Canadian Responsible Investments Surpass $1.5 Trillion
TORONTO, February 2, 2017 – The 2016 Canadian Responsible Investment Trends Report reveals that responsible investment (RI) is growing rapidly in Canada. The biennial report, released today by the Responsible Investment Association (RIA) tracks the evolution and growth of RI in Canada. RI is defined as investments that incorporate environmental, social and corporate governance (ESG) criteria.
According to survey data, as of December 31, 2015, assets in Canada managed using one or more RI strategies increased from $1.01 trillion to $1.51 trillion in the prior two years. This robust growth represents a 49% increase in RI assets under management during the two-year period.
Responsible investing is also taking a greater share of the investment industry. The data shows that 38% of assets under management in Canada incorporate a responsible investment strategy, up from 31% two years prior.
“Individual and institutional investors increasingly recognize that incorporating ESG factors into investment decisions can reduce risk and enhance returns while contributing to positive societal impact,” said Deb Abbey, CEO of the RIA.
“In Canada and around the world there is a growing consensus among investors that information related to ESG issues such as climate change, human rights, diversity, and corporate corruption is material for investment decisions,” said Abbey. “Systematically considering ESG factors is a component of accurate valuation and comprehensive risk management.”
- $1.5 trillion in RI assets under management
- 49% increase in two years
- Responsible investing represents 38% of Canadian investment industry
- Individual investors’ RI assets up 91% in two years
- Pension fund assets make up 75% of RI industry’s growth, increasing by $374 billion, or 45%, in two years
- 80% of respondents expect moderate to high levels of growth in RI over next two years
- Asset managers and owners ranked the following as their top motivations for incorporating ESG factors into investment decisions: (1) to minimize risk over time; (2) to improve returns over time; (3) to fulfill fiduciary duty.
“We are not surprised, but we are very pleased by the continued growth in responsible investing,” said John Kearns, CEO of NEI Investments. “For over 30 years, our investors have told us how important it is to invest in alignment with their personal values. This trend not only validates that approach, it reinforces NEI’s core commitment: to make money for our investors, while also making a positive difference.”
“We’re thrilled to see the continued growth of responsible investing in Canada, which reflects a prevailing concern for sustainable development,” said Frederick Pinto, CEO of OceanRock Investments Inc. “Investors want competitive financial returns along with positive social and environmental impact. That’s why OceanRock continues to broaden the Impact Investing mandate for the Meritas SRI Funds into areas like affordable housing and renewable energy.”
“The report provides further evidence that asset owners and investment managers believe environmental and social events in the real world can, and do, impact portfolio returns,” said Dermot Foley, Portfolio Manager, ESG Analysis with Vancity Investment Management, manager of the IA Clarington Inhance SRI Funds.
About the Canadian RI Trends Report
The Responsible Investment Association (RIA) publishes the Canadian Responsible Investment Report on a biennial basis to understand and assess the characteristics of responsible investment in Canada. For the current report, the RIA’s researchers collected data from more than 150 investment managers and asset owners. Primary research was supplemented by secondary sources such as annual reports. The researchers avoided double counting by subtracting approximately $307 billion in RI assets which overlapped between external managers and funds of funds.
About the Responsible Investment Association
The Responsible Investment Association (RIA) is Canada’s leader on responsible investment (RI). RI refers to the integration of environmental, social and governance (ESG) criteria into the selection and management of investments as well as socially responsible and ethical investing. We are a national, membership-based organization composed of financial institutions, mutual fund companies, investment management firms, financial advisors, and various organizations and individuals who practice and support responsible investing. The RIA and its members strongly believe that RI is a valuable investment tool to enhance returns, reduce risk, and catalyze positive societal change.