data poll showed Prime Minister Justin Trudeau may finally get the majority government he so very much desires.

    Why investors should get their portfolios in order before an election is called

  3. It appears that investors have forgotten that return and risk go hand in hand.

    Investors want both sky-high returns and the comfort of safety

  4. The U.S. Federal Reserve is extremely limited in its ability to materially raise rates given the massive amount of debt being taken on by its government to fight the COVID-19 pandemic, writes Martin Pelletier.

    Martin Pelletier: Investors are overlooking this key reason why the Fed won’t rush a rate hike

Looking forward, the trillion-dollar question, therefore, is if the stupidity of those choosing not to get vaccinated is greater than many expect, resulting in the rise of the variant this fall and forcing another lockdown. We hate to position portfolios around stupidity, but it is a risk nonetheless and worth keeping a very close eye on.

In conclusion, pullbacks are signs of a healthy market and more so, given they present a great chance to reposition and rebalance portfolios. This can be a rather difficult thing to do in today’s headline-grabbing environment, but it helps to strip out the noise, have a long-term plan and deploy some form of near-term active risk-management.

Martin Pelletier, CFA, is a portfolio manager at Wellington-Altus Private Counsel Inc. (formerly TriVest Wealth Counsel Ltd.), a private client and institutional investment firm specializing in discretionary risk-managed portfolios, investment audit/oversight and advanced tax and estate planning.


In-depth reporting on the innovation economy from The Logic, brought to you in partnership with the Financial Post.


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