Climate change a risk for global economy, say Canadian investors

Survey report from Responsible Investment Association reveals overwhelming response

Climate change a risk for global economy, say Canadian investors

There is a big change happening among the Canadian public when it comes to climate change, according to the Responsible Investment Association.

The 2018 RIA Investor Opinion Survey report was a “pleasant surprise” to CEO Dustyn Lanz after 81% of respondents expressed concern about climate change, ranking environmental issues as the most important factor among ESG issues.

Total RI AUM in Canada now exceeds £2 trillion, including $435 billion being managed on behalf of individual investors. The report is based on survey data from 800 investors across Canada and its big takeaways revolved around the topic of climate change.

A total of 73% of respondents believe it’s likely that climate change will create risks for the global economy within five years, with this figure climbing to 81% over a 20-year horizon.

Lanz said: “In the institutional community, they are talking a lot about the taskforce on climate-related disclosure and, typically, these are more sophisticated institutional investors who are working on these issues.

“I was pleasantly surprised to see the retail market is also quite aware of how climate change presents financial and economic risk.”

The survey also reported that 66% of respondents would like a portion of their portfolio to be invested in companies providing solutions to climate change and environmental challenges, while 86% of respondents agreed that financial advisors and institutions should be knowledgeable about how ESG risks could affect their investments.

Lanz said a genuine shift is taking place in the Canadian landscape.

He said: “Canadian RI fund companies have been leading environment and social issues for a long time and I think this data tells us there’s an appetite for these products. This demand is ready and waiting for advisors and client-facing financial professionals, who want to make responsible investing part of their business.”

Other highlights from the survey included how 70% of respondents believe climate change will have negative financial impacts on companies in some industries in the next five years, with this number rising to 79% over the next 20 years.

Meanwhile, 81% of respondents would like their financial services provider to inform them about responsible investments that are aligned with their values and 71% of respondents agreed that companies with good ESG practices are better long-term investments.

Lanz told WP: “It was a surprise to see the results. All previous data had showed individual investors are largely unaware of responsible investing and Canada has a large energy sector, which can lead to mixed reactions around climate change.

“But there’s a big change among the Canadian investing public. There are very real concerns about climate change and other environmental issues.”

The survey was sponsored by AGF and its CEO, Kevin McCreadie, welcomed the results of the survey.

He said: “As a leader in the development of sustainable investing initiatives, AGF is pleased to hear that Canadians are committed to investing in solutions that contribute to building a sustainable future.

“We believe that integrating consideration of ESG factors into our investment decision-making and ownership practices will contribute to better investment outcomes for our clients – and this is true across all of our investment management teams.”