Ethical Funds Inc. is calling for securities regulators in Canada to catch up to the U.S. to restore investor confidence in the securities industry and capital markets.

The firm’s action has been prompted by reforms proposed by the Securities and Exchange Commission requiring mutual funds and investment advisors to disclose proxy votes and proxy voting policies.

The five-member board of the SEC voted unanimously in support of the proposal and will now consider public comments submitted until December 6. Ethical Funds is requesting that securities regulators across Canada examine the reforms proposed by the SEC and to consider implementation of these reforms in their respective jurisdictions.

It says that this action should be taken in recognition that proxy votes represent corporate assets owned by the investor. Investors have a right to know how their property is being voted. “Proxy voting disclosure across the industry would help ensure Canadian investors that mutual funds are supporting corporate governance practices that are consistent with the best interests of investors, rather than company managers,” said Robert Walker, vice president SRI Policy & Research at Ethical Funds. “It’s less likely that many of the inadequate corporate governance practices now coming to light would have been tolerated had these been more widely known and recognized as detrimental to the long term health of the corporation. Mandatory proxy voting disclosure would be an important step in helping to publicize such practices and prevent future financial disasters.”

Ethical Funds began disclosing its proxy voting policies in 2000 and its proxy voting record in 2001, the first mutual fund company in Canada to do so. “Ethical Funds believes that by adopting progressive proxy voting policies, mutual funds can help build better managed companies, reduce firm specific risk, and yield stronger financial performance,” said Walker.

The SEC is also asking for comment regarding whether mutual funds should be required to disclose how proxies are voted on social and corporate responsibility issues. Ethical Funds supports these specific disclosures, believing that social and environmental risks are significant yet largely unrealized factors in determining the long-term value of the corporation. Disclosure of proxy voting policies and records on social and environmental performance will draw attention to these issues and to a determination of how companies can reduce risks in a manner that advances the strong financial, social, and environmental performance of assets.