Business Wire, November 26, 2020 07:00 AM Eastern Standard Time
Responsible investments that incorporate environmental, social and governance factors now represent 61.8% of professionally managed assets in Canada.
TORONTO–(BUSINESS WIRE)–The 2020 Canadian Responsible Investment Trends Report reveals that responsible investment (RI) continues to grow rapidly in Canada. The biennial report, released today by Canada’s Responsible Investment Association (RIA), tracks the scale, trends, and outlook for responsible investment, which refers to investments that incorporate environmental, social and corporate governance (ESG) issues into the selection and management of investments.
“This research confirms that responsible investment is not a trend; it’s a paradigm shift”
According to the latest available data, RI assets grew from $2.1 trillion at the end of 2017 to $3.2 trillion as at December 31st, 2019. This represents a 48% increase in RI assets under management (AUM) over two years. These figures reflect assets that fall into seven different RI strategies or categories including ESG integration, shareholder engagement, negative screening, norms-based screening, positive screening, thematic ESG investing, and impact investing.
Responsible investing now accounts for 61.8% of Canadian AUM, up from 50.6% two years earlier. Retail RI mutual fund assets increased from $11.1 billion to $15.1 billion, up 36% over two years. This growing market share shows that Canadian investors increasingly view ESG factors as important components of investment decisions, with an overwhelming majority of 97% of respondents expecting moderate to high levels of growth in RI over the next two years.
“This research confirms that responsible investment is not a trend; it’s a paradigm shift,” said Dustyn Lanz, CEO of the RIA. “The investment industry is undergoing a secular transformation, stewarding assets towards more sustainable and inclusive outcomes for society while protecting long-term shareholder value.” He added, “For asset managers and financial advisors, RI expertise is no longer ‘a nice to have’; it’s table stakes.”
“Asset managers are hearing loud and clear that Canadians want to make a difference through their investments, with ‘investor demand for ESG/impact’ predicted to be the top driver of RI over the next two years,” said Frederick M. Pinto, Senior Vice President and Head of Asset Management for NEI Investments. “NEI is committed to helping guide the industry toward a greater focus on active ownership and impact solutions to help meet that demand.”
- $3.2 trillion in RI assets under management (AUM).
- 48% growth in RI AUM over a two-year period.
- RI represents 61.8% of Canada’s investment industry, up from 50.6% two years ago.
- Retail RI mutual fund assets increased from $11.1 billion to $15.1 billion, up 36% over two years. RI ETF assets more than doubled from $240.6 million to $654.9 million during the same period.
- The two most prominent RI strategies by AUM are: (1) ESG integration and (2) shareholder engagement.
- The ESG frameworks most often used by survey respondents in their investment analysis are: (1) Task Force on Climate-related Financial Disclosures (TCFD); (2) United Nations’ Sustainable Development Goals (SDGs); and (3) Sustainability Accounting Standards Board (SASB).
- Survey respondents reported the top four reasons for considering ESG factors are: (1) minimizing risk over time, (2) improving returns over time, (3) fulfilling fiduciary duty, and (4) fulfilling mission, purpose or values.
- 97% of respondents expect moderate to high levels of growth in RI over the next two years.