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Responsible Investment Industry in the Midst of Remarkable Evolution
[November 23, 2022]

Responsible Investment Industry in the Midst of Remarkable Evolution


The responsible investment industry is in the midst of a remarkable evolution, according to new data from the 2022 Canadian Responsible Investment (RI) Trends Report. Released today by Canada's Responsible Investment Association (RIA), the report tracks the national trends and outlook for RI, which refers to investments that incorporate environmental, social, and corporate governance (ESG) issues into the selection and management process.

This year's report confirms that RI's recent momentum is giving way to demand for sophistication and more vigilant reporting, signaling a maturing industry. Over the past two years, the rush into RI claims has been met by forces both external and internal to the financial industry, including the reputational and legal risks associated with greenwashing and lack of clarity around ESG industry terminology and disclosure requirements.

With its updated methodology, the report affirms that RI is entrenched in Canada, with reported assets under management at $3 trillion, and 94% of respondents using ESG integration as an RI strategy. This marks the emergence of a reliable baseline for RI market share and demonstrates that ESG Integration is a fundamental tool in Canadian investors' decision-making.

"Greater vigilance is redefining the 'floor' of RI assets under management. Increased clarity and alignment are necessary to shape the slope and raise the ceiling," said Patricia Fletcher, CEO of the RIA. "RI is here to stay, but we have work to do with everyone in the investment ecosystem to get the next steps right in order to propel further growth."

Growth expectations overall remain strong with 90% of respondents anticipating moderate to high levels of growth over the next two years. The demand for sophistication and vigilance is further reflected in investors' future outlook, with respondents citing the top three potential deterrents to RI growth as: (1) mistrust or concerns about greenwashing, (2) a lack of standardized ESG disclosure frameworks/standards, and (3) lack of reliable data.

The report found an increase in the prevalence of all other RI strategies in addition to ESG integration, including corporate engagement, positive and negative screening, and thematic and impact investing, further pointing to thegrowing RI sophistication of Canadian investors. Respondents cited risk management as their top motivation for considering ESG factors.



Additional Highlights

  • Survey respondents reported the top three reasons for considering ESG factors are: (1) to minimize risk over time, (2) to improve returns over time, and (3) to fulfill fiduciary duty.
  • The three most prominent RI strategies by AUM are: (1) ESG Integration, (2) Corporate engagement & shareholder action, and (3) Negative/exclusionary screening.
  • Climate change is an overwhelming concern for responsible investors--who also believe it is the greatest driver for growth over the next two years.

View the report here.


Quotes from 2022 Canadian RI Trends Report Partners:

"The evolution of responsible investing is a natural and expected process that is beneficial both to investors and the industry," said Roger Beauchemin, President and CEO of Addenda Capital. "Several trends are helping to strengthen practices: investors' growing appetite for data on environmental, social and governance (ESG) issues, pressure on companies to improve transparency, and industry efforts to define and meet standards in sustainable investing."

"As the definition of responsible investing matures and the collective knowledge of our industry continues to increase, we are encouraged to see significantly more respondents turning to thematic approaches and to hear that a desire to address key issues like climate change will continue to drive growth over the next few years," said Karrie Van Belle, Chief Marketing & Innovation Officer, AGF Investments Inc.

"We are incredibly proud of the progress that Canadian investors are making to deliver more transparency, a diversity of responsible investment solutions, and better client outcomes," said Fate Saghir, SVP, Head of Sustainability, Mackenzie Investments. "This report reinforces Canada's ambition to lead in the future low-carbon, equitable, and prosperous economy, and we at Mackenzie, are humbled to participate in this journey on behalf of our clients."

"We are inspired by the level of attention investors are paying to climate factors. What's more, the relatively low use of impact investing revealed by the report suggests there is untapped opportunity to leverage investment portfolios to reduce global carbon emissions," said Adelaide Chiu, VP, Head of Responsible Investing & ESG Services. "We look forward to helping Canadians seize the opportunity to make an impact as they pursue their financial goals."

"RBC Global Asset Management is proud to collaborate with the RIA Canada and support its efforts to build greater awareness of ESG trends and issues facing the investment community," said Melanie Adams, Vice President and Head, Corporate Governance and Responsible Investment, RBC Global Asset Management. "Primary research, such as the 2022 Canadian Responsible Investment Trends Report, plays an important role in helping educate Canadian investors and advisors about responsible investment trends and sentiment."

About the Canadian RI Trends Report
The RIA publishes the Canadian Responsible Investment Trends Report to understand and assess the characteristics of responsible investment in Canada. This study was completed by Environics Research on behalf of the RIA. The results are based on input from organizations invited to participate in an online survey between August 2nd and September 29th, 2022 as well as desk research completed by the RIA. All figures are stated in Canadian dollars as at December 31st, 2021. The 2022 report was generously sponsored by Addenda Capital, AGF Management Limited, Mackenzie Investments, NEI investments, and RBC Global Asset Management.

About the Responsible Investment Association (RIA)
The RIA is Canada's industry association for responsible investment. The RIA's membership includes asset managers, asset owners, advisors, and service providers who support its mandate of promoting responsible investment in Canada's retail and institutional markets. RIA institutional members collectively manage more than $42 trillion in assets. Learn more at www.riacanada.ca.


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