1. Exploring factors that influence social retail investors: Evidence from Desjardins Fund Responsible Investing Initiative Webinar March 26 th 2013 Tessa Hebb Carleton Centre for Community Innovation Carleton University

2. Presentation Overview Research Paper by Dominique Diouf, Tessa Hebb, and El Hadji The research question The research framework Key research findings Implications

3. Research Question This paper argues that to understand the behavior and choices of SRI investors we must consider social investors as complex individuals in order to understand the characteristics and behaviors of individual social investors in relation to those of conventional investors. Until now most studies on the choices, motivations and behavior of investors consist of a segmentation focused on socio-demographic characteristics.

4. Research Framework Our research builds on the theory of complexity framework. We take into account the influence that the institution may exercise and the role of SRI advisors in promoting socially responsible investment. Our research provides evidence from focus Desjardins Fund

5. What we looked for in the data Distinguishing characteristics associated with those who choose SRI products. ▫Common demographic characteristics. ▫Common attitudinal (values-based) characteristics. ▫Awareness of environmental, social, and governance issues as a determining factor in decisions on SRI investment.

6. Further Data analysis Investor expectations both in terms of ESG values and financial returns for SRI investors. The trade-off between ESG issues and the financial return. The role of advisor in SRI investment selection.

7. Variables Analyzed

8. Findings 893 participants in the survey, the majority are Diapason portfolio holders (90.4%); Sociéterre portfolio (SRI) holder’s are just 12.5%; ​​ while the holders of two portfolios (and Diapason and Sociéterre) are only 2.9%. 14.6% of the total sample are « enthusiastic » about ESG; 47.6% of the sample are «interested» in ESG; followed by «warm» (31%), and «reluctant» (6.9%). Those who are « enthusiastic » about ESG on ESG tend to hold a Sociéterre portfolio (33.8%), while those who are only warm to ESG tend to hold a Diapason portfolio (98.2%).

9. More Findings People who have heard of product through advertising or articles (TV, newspapers, journals) are more likely to hold a Sociéterre portfolio (57.1%). People who feel that the advisor knew little about the Sociéterre product are more likely to hold a Sociéterre portfolio (25.5%). Most people in the survey held the Diapason portfolios regardless of the level of knowledge of the advisor. These results show the importance of the need for institutions to develop strategies to promote SRI products.

10. SRI and Financial Performance When presented with a case of equal financial performance between the two portfolios, almost all Sociéterre investors choose the SRI option. Similarly more than 85.2% of them would choose SRI with a return 1% lower than that of the classical investment. This shows a high degree of loyalty to the product. 17% of Sociéterre investors say they would choose SRI even with a return 10% lower than that of the classical investment.

11. Conclusion We find people enthusiastic about ESG are 66 times more likely to hold the SRI portfolio than those reluctant about ESG. These individuals tend are more ‘autonomous’ in their investment style and get their information from the Internet and other media then through their advisor. These findings suggest that SRI funds may want to use the media and Internet to educate those who are warm or interested in ESG to become enthusiastic about ESG. They may want to provide autonomous routes beyond the advisor network for these individuals to make SRI investments.

13. Dr. Tessa Hebb tessa_hebb@carleton.ca Director, Carleton Centre for Community Innovation www.carleton.ca/3ci Contact