But CEO calls for better information for advisors to help meet client demand
Canadian investors have boosted responsible investing to a “pivotal milestone” according to a new report published today (Nov. 19).
Responsible investment assets under management grew to almost $4.5 trillion in 2023, a significant increase in its share of total AUM which reached 71%, the Responsible Investment Association’s latest trends report reveals.
This comes amid rising investor confidence as almost 60% of respondents cited higher confidence in the quality of ESG reporting thanks to clearer definitions and improved practices. But this does not mean there isn’t more to do with investors calling for progress on standardized reporting practices.
The report draws on responses from Canadian institutional asset managers and asset owners.
“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.”
Gains for RI are being driven by concerns about climate change, regulatory influence, and the demand of investors for investments that make an impact, particularly among younger and retail investors, although institutions are also powerful influencers. The share of respondents who cited younger investors as key drivers of RI growth was 34% in 2024, up from 8% last year.
The participation – and demand – of retail investors fuels the growing consensus on the need for an RI standard for advisors to help them better navigate the complexities of the space to meet client needs.
“Financial advisors will play an essential role in connecting investors with responsible investment options,” added Fletcher. “It is incumbent on us to equip them with the necessary knowledge and tools to leverage the potential from rising client demands.”
Risk mitigation remains the primary reason organizations consider ESG factors, followed by enhancing long-term returns and fulfilling fiduciary duties. Top concerns include reducing GHG emissions, increasing board diversity and climate change mitigation.
But the report shows that Canadian investors are still very concerned about greenwashing and the lack of standardization of ESG reporting with further alignment on definitions and practices seen as crucial to maintain investor trust and to build on continued momentum.
