Copyright : Travis Wolfe

From the end of 2015 to the end of 2017, impact investing in Canada has grown by 81 per cent, representing $14.75 billion, according to a new report by the Responsible Investment Association.

“Like any pre-teen, impact investing currently sits on the edge of youthful maturity,” said Kelly Gauthier, RIA board member and managing director of impact advisory at Rally Assets, in the report. “Canada might be described as a ‘late bloomer’ compared to some global comparators — less mature, with fewer investment options and less capital committed.

Read: Most Canadian institutional investors engaging in ESG issues: survey

“Impact investing enters adolescence charged with emotion, fuelled by nascent growth and ready to change the world. Skepticism remains high among those ‘older and wiser,’ who dismiss impact investing as youthful exuberance. But they continue to underestimate the potential of the massive intergenerational transfer of wealth and the difference in priorities of the recipient generation.”

The report found special impact funds and managers make up the largest cohort managing impact investments, with $7.8 billion under management in Canada, followed by credit unions with $4.6 billion and Quebec solidarity-based finance investment organizations, managing $1.1 billion. Impact funds and managers have overtaken credit unions as the largest manager type since the RIA’s 2016 report. This has been driven by the increase in specific impact investment products, as well as demand stemming from increasing investor awareness, noted the report.

Read: ESG move to mainstream boosts demand for data: report

Ontario is leading the way, with assets coming to $6.4 billion, followed by British Columbia with $4.7 billion, Quebec with $2.9 billion and Saskatchewan with $106 million.

Public equity is the most popular asset class to apply impact investing, making up 41 per cent of assets within the strategy. Private equity comes in at a close second with 34 per cent, followed by 10 per cent for private debt and six per cent for public debt. This represents a major shift over the past two years — private debt made up 32 per cent of assets at the end of 2015.

Notably, the acceleration of adapting impact investing for public equities is happening faster in Canada than on a global scale. In 2013, public equities made up three per cent of impact investing in the country.

Read: Developing ESG, infrastructure considerations for investors in Asia

Copyright © 2019 Transcontinental Media G.P. Originally published on benefitscanada.com

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Randy Bauslaugh:

This article seems to conflate or confuse “impact investing” with ESG integration. If the goal of impact investing is to make change to environmental, social or governance issues, it raises legal risks for pension fund fiduciaries. Taking into account and engaging on ESG factors for purposes of achieving financial goals or mitigating financial risks does not.

Monday, February 25 at 2:06 pm | Reply

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