BJK Financial Group Blog

Sept-23-2021

Right here at home

As I began to think about how I could talk about governance in ESG, I was presented with a perfect local example. Although the biggest national take-away from the recently finished Canadian election was how little anything changed, we saw one of the few examples of significant change right next door in Kitchener Centre.

As you probably already know, a series of unexpected circumstances allowed the Green Party of Canada to elect their very first Member of Parliament here in Ontario. Mike Morrice had finished second in the 2019 campaign and chose to run again for the Green Party. Then, late in the campaign Raj Saini, the Liberal incumbent, decided to end his campaign amid allegations of inappropriate conduct towards female staffers.

Because it happened so late, the Liberals could not remove Saini’s name from the ballot. This gave Morris the opportunity to take advantage of his previously strong showing in the riding to become the first ever Green Party MP from Ontario.

Green Party local success contrasts with national collapse

Across the rest of Canada, the Green Party saw a collapse in their support. This has been blamed on the controversy that has plagued their federal leader, Annamie Paul.

Elected leader of the party less than a year ago, Ms. Paul, also ran three times for the Green Party than two years as a local candidate in Toronto Centre.

But things took a strange twist for Ms. Paul and the Green Party in June. At that point, Jenica Atwin, a Green Party MP from News Brunswick crossed the floor to sit with the Liberals. She referred to differences with Ms. Paul over the party’s position on the Israeli-Palestinian conflict. The party also announced that they were conducting an internal review of Ms. Paul’s leadership. That was suspended when the election was called. But that point the damage had been done.

Governance becomes consequential when it becomes public

In both these situations, the damage was done when problems became public.

If you are concerned about the presentation of environmental issues in the Canadian House of Commons, then the difficulties in the Green Party probably bother you. The fact that the root of the issue lies with apparent differences of opinion about in the Middle East just makes the story harder to figure out.

On the other hand, the problem for the Liberals in Kitchener Centre stems from the growing intolerance for sexual harassment in the workplace. Both Raj Saini and former Governor of the State of New York Andrew Cuomo can attest to that.

In both situations, allegations had been reviewed internally and dismissed. But when the stories went public the increased scrutiny forced each of these elected officials to resign. And their stories are not unique.

The issues addressed in these stories cover the entire ESG spectrum. And they serve as a stark reminder of the impact that these issues can have when they become public. Unfortunately, we cannot always foresee these occurrences.

And that can be one of the most difficult aspects of investing responsibly. But there are tools available to help make our decisions easier. Call or write me to start looking at using some of those tools in your own investment decisions.