Toronto – November 19, 2024 – The market share of responsible investment (RI) assets under management (AUM) in Canada has grown significantly, according to the latest findings from the 2024 Canadian Responsible Investment Trends Report. Released today by the Responsible Investment Association (RIA), the report tracks the national trends and outlook for RI, which refers to investments that incorporate environmental, social and governance (ESG) factors into the selection and management process.
The 2024 Report reveals a pivotal milestone for the industry, with RI now accounting for 71% of total AUM. This growth is accompanied by a marked rise in investor confidence, driven by clearer definitions of RI strategies and improved ESG reporting practices. The Report also identifies key challenges that continue to hinder RI’s full potential, including greenwashing, regulatory uncertainty and performance concerns.
“As responsible investing continues to evolve, we cannot become complacent,” says Patricia Fletcher, CEO of the Responsible Investment Association. “Collective action and advocacy are necessary to further advance the adoption of RI and mobilize capital to strengthen Canada’s economic resilience.”
Key findings from the 2024 Report:
- Rising Confidence in ESG Reporting: Nearly 60% of respondents report increased confidence in the quality of ESG reporting, driven by clearer RI strategy definitions. However, continued demand for standardized reporting practices remains strong, signaling the need for further progress.
- Climate Change and Investor Demand Fuel RI Growth: Climate change concerns, investor demand for ESG/impact investments and regulatory guidance/requirements remain the primary drivers of RI growth. Notably, younger and retail investors are emerging as powerful forces, alongside institutional players and regulators, in shaping the future of RI.
- ESG Integration Leads; Risk Mitigation and Long-Term Returns Drive Adoption: Risk mitigation remains the primary reason organizations consider ESG factors, followed by enhancing long-term returns and fulfilling fiduciary duties. Commonly considered ESG factors include GHG emissions, board diversity and climate change mitigation. ESG integration leads as the most widely used strategy, with screening and stewardship also prevalent. Impact investing is less common with a use incidence near 50%.
- Barriers to Progress: Greenwashing and lack of standardization remain top obstacles, while concerns related to perceived performance of RI are more pronounced. As the profile of the industry grows, further alignment on definitions and practices will be crucial to maintain investor trust and build on continued momentum.
- A Window of Opportunity: Evolving regulations present both challenges and opportunities for RI expansion. Retail investors are playing an increasingly pivotal role in driving this momentum. There is growing consensus on the need for an RI standard for advisors, better equipping them to meet rising client demand and navigate the complexities of the evolving investment landscape.
Quotes from 2024 Canadian RI Trends Report Partners:
- “The growth of RI assets as well as their continued increase in market share despite significant headwinds attest the validity of this approach in today’s investment industry, said Roger Beauchemin, President and CEO of Addenda Capital. Organizations and investment teams are committed to improving risk management and to unlocking opportunities by increasing the breadth and the scope of their research, analysis of and their stewardship with their portfolio companies. That appears to be the state of play of responsible investment today.”
- “As a longtime supporter of the RIA, we are pleased to continue our sponsorship of the 2024 Canadian Responsible Investment Trends Report and applaud the work being done to bring awareness to the national trends and outlook for RI,” said Judy Goldring, President and Head of Global Distribution, AGF Management Limited. “The Report provides a clearer understanding of the opportunities and challenges in responsible investing, and we believe the findings will help shape the way we engage and educate our clients.”
- “It has been a long time coming, but the continued push for improved standardization of responsible investment terminology and reporting frameworks appears to be bearing fruit. As investment managers gain confidence in these areas, they will have an easier time passing the relevant information to their clients in a way that’s meaningful to them. For NEI, that means we’ll be better positioned to share with everyday Canadians how their investments are generating long-term sustainable value.” Adelaide Chiu, VP & PM, Head of Responsible Investing, NEI Investments
- “Responsible investing is no longer a niche; it has become the standard expectation across the Canadian investment community. This progress is crucial for the Canadian economy as it fosters sustainable growth, attracts global investors, and ensures long-term financial stability. By prioritizing responsible investment practices, Canada will lead the way in building a resilient and prosperous future.” Fate Saghir, Senior Vice President, Head of Sustainability, Mackenzie Investments
- “RBC Global Asset Management is proud to continue our collaboration with RIA Canada by sponsoring the 2024 Canadian Responsible Investment Trends Report. The findings from this year’s report address several key issues that are becoming increasingly important to shareholders, such as the standardization of reporting practices by issuers. To continue to move the needle on this topic and others, we believe collective action is very important to maximize our impact.” Melanie Adams, Managing Director and Head, Responsible Investment, RBC Global Asset Management, and Chair of the Board, RIA
About the Canadian RI Trends Report:
The Canadian Responsible Investment Trends Report, published by the Responsible Investment Association (RIA), serves as a tool for monitoring the evolution of responsible investment (RI) practices in Canada. This 2024 report draws on responses gathered from a survey of Canadian institutional asset managers and asset owners, which took place between May 22nd and July 19th, 2024. The previous survey was conducted in 2023.
The 2024 report was generously sponsored by Addenda Capital, AGF Management Ltd., Mackenzie Investments, NEI Investments and RBC Global Asset Management.
About the Responsible Investment Association (RIA):
The RIA is Canada’s investment industry association with a purpose of entrenching responsible investment (RI) in Canada’s financial ecosystem. The RIA’s membership includes asset managers, asset owners, advisors and service providers. Institutional members collectively manage over $45 trillion in assets globally. Learn more at www.riacanada.ca
For more information or interview requests, please contact:
Ady Jonsohn
Vice President, Content Development and Delivery
Responsible Investment Association
+1 416-461-6042
