NEW YORK--(BUSINESS WIRE)--Canadian investors have sharpened their focus on environmental and social issues due to the pandemic, but less so than the rest of the world, the Schroders Global Investor Study has found.
The sustainability-focused findings of the annual flagship study, which surveyed over 23,000 investors from 33 locations globally, found that 44% and 40% of Canadian investors, respectively, are now placing greater importance on social and environmental issues, compared to 55% and 57% of investors globally.
More than half (54%) of Canadian investors believe that data/evidence demonstrating that investing sustainably delivers better returns would encourage them to increase their allocations. A further 36% of investors said that regular reporting that highlights the impact their investments are having would motivate them to increase their sustainable investments and just over a third (34%) would like their financial advisor to provide them with more information aligned to their sustainability preferences.
While many Canadians are at ease with the prospect of embracing sustainability, they are slightly behind their global counterparts. Forty-three percent stated they would feel positive with their advisor moving their assets to an entirely sustainable portfolio, so long as the same level of risk and diversification was maintained, compared to 57% of investors globally and 68% of U.S. investors.
Of that 43%, three quarters said the opportunity to have a positive impact on the world was the most appealing factor, ahead of 41% who were confident about returns.
“Across the globe, ESG has firmly cemented its place in mainstream investing,” said Sarah Bratton Hughes, Head of Sustainability, North America, at Schroders. “As we begin to see externalities related to climate change, corporate governance and other factors materialize, Canadian investors can not only have a positive impact on the world but also uncover risks and opportunities to potentially enhance returns through their allocation strategy.”
Canadian investors seek to avoid financial, climate risks with ESG investing
The study also asked what controversies would drive people to withdraw from investments. Financial scandals are the most likely to occur, with these issues creating greater investment obstacles than cyber security hacks or climate change catastrophes. With that, some 63% of Canadian investors stated they would sell out if their investments were impacted by financial or accounting scandals.
This was ahead of 52% of investors who cited human rights scandals, and the same percentage who identified a scandal relating to treatment of a company’s workforce. Interestingly, Canadian investors were less concerned than their global counterparts with a climate change catastrophe. Only 48% identified they would sell out of a company experiencing this, versus 60% of investors globally.
“The pandemic has encouraged investors to want more from the companies they are invested in, with a microscope put on the way management teams treat employees and the communities they serve,” said Bratton Hughes. “Many Canadians want to ensure that they are only owning those that are having a positive impact on the world, with less risk of scandals that may hurt returns and company reputation.”
At an increasing level, investors are expecting global action to be taken to address climate change. The study found that pressure was growing on almost all key global stakeholders – from governments, companies and even asset managers – to mitigate the impact.
Over three-quarters of Canadian survey respondents (71% 77%) agreed that this responsibility should fall on the shoulders of national governments and regulators, while 70% placed responsibility on companies for tackling climate change.
Note to Editors
In 2021, Schroders commissioned Raconteur Media and iResearch to conduct an independent online survey of 23,950 people who invest from 33 locations around the globe.
The research defines “people” as:
- Those who will invest at least CAD17,300 (or equivalent) in the next 12 months
- Have changed their investments within the last 10 years
Due to this threshold, Schroders acknowledges that this group and thus the research findings are not representative of everyone's experience.
Note: Figures in this document may not add up to 100 per cent due to rounding and multiple selection questions.
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As a global active asset manager, the way we direct capital not only shapes the financial returns we achieve for our clients but also the impact that the companies in which we invest on their behalf might have on society. The relationship between these two outcomes has rapidly evolved as we see a fundamental shift in how companies are viewed and valued. Understanding the impact that they can have on society and the planet is crucial in assessing their ability to deliver risk-adjusted profits.
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*as at 30 June 2021