I recently received this question by email (C.R.):

“Being very concerned about the environment and global warming, I would like to know why Cote100 continues to buy oil-related securities as well as Canadian banks which finance the development of Canada’s tar sands. Very large mutual funds have decided to exit this industry completely, why is Cote100 not doing the same?”

The question is very relevant. I myself am concerned about the environment and the climate change crisis. In fact, I believe our company is doing its part for the environment – our headquarters is LEED Gold certified, using a geothermal system since its construction in 2012. We recently added two electric charging stations for electric vehicles for our employees (for a total of four). We are considering adding solar panels to our building.

It is also an important consideration in the management of our portfolios under management. This is why we have not invested in the oil industry for several years. The environmental issue is integral to any investment decision we make. As long-term investors, we are convinced that any company that harms the environment does not have a very bright long-term future.

That said, in my opinion, we must make allowances. I believe that any extreme position is probably not reasonable in investing, as in most other spheres.

You mention Canadian banks and the fact that they lend money to oil companies. Is this a reason not to invest in banks?

We have been shareholders of Couche-Tard for many years, a significant part of whose revenue comes from the sale of gasoline to motorists. Is this sufficient reason to sell our shares?

There is a lot of talk these days about the Quebec government’s major investment in a producer of batteries for electric cars. But electric cars and batteries are far from being free of environmental footprints.

Is a software company green? What if one of its clients is a bank that finances the oil industry? Or what if one of its clients is an airline? A solar panel manufacturer uses plastic and other materials partly derived from petroleum.

If we push the argument further, are there really economic sectors that have no exposure to the oil sector or any action harmful to the environment? Is there an investment that is free from any environmental impact?

I believe that the vast majority of companies in the world have an environmental footprint. COTE 100 has one, although it is probably much smaller than the average company (it’s easier when you don’t manufacture anything).

As with anything, I believe an investor must seek balance. The world of green investing is neither black nor white, but a shade of grey (or green).

Our goal is to invest long term in companies that will provide us with attractive returns. We avoid companies and industries that we believe are clearly harmful to the environment. We prefer those which, at best, are good for the environment, or at the very least do not affect it too much.

But perfection doesn’t exist.