Canadian ESG-related investment assets surge to $3.2 trillion: report

A majority (91 per cent) of Canadian institutional investors say climate change is a leading concern within the environmental, social and governance space, according to a new survey by Millani.

The survey, which polled more than 30 institutional investors with a total of $4.5 trillion in assets under management, found 47 per cent of respondents also cited biodiversity as one of their top three ESG issues. Indeed, 16 per cent said they’re already integrating nature-related considerations into their investment decision-making processes, while nearly two-thirds (63 per cent) are in the learning or development phase of integrating these considerations.

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When asked about expectations for issuer disclosures, many acknowledged the newly published task force for nature-related financial disclosures framework as a potential tool for issuers’ disclosures. However, given the early stages of their own understanding of the implications of these topics, the expectation is that issuers should demonstrate an understanding of biodiversity’s materiality and begin to speak to potential exposures, start value chain assessments and gather data on their positive and negative impacts.

Nearly two-thirds (63 per cent) of respondents said their organization has started to embrace sustainability outcomes. Asset managers are evolving their thinking around climate actions and now require “granularity in disclosures,” noted the report. As well, 43 per cent of respondents said they plan to launch impact products in 2024, with some citing the misconception that impact investing is contradictory to fiduciary duty as the biggest barrier to implementing this strategy.

More than half (57 per cent) of respondents indicated they engage on public policy issues. A quarter (25 per cent) said the federal government’s plan to develop a taxonomy aligned with the goal of reaching net zero by 2050 is a positive move. However, more than 63 per cent of respondents are skeptical of the government’s announcement and are growing frustrated with delays to the creation of the taxonomy.

“The market is evolving from ESG integration to impact of investments,” said the report. “Those who prepare well will be positioned to gain early competitive advantages.”

Read: Survey finds 75% of global asset managers have an ESG policy