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Invest in Your Future and the Environment

May 30, 2016

“The effects of climate change are being felt today, and future projections represent an unacceptably high and potentially catastrophic risk to human health.”

This statement, made by the medical journal The Lancet, 1 demonstrates the connection between climate change caused by increased carbon emissions and human health.

The consequences of climate change, like increased pollution, disrupted weather patterns, reduced crop yields and other environmental issues, have led to the movement toward socially responsible investing.

While socially responsible investing is not new, it is gaining momentum. More people are paying attention to the types of companies they invest in—what business activities those companies undertake, and the health and environmental impact of their actions. In this approach, institutional investors apply a screen (i.e., a filter) for various environmental, social or governance (ESG) factors, and if a company doesn’t meet the specified ESG obligations, they won’t invest in that company.

Going fossil-fuel-free resonates with many CMA members

The energy sector is an obvious focus for environmentally aware investors. Companies involved in oil and gas exploration and production, as well as those that mine coal, have been scrutinized because of the environmental impact associated with their activities.

As a result of a member vote at its 2015 annual meeting, the Canadian Medical Association (CMA) made a decision to divest its reserves from fossil fuel companies. The CMA asked that MD Financial Management investigate investment opportunities in renewable energy solutions. The CMA is committed to being responsive to the needs and wishes of its members.

Many physicians want the companies they invest in to generate reasonable returns while also being environmentally responsible.

MD Fossil Fuel Free Funds™: Effectively reducing carbon exposure

If you’re interested in fossil-fuel-free investing, consider our MD Fossil Fuel Free Equity Fund TM and MD Fossil Fuel Free Bond Fund TM . These funds eliminate exposure across stock and bond holdings to companies involved in extracting, processing and transporting fossil fuels.

Flexible exposure to fossil-fuel-free investments

With MD Fossil Fuel Free Funds, you and your MD Advisor can reduce your exposure to a customized level that makes sense for you. Below is an illustration of how you can allocate, for example, 10% of your investment portfolio to MD Fossil Fuel Free Equity Fund and 10% to MD Fossil Fuel Free Bond Fund, without changing your overall asset class exposure (i.e., the proportion of assets allocated to equities and to fixed income).

Note: The portfolios above are examples only, used to illustrate the concept of flexible fossil fuel exposure, and do not necessarily reflect actual portfolios.

At a glance: MD Fossil Fuel Free Funds
  MD FOSSIL FUEL FREE EQUITY FUND MD FOSSIL FUEL FREE BOND FUND
OBJECTIVE Long-term capital appreciation Conservation of principal and income production, with capital appreciation as a secondary consideration
FUND MANAGER(S) AGF Investments Inc., Comgest Asset Management International Limited, CIBC Asset Management Inc. Manulife Asset Management Ltd.
MANAGEMENT FEES 1.25% 0.85%
ASSET CLASS Global equity Fixed income
OTHER INFORMATION Includes a 10% “opportunistic sleeve” that will be invested in companies that develop or fund positive environmental solutions like renewable energy, energy efficiency, waste reduction and water management.

Stringent screening is critical

MD conducts rigorous screening to select companies for our MD Fossil Fuel Free Funds. We use Sustainalytics, an independent responsible-investment research firm, to help analyze our funds’ exposure to fossil fuels. With 14 offices around the world, the company helps institutional investors develop and implement responsible investment strategies.

If a company doesn’t meet Sustainalytics’ customized screening criteria for fossil fuel exposure, it is not eligible for the MD Fossil Fuel Free Funds.


5X
Fossil fuel companies have five times more oil, coal and gas in known reserves than climate scientists believe is safe to burn.
2°C
Almost every government in the world agrees that any warming greater than 2°C rise above pre-industrial levels would be unsafe.
80%
To keep the earth in livable shape, 80% of fossil fuels must be kept underground.
565
565 gigatons of carbon dioxide is the maximum that can be poured into the atmosphere and still allow a reasonable hope of staying below 2°C.
31
31 gigatons of carbon is used per year. At this rate, we will burn our 565-gigaton allowance in only 16 years-that’s roughly when today’s preschoolers will be finishing high school.
Source: http://math.350.org/questions .

Climate change and growing health concerns

Physicians recognize that carbon emissions from fossil fuels can potentially compromise the health of their patients, so they may have extra incentives to pursue investments that are free of fossil fuels.

The Public Health Agency of Canada 2 recognizes that weather can have a direct impact on health, through outcomes such as hypothermia, heat stress and injuries or death from extreme weather. Indirectly, changing weather patterns can impact health via storm-related water contamination, cardiorespiratory issues linked to smog, an increase in allergies, and heightened risks of disease. The agency expects these health issues to worsen as carbon-induced climate changes intensify.

Did you know?

The World Health Organization believes that, by 2030, the direct health costs associated with climate change could exceed US$2 billion a year.


Source: World Health Organization, Fact Sheet No. 266, September 2015.

Investing for the future

As the health risks of increased greenhouse gas emissions become more apparent, many CMA members are seeking alternatives to fossil fuel investing. With the MD Fossil Fuel Free Funds, you can make a meaningful investment in both the environment and your portfolio returns. Each will leave an important legacy.

Contact your MD Advisor to see how these funds could be a good fit for your portfolio—and the health of the planet.

1 “Health and climate change: Policy responses to protect public health,” The Lancet Commissions, November 2015.
2 Public Health Agency of Canada, 2015.

MD Financial Management provides financial products and services, the MD Family of Funds and investment counselling services through the MD Group of Companies. For a detailed list of these companies, visit md.cma.ca.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed. Their values change frequently and past performance may not be repeated. To obtain a copy of the prospectus, please call your MD Advisor, or the MD Trade Centre at 1 800 267-2332. The MD Family of Funds is managed by MD Financial Management Inc., a CMA company.