Driven by the goal of environmental impact, Canadians invest sustainably to help ensure long term profitability, Schroders’ study finds
New York, NY – September 28, 2022 – Schroders, a global asset manager, today released the findings of its annual Global Investor Study which found that many Canadian investors believe investing sustainably can help ensure long term profitability.
Schroders’ Global Investor Study surveyed over 23,000 investors (including 1,000 in Canada) to gauge their sentiment on key investment themes and outlooks, with a particular focus on their views on sustainability, climate change and ESG (environmental, social, governance) investing.
Sustainable investing and climate engagement can drive long term profitability and positive change
This year’s survey found that 56% of Canadian investors believe investing sustainably is the only way to ensure profitability for the long term, including 22% who strongly agreed with this sentiment.
More so than their U.S. peers, Canadian investors are also emphasizing the importance for investor engagement on climate issues. Sixty three percent of investors listed general climate efforts (including Net Zero, decarbonization and physical risks) as one of the top three most important areas investors should engage with companies on, compared to 59% of U.S. investors. The same percentage selected natural capital, which includes efforts to mitigate deforestation and pollution, compared to 59% of US respondents.
In addition to driving investment performance, Canadians believe that sustainability can also make a real impact. Sixty percent of respondents believe investment can lead to progress regarding sustainability challenges such as climate change.
Investors seek portfolio customization and evidence of investment and impact results, both around environment and social issues
Canadian investors, especially when compared to their U.S. peers, are placing a higher level of importance on environment-focused sustainable investment options, and with that, are looking for a results-oriented approach.
Fifty five percent of respondents noted sustainable funds are attractive because of their wider environmental impact, compared to 45% of U.S. respondents. In fact, 41% of Canadian respondents (compared to 38% globally) indicated regular reporting showing the impact of their investments on people and the planet would encourage them to increase their sustainable investing.
Beyond climate, and similar to their U.S. peers, Canadian investors are also emphasizing the “S” in ESG. Nearly two-thirds of Canadian respondents (65%) identified human capital management (e.g., health and safety, wellbeing, compensation & benefits) as one of the top three most important areas on which investors should be engaging with companies. Forty four percent of investors ranked diversity and inclusion as a top choice, while 42% ranked human rights.
When asked on which areas they would most like their investments to have an impact, Canadian investors selected several “S” and “E” focused initiatives among their top choices, including:
- Good health and wellbeing (45%)
- Clean water & sanitation (44%)
- Quality education (42%)
- Climate action (37%)
Clarity around available educational resources is needed
Canadian investors reported a lack of education and transparency as a key factor holding them back from increasing their sustainable investments. In fact, nearly half (48%) listed the lack of transparency and reported data from providers about the impact of sustainable investments as a barrier and 44% acknowledged the lack of clear, agreed definitions on what sustainable investment is as hinderance for further allocation.
To this point, it is clear education around sustainability is important to Canadian investors, with over half of respondents (52%) noting more education about sustainable investment in general would encourage them to increase their allocations.
Interestingly, despite calling for more transparency and education, 70% of investors say they have access to information on sustainability. However, only 36% of investors engage with the information. This suggests that while there is plenty of information on sustainability available, there is a lack of clear, comprehensible and accessible resources that explain ESG investing in general and in the context of investor portfolios.
Marina Severinovsky, Head of Sustainability, North America, commented:
“While it’s now clear that a number of investors are coming to believe that investing sustainably is a long term endeavor, the asset management industry must look to make clear the risk mitigation and financial opportunities a sustainability-forward investment approach can bring.
Many Canadians are ready to make an impact with their investments and have clearly outlined what they need to engage further with sustainable investing. Investment managers must cut through the jargon and provide clear, digestible information on the real impacts of sustainable investing, as well as explain the difference between various levels of ESG, such as integration, divestment and impact.”
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Contacts
Sarah Levine, Prosek Partnersslevine@prosek.com646.818.9289
Jennifer Manser, SchrodersJennifer.Manser@schroders.com212.632.2947
The views and opinions contained herein are those of Schroders’ investment teams and/or Economics Group, and do not necessarily represent Schroder Investment Management North America Inc.’s house views. These views are subject to change. This information is intended to be for information purposes only and it is not intended as promotional material in any respect.