A majority (98 per cent) of Canadian institutional investors consider climate change a top environmental, social and governance focus area, according to a new survey by consultancy Millani.
The survey, which polled 40 institutional investors with more than $5.8 trillion in assets under management, found they also ranked diversity, equity and inclusion (45 per cent) and human capital and human rights (45 per cent) among their top three ESG focus topics. However, when assessing the hierarchy of topics for investors, biodiversity was cited as the second-most important issue (24 per cent), followed by DEI (19 per cent).
More than a third (36 per cent) of respondents said they either have, are currently working on or are planning to create their own ESG guidelines in the absence of a public taxonomy, while a quarter (25 per cent) called the European Union’s sustainable finance disclosure regulation the most impactful regulation in the past year, with some saying it’s now their “best in class” baseline.
The survey respondents also noted there’s a need for as much as $115 billion per year in new investments to transition Canada to a lower-carbon economy. When asked what their anticipated investment timelines for a transition-oriented investment would be, some cited five years, while others either indicated no clear timelines or suggested private markets might consider longer timelines. In addition, some respondents suggested there’s sufficient demand from investors for transition-oriented investments; however, they also noted ample supply is lacking.
Three-quarters (74 per cent) of respondents said their organizations have started to consider, in some manner, sustainability outcomes as part of their investment process. The main mechanism respondents said they’re using to avoid greenwashing claims is to adjust their level of individual engagements, while many are adapting their approaches to ask for and track specific outcomes.
Among respondents that referred to pushback around ESG investments, a majority (89 per cent) said it had no impact on their business. Most see this pushback, together with global regulatory efforts, as healthy for the industry in the medium to long term.