January 17, 2013
Sustainable Investment Assets Continue Growth in Canada
by Robert Kropp
The biennial report by the Social Investment Organization of Canada reveals that sustainable assets
under management now represent 20% of the total.
The Social Investment Organization
(SIO) released its biennial Canadian Socially Responsible Investment Review today, and as
with the findings of other sustainable investment forums, the report notes continued growth in
virtually every major market segment.
Since the release of SIO's 2010
report, "markets have improved, with S&P/TSX Composite Index rising 5.8% and total assets under
management growing by 9%," the new report states. "At the same time, total SRI assets have grown by
16%, with gains among institutional asset owners and managers, in the retail industry, and in
impact investing." With assets of $601 billion, sustainable investing in Canada now comprises 20%
of all assets under management by the financial industry there. $532.7 billion of the sustainable
assets, or 89% of the total, are held by pension funds.
Three strategies prevail in the
Canadian sustainable investment industry: corporate engagement and shareowner action; negative
screening; and integration of environmental, social, and corporate governance (ESG) factors into
traditional financial analysis. For a pension fund to be considered sustainable, it must have
detailed proxy voting guidelines addressing ESG issues and evidence that it votes its proxies
according to the guidelines
"The dominant strategy employed by asset managers on behalf
of their clients is negative/exclusionary screening," the report states. "This is partly a function
of the large number of assets managed on behalf of religious institutional clients, but it is also
partly because of the size of some large funds with single-issue screens such as tobacco."
The only area of sustainable investment experiencing a decline since the 2010 report is venture
capital, whose $1.3 billion in investment in 2012 represented a 7% decline. The decline was due to
a number of factors, according to the report, "including historically low natural gas prices,
European and American cleantech subsidies receding from historic levels, and low-cost competition
"We believe that there is still a great deal of potential growth yet to be
realized," the report's authors concluded. "There is a clear opportunity for our industry to
demonstrate that doing the right thing has never been more clearly linked to doing well."
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