The vast majority (91 per cent) of Canadian institutional investors have adjusted their voting and engagement policies to focus more on environmental, social and governance risks, according to a report by marketing agency Edelman.
The report, which surveyed 500 Canadian institutional investors, found 65 per cent have made policy adjustments within the past year. As well, investors are more amenable to associating themselves with activist investing, with 90 per cent saying they’re more interested in an activist approach. However, 90 per cent of respondents also said they don’t think many companies are prepared to respond to shareholder activism.
Read: A quarter of professionally managed U.S. AUM in ESG investments: survey
“This data makes it clear that issuers can no longer turn a blind eye to environmental and social considerations,” said David Ryan, executive vice-president of corporate and financial communications at Edelman. “Canadian institutional investors are measuring companies not only on their financial returns, but also on their contribution to social issues shaping business and political environments.
“This data tells us that to build and maintain trust with institutional investors, companies can benefit from responding to this new investing criteria, having clear and forward-looking disclosures and placing greater importance on verbal communications with the investment community.”
The survey also found 96 per cent of survey respondents believe addressing societal issues affects trust in a potential investment, while 91 per cent would consider investing with a lower rate of return if it meant including sustainable or impact investing considerations.
Institutional investors also said companies need to take urgent action on cybersecurity, globalization and income inequality.
Read: Inclusion of ESG in fixed income isn’t keeping up with investor demand: research