RI, also known as SRI or socially responsible investing, refers to the integration of companies’ environmental, social and governance (ESG) practices into the selection and management of investments.

One of the myths surrounding RI is the notion that aligning investments with one’s values necessarily entails sacrificing investment returns. But there is plenty of evidence to the contrary. Responsible investing can and does perform competitively, all while having a positive societal impact. Finally, the word is getting out!

Recent studies published by the Responsible Investment Association (RIA) show that SRI in Canada is on the rise, and in a big way. Some highlights from the findings of 2016:

• There are $1.5 trillion in SRI assets under management, representing a 49% increase over two years.
• Responsible investing represents 38% of the Canadian investment industry.
• Pension fund assets make up 75% of SRI industry’s growth.
• Individual investors’ SRI assets have almost doubled over the past two years to reach $118 billion, reflecting a growth rate of 91%.

Drivers of growth

This recent and very awesome growth in SRI stems in large part from changes within the investment industry itself. In brief, the use of ESG factors in the investment process has uncovered new opportunities in risks management, and more professional investment managers and pension funds are coming to recognize the many benefits of “doing well, while doing good”.

On the demand side of the equation, it is demographic shifts that are making the difference. Apparently, the millennials generation are 65% more likely than their baby boomer parents to consider ESG factors when investing, and more than twice as likely to seek investments dedicated to solving environmental and social challenges.[1]

For an investment advisor on the “front lines” of SRI as I have been throughout my career, these new and very welcome trends have not gone unnoticed. What was more of a surprise for me were the findings of an Investor Opinion Survey conducted by the RIA last year. This revealed that 77% of investors are interested in RI, yet a staggering 73% know very little or nothing about it.[2] So while the investment industry is catching on to the opportunities in RI, much more needs to be done to educate the investing public!

[1] “2016 Canadian Responsible Investment Trends Report.” Responsible Investment Association, February 2017.

[2] “2017 RIA Investor Opinion Survey.” Responsible Investment Association, June 2017.