The Responsible Investment Association (RIA) has published a report revealing significant growth in responsible investment (RI) assets under management (AUM) and calling for greater standardization to address ongoing challenges.
The 2024 Canadian Responsible Investment Trends Report shows that RI now represents 71 percent of total AUM in Canada, reflecting increasing investor confidence and progress in environmental, social, and governance (ESG) reporting practices.
According to the report, improvements in ESG reporting quality, supported by clearer definitions of RI strategies, have bolstered confidence among investors, with nearly 60 percent of respondents acknowledging advancements. Key factors driving RI growth include heightened awareness of climate change, evolving regulatory guidance, and strong demand from both retail and institutional investors.
In a statement, Patricia Fletcher, CEO of the RIA, underscored the need for continued collaboration to advance RI practices. “Collective action and advocacy are necessary to further advance the adoption of RI and mobilize capital to strengthen Canada’s economic resilience,” Fletcher said.
The report highlighted the dominance of ESG integration as a primary strategy in responsible investing, driven by its focus on risk mitigation, long-term returns, and fulfilling fiduciary duties. Despite these advancements, challenges such as greenwashing, regulatory uncertainty, and the lack of standardized reporting remain significant barriers to progress. Concerns over the perceived performance of RI investments also persist.
The report further revealed that retail investors, particularly younger generations, are playing an increasingly influential role in shaping the RI landscape alongside established institutional players. This shift highlights opportunities for the industry to engage with a broader base of investors while adapting to new demands and expectations.
The report also emphasized the importance of evolving regulations, which offer challenges and opportunities for expanding RI practices. According to the report, establishing standardized reporting frameworks and adopting an RI standard for advisors are critical steps to address rising client demand and navigate the complexities of this growing sector.
The findings are based on a survey conducted from May to July. Industry leaders, including sponsors Addenda Capital, AGF Management, Mackenzie Investments, NEI Investments, and RBC Global Asset Management, reiterated the importance of collaboration and innovation to drive sustainable growth.