Most investors want an energy transition – but not just any transition

Amid a groundswell of climate pledges from countries and corporations, the majority of Canada’s retail investors are treating the transition to net-zero carbon as an opportunity that must be balanced against other concerns as well.

In the latest Investor Opinion Survey conducted by the Responsible Investment Association (RIA), which draws from an Ipsos poll of 1,000 Canadian investors, 86% said they were “very” or “somewhat” concerned about climate change and the environment. Almost the same number (85%) said corporations should set goals for their businesses to reach the net-zero emissions standard by 2050.

Four fifths of respondents (80%) strongly or somewhat agreed that they’d want their fund manager to encourage Canadian corporations to curtail their carbon emissions, and almost as many (78%) said they’d want a portion of their investment assets to be placed in companies that are providing solutions to reduce carbon emissions.

The survey also confirmed most investors won’t tolerate organizations’ attempts to put on a green facade. When asked to rate their level of concern about greenwashing in the investment industry – greenwashing was defined as “false information that is distributed by an organization to make it look more environmentally responsible than it actually is” – 33% said they were “very concerned,” and another 45% were “somewhat concerned.”

At the same time, most agreed companies should not overlook the forest for the trees by hyper-fixating on climate while disregarding people. A convincing majority of respondents (86%) agreed that avoiding negative outcomes for workers and communities is “very” or “somewhat” important for Canadian companies that are “in transition.” 

In line with that, 70% said they want the companies in their portfolio to include Indigenous Peoples as partners in decisions around the coming energy transition, particularly in considering the impact on their communities, lands, and rights.

Despite the overwhelming consensus around climate action, one poll finding also suggested that some green-minded Canadian investors will waiver in certain cases.

When asked what they would do if one of their portfolio companies has performed financially well in the past, but has high carbon emissions and no plans to align their business with a net zero model, a 38% plurality said they’d stay invested in the company but urge action to reduce emissions. Nearly one quarter (24%) said they’d divest from the company, 15% said they’d take no action, and 22% weren’t sure.

The survey also confirmed a continuing responsible investment service gap among Canada’s retail investors.

In a question on whether their financial advisor or institution has ever asked if they were interested in responsible investments that aligned with their values, only 27% said “yes” while 61% said “no.” However, 77% said they’d like their advisor or institution to educate them about such investments, including 51% who “somewhat agreed” and 26% who “strongly agreed.”

The desire to be informed about RI was prominent among respondents aged 35 to 54 years old (81%) and those between 18 and 34 years old (80%). In contrast, 71% of respondents who were at least 55 said the same.