Vancouver-based sustainable investing pioneer Genus Capital Management Inc. is opening an office in Toronto, with the ambition of having its story told more intimately to a larger market.

Genus is an employee-owned investment management firm that started a sustainable portfolio in 1994 which divested from high-carbon assets. In 2013 it created a family of fossil-fuel-free funds. Clients include individuals, families, institutions and funds such as the David Suzuki Foundation, Crossroads International and the United Church of Canada.

As of Dec. 31, its portfolio measured at $1.9 billion.

Chartered financial analyst Darryl Brown has been tapped as the head of Eastern Canada and associate client relationship manager for Genus. In an interview with Sustainable Biz Canada, he said the expansion is an opportunity to find a position as sustainable investors at a moment where interest in responsible investing is burgeoning.

“We’re not looking to sell at all costs. We’re looking to help Canadians understand our story and help them understand this can be a part of their financial journey.”

A sustainability stalwart

The essence of Genus is to provide a responsible investing approach for clients who seek alignment with its values, according to Brown. This is achieved with screens that filter out investments that do not match its clients’ values. To push for sustainable decisions on behalf of its clients, Genus also engages with companies.

Brown said Genus aims to be inclusive in its fund management, as the definition of sustainability may differ from person to person. “It’s not just that we’re thinking about climate action as being exclusively carbon reduction. We integrated a biodiversity screen in our portfolio.”

It may include investments that cover the S (social) of ESG, and not purely the E (environment). Screens for diversity, equity and inclusion, Indigenous conflict and reducing inequality are also options.

A major fund offering for its portfolios is its fossil-fuel free variant that excludes investment with companies that produce, transport and refine fossil fuels.

Genus has balanced sustainability and returns with its strategy, Brown said. Its equity impact fund with no fossil fuel assets beat the market with a 13.5 per cent growth rate per year for five years as of Dec. 31, 2023, he explained.

Why Genus expanded to Toronto

It was a natural decision for Genus to branch into Toronto because it is home to a growing customer base and has a hefty market size, according to Brown. But more importantly, it builds a closer, face-to-face connection to Genus’ existing Toronto clientele, as opposed to interacting through video or phone calls.

Brown expects to be joined by other permanent Genus employees at the company's office at 181 University Ave.

As for Brown, leading Genus’ Toronto office is the culmination of years in the financial sector, where he got his first professional exposure to sustainable investing, and the obstacles in the field.

As a senior financial analyst at Dominion Bond Ratings Service, he focused on the North American and Canadian energy landscape. He was exposed to oil and gas companies across the supply chain of exploring, transporting, refining, and storing fossil fuels, and debates over whether pipeline companies should be held responsible for climate change.

Brown then moved on to Sun Life Financial as an associate director and director of public fixed income, where he witnessed the challenge of integrating a sustainability framework into energy infrastructure investing.

“There was no framework internally, there’s no established framework industry-wide in terms of how do we incorporate a transition to a low-carbon economy into the investment decision approach,” he said.

He left Sun Life to work as a freelance investment consultant, demystifying investment by educating his clients. Brown partnered with small financial planning firms that aligned with investors’ values, giving him another look into sustainable finance.

Genus eventually approached his firm to plant roots in Toronto. The company was appealing because the firm understands the complexities of sustainable investing, so it made a “fantastic fit” for him. Genus believes in values alignment, inclusivity and education, and is one of the few firms he would consider joining, he said.

ESG investing: trend or mainstay?

Sustainable investing has shown signs of ebbing amid challenging times for some in the investment industry. Sustainable funds lost billions in 2023, suffering their first net outflow of equity, according to Bloomberg News.

Additionally, JPMorgan, State Street and Pimco left the Climate Action 100+ investor initiative earlier this month.

The issues Brown identifies in the ESG investing space are the absence of a strong definition of ESG, the threat of greenwashing, and the trendiness of ESG investing that resulted in some funds leaving as quickly they entered.

Despite the blows, Brown is a believer that ESG and sustainable investing will continue as a long-term trend. Qualitative factors beyond the traditional investing metrics are in demand by investors, and the transition to a low-carbon economy makes financial sense, he added.