TORONTO – October 26, 2023 – Conviction behind responsible investing has only grown stronger, according to new data from the 2023 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 governance (ESG) issues into the selection and management process.
This 2023 Report, the first the RIA has produced annually instead of biennially, saw the proportion of RI Assets Under Management (AUM) increase to 49% —even as AUM in general decreased. Global investor momentum to enhance, align, and embed sustainability reporting in capital markets is seeing strong ripple effects in Canada, which will grow stronger over time with the international uptake of emerging standards.
This year’s data shows a marked increase in investor confidence related to the quality of ESG reporting—both overall and concerning their own reported data. With greater sophistication around RI leading to increased scrutiny and higher expectations, investors eagerly await globally consistent definitions, standards and frameworks. This will provide the common language and comparability needed to boost confidence and address persisting concerns about greenwashing, disclosure, and data integrity.
“As sustainability issues increasingly define investment risk and opportunity, the financial sector is codifying RI practices, ramping up transparency and reporting, and pushing for greater clarity and certainty,” says Patricia Fletcher, CEO of the RIA. “I am optimistic about the future of RI in Canada and the opportunity to embrace the global momentum behind emerging tools – from disclosure standards to green and transition taxonomies – in ways that advance Canada’s priorities, including economic Indigenous reconciliation.”
Investors remain committed to implementing sound RI practices and adopting formal policies, and they are increasingly sharing this information publicly. Their consideration of ESG factors in investment decisions continues to be motivated by the same top factors as in the previous three surveys: minimizing risk and improving returns. Together with the upward trend of RI market share, this points to the steadfast conviction of responsible investors.
Key findings from the 2023 Report:
- Minimizing risk is the top-ranked reason organizations consider ESG factors, followed by improving returns over time, and fulfilling fiduciary duties.
- GHG emissions are the most common ESG factor considered in investment decisions, followed by board diversity and inclusion, and climate change mitigation.
- ESG integration is the most commonly used RI strategy, followed by corporate engagement and negative screening. Over 50% of respondents say they are using impact investing.
- Nearly 6 in 10 organizations feel more confident about the overall quality of ESG reporting compared to last year.
- The top three deterrents to RI growth, according to respondents, continue to be greenwashing, lack of standardized disclosure frameworks, and lack of reliable data.
- Growth in RI is being driven by climate change, investor demand for ESG/impact, and regulatory guidance/requirements.
Quotes from 2023 Canadian RI Trends Report Partners:
- “Witnessing a rise in the proportion of RI assets amid a pullback in total AUM due to very difficult markets in 2022 distinctly validates the importance of responsible investing and the commitment organizations hold for it,” said Roger Beauchemin, President and CEO of Addenda Capital. “As tomorrow’s challenges grow increasingly complex, managing risk is top of mind for many. We can reasonably expect RI assets to expand, thanks to the ongoing development and implementation of standards, continual improvement in data quality, and increasing confidence toward ESG reporting.”
- “As a long-standing supporter of the Responsible Investment Association (RIA) AGF Investments applauds the important work, advocacy, and research they are doing to drive change in the sustainable investing space” said Karrie Van Belle, Chief Marketing and Innovation Officer, AGF Investments. “The Responsible Investment Trends Report provides advisors and investors with in-depth insights into the national trends and outlook for responsible investing, while capturing the evolution and forward-looking changes that have been unfolding in recent years.”
- “It is encouraging to see the maturation of responsible investing across Canadian money managers,” said Fate Saghir, SVP, Head of Sustainability, Mackenzie Investments. “This is especially apparent in the consideration of ESG to minimize risk over time which is a practice that we, at Mackenzie, have implemented across our diversified investment boutiques to align to client outcomes.”
- “It is heartening to see that asset managers and owners continue to put their clients’ needs first when it comes to the application of responsible investment strategies—as they must,” said Adelaide Chiu, VP, Head of Responsible Investing at NEI Investments. “The fact that reducing risk, improving returns and fulfilling fiduciary duty remain top reasons for consideration of material non-financial information underscores the importance of ESG integration. As standardization of disclosures improves and confidence in reporting rises, there will be no reason to ignore that information in the pursuit of Canadians’ investment success.”
- “RBC Global Asset Management is proud to continue our collaboration with RIA Canada by sponsoring the 2023 Canadian Responsible Investment Trends Report. Research such as this provides important education and insights into the evolving ESG landscape for Canadian advisors and investors, which is a shared priority for both of our organizations.” Melanie Adams, Vice President and Head, Responsible Investment, RBC Global Asset Management
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. Environics Research completed this study on behalf of the RIA. The results are based on input from organizations invited to participate in an online survey between May 9th and July 6th, 2023 as well as desk research completed by the RIA. All figures are stated in Canadian dollars as of December 31st, 2022. The previous survey was conducted in 2022, and before that, surveys were conducted biennially. The 2023 report was generously sponsored by Addenda Capital, AGF Investments, 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 $40 trillion in assets. Learn more at www.riacanada.ca.
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Vice President, Content Development and Delivery
Responsible Investment Association