From the Editor: Pivot

Q2 | June 2020

Laptop, notebook, Tablet and coffee on work desk

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Dianne C. White, CPA, CA, CFP, TEP

June 25, 2020

Image used with permission: iStock/PRImageFactory


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From the Editor: Pivot

Q2 | June 2020

In this time of COVID-19, change is underway. Working from home, wearing masks and hoarding a lifetime’s supply of disinfectant wipes are just a few examples of our new personal reality. COVID-19 is also changing business reality.

The Business Roundtable, which is a group of 181 CEOs, made a pivot when they issued a statement about the purpose of corporations shifting from shareholder capitalism to stakeholder capitalism. (1) But what does this mean?

For many decades the purpose of corporations has remained the same: serve shareholders, primarily by maximizing profits and share prices. Now, the Business Roundtable CEOs are suggesting that corporations need to commit to serving not only shareholders, but customers, employees, suppliers and the public at large. According to Alex Gorskey, chairman of the Business Roundtable and CEO of Johnson & Johnson, this pivot “affirms the essential role corporations can play in improving our society when CEOs are truly committed to meeting the needs of all stakeholders… if companies fail to recognize that the success of our system is dependent on inclusive long-term growth, many will raise legitimate questions about the role of large employers in our society.” (2) In a system of stakeholder capitalism, corporations strive to promote long-term societal welfare.

As it turns out, these considerations are included in the social responsibility element of “ESG”. ESG stands for three criteria on which any company can be evaluated: environmental compliance and stewardship (E), social responsibility (S), and corporate governance (G). Many clients have asked how Nexus incorporates ESG into its investment process. You may be surprised to discover that these pillars have always been considerations in our investment philosophy. In this issue of Nexus Notes, you will find an article written by John Stevenson about how we integrate ESG into our investment process, and also how COVID-19 is changing how investors think about ESG.

Nexus has also faced a shift when it comes to how we do business since COVID-19 has arrived. We have made a myriad of changes to ensure things run smoothly while we are working from home. You can read about these in the article Swimming Naked by Denys Calvin. It is of utmost importance to continue to connect with clients, as always. Zoom is a good solution for client meetings. We can share investment reviews and financial plans one-on-one with clients online, thanks to Alex Jemetz, who introduced us to the Zoom application last year. We are also hosting our group investment reviews in the form of a live webinar with a Q&A. Nicole Weiss, our marketing manager, made a tremendous effort to ensure this works smoothly. While we miss the personal interaction, and we can’t provide lunch, we will continue to offer these forms of interaction. If you missed our live session in May, a recording of the full webinar is on our website, along with a shortened version.

Finally, in this issue we have a tax planning article for you to ponder. With change comes opportunity, so, with interest rates dropping, the prescribed rate loan strategy is back in favour. Read about this income splitting strategy in an article written by Nexus financial planner and CPA, Brad Weber. To close, we hope everyone is able to enjoy the wonderful summer weather. Borrowing the words from Dr. Bonnie Henry, who has successfully led British Columbia through its coronavirus fight: be kind, be calm, be safe.

(1), (2) Joy Thomas, “The New Bottom Line”, Pivot CPA Canada, March/April 2020.

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