4 drivers of growth in responsible investment

Canada’s responsible investment (RI) market is growing rapidly: as of December 31, 2015, there was $1.5 trillion in RI assets under management in Canada, according to an updated version of the Responsible Investment Association’s (RIA) 2016 trends report–that represents a 49% increase between 2013 and 2015.

Read: Not on top of ESG investing? Don’t ignore it

Other key findings include:

responsible investing represents 38% of the Canadian investment industry;
individual investors’ RI assets, which totalled $118 billion by 2015, have risen 91% in the last two years;
pension fund assets make up 75% of the RI industry’s growth, increasing by $374 billion, or 45%, in the two-year period; and
asset managers and owners rank the following as their top motivations for incorporating ESG factors into investment decisions: it helps minimize risk over time; it improves returns over time; and it helps fulfill fiduciary duty.

The RIA says investors are “very optimistic about the RI industry’s outlook,” in its report. Most survey respondents (80%) expect “either moderate or high levels of growth over the next two years. This is a significant increase from our last survey, in which 59% of respondents expected [significant] growth.” The RIA polled member investment firms as part of its 2016 Canadian Impact Investment Trends Report.

Read: Impact investing makes gains with clients

The association attributes the industry’s growth to four main drivers. Those are:

increased engagement from investment managers;
more awareness of ESG opportunities and risks;
the growth of pension fund assets; and
demographic shifts, given “millennials […] are 65% more likely than boomers to consider ESG factors when investing,” says the RIA.

For more from RIA, click here.

And, read these articles:

Consider ESG investments for millennials, longer-term investing

Most clients unaware of responsible investing

CI Investments signs on to support responsible investing

IA Clarington launches RI mutual fund

What’s the greenhouse gas footprint of world’s 500 largest companies?