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The Purpose Approach to ESG Investing

A Modern Approach to Environmental, Social and Governance for Thoughtful Canadian Investors

Read time: 3 min

Today, we're one of the first investment firms in the world to embed ESG core factors across our entire investment process and at the foundation of how we think about building products.

When Purpose Investments was created, CEO and founder Som Seif believed there was a way for an investment firm with modern principles to support social good without compromising superior performance. If it placed its clients at the centre of its vision, Purpose would be a for-profit company that was also a positive social utility in society.

Through our core mission, we create success for investors like you. We do that by caring genuinely about the same things you do. And part of that care is making sure we integrate humanity with profitability.

As with all our core values, we design our solutions by knowing that responsible investment principles are a key factor in determining which companies will perform strongly in the long run. A modern investment firm can build value into its process by examining how the capital it invests is with companies that have demonstrated a strong commitment to sustainability.

Historically, environmental, social and governance (ESG) approaches have simply narrowed the scope of potential investments to easily trade values for performance. Investors were forced to accept weaker returns in exchange for responsible investment.

We were more strategic in our approach. Our difference lies in fully integrating ESG factors in a unique way that maximizes value — and your return — while also delivering a social good.

“Since day one, our core principles have been our north star. Our approaches to risk management, outcome orientation, accessibility, sustainability and transparency broke new ground. To create them, we built off robust historical data and the collective wisdom gathered from our personal experiences and years in the industry.”

- Som Seif, CEO

A genuinely people-focused investment business can only thrive with an ESG strategy that bolsters its existing mission. ESG factors help determine an investment's future performance, but more importantly, they're also a way to enhance investing beyond traditional financial reports.

A comprehensive ESG investing strategy looks past opinions and potential misconceptions about industries to capture a contextual, holistic view of how a company is impacting the world around it. By investing in companies with stronger ESG scores, we're able to make better decisions while investing in a more responsible future.

Research now shows companies that proactively manage environmental and social impact with strong governance models have proven to, over time, outperform those that do not. When Purpose first launched in 2013, the necessary data and research to create a quality, effective ESG approach — with the confidence to avoid negatively impacting returns — simply wasn’t available.

ESG was a defining project for us. We would be one of the first with this approach and we had to get it right. It deserved our time and attention — our goal was to embed responsible investing in a way no other firm ever had before.

So that's precisely what we did.

To make it happen, our unique approach started with taking the results of a deep research project to develop a robust way to utilize ESG data. Through years of testing, we designed an effective way to clean the data and apply it in a more nuanced way across the full range of industry sectors.

With improved data availability over time, we’re now able to incorporate ESG factors into a set of processes that create a better performance experience for all, avoiding compromise and adding value.

While many other firms have rushed to add ESG funds to their line-ups, we think that misses the big picture. How we govern our societies and steward our environment through increasingly risky times shouldn’t be an afterthought.

We took the time to get it right because, for the modern investor, we think it’s unacceptable to get it wrong.

“ESG is not becoming the sole determinant of investment decisions, but rather part of Purpose’s investing DNA. Investors shouldn’t expect dramatic shifts in short-term performance, but our target is for a positive trend to emerge over the long term. More information makes for a more robust investment process, better security selection and, ultimately, higher quality long-term returns. More data gives us the ability to make better decisions.”

- Greg Taylor, CIO

We aim to use robust ESG rankings to make smarter choices when all factors are equal. When there isn't enough data, we research and ask management teams difficult questions to ensure that the investments we choose to make also live up to our core values.

This is just the start. As with everything we design, we’ll continue to learn from our results and optimize to improve. We hope to lead an industry-wide sea change toward ESG solutions that includes creating a common language, scoring criteria and data-based decision making that we can use together to evolve our industry.

We've always proactively added modern, trail-blazing approaches to reflect our values and ensure that our core practices measure up to the bar we've set for ourselves.

Today our daily mission has grown to include the proven, high-quality ESG principles we'd always dreamed of bringing to market.

We've done it before through our ground-breaking focus on risk management, with our quality investment strategies and by being a catalyst for driving fair pricing to an industry that had never seen it before.

By realizing our goal of embedding sustainable investing and ESG into the core of Purpose, we believe we're not only demonstrating a new way to think about investment products.

We're showing how a modern investment firm can discover new ways to think.