Investment managers adopting reconciliation practices, but more work to be done: report

A survey from the Reconciliation and Responsible Investment Initiative (RRII) has found that many investment managers incorporate reconciliation and Indigenous rights recognition into their activities. However, the degree of commitment and integration was decidedly mixed.

“While some firms are leading in building internal momentum and embedding economic reconciliation into client relations, investment and stewardship, others have yet to take tangible action to respond to Truth and Reconciliation Call to Action 92 and move from awareness to action on reconciliation,” said Katherine Wheatley, manager of the RRII, which is a a partnership between the Shareholder Association for Research and Education and the National Aboriginal Trust Officers Association.

“In some cases, [firms] have yet to make any movement,” Wheatley said.

Forty of the 47 investment management firms surveyed (85%) indicated that they had considered reconciliation and Indigenous rights recognition within their investment analysis. For 33 of those 40 firms (70%), considering reconciliation led to a change in the valuation of the companies in their portfolio.

However, only 22 firms (47%) had proxy voting guidelines that incorporate considerations related to Indigenous peoples.

Investment managers were also asked whether they knew of any Indigenous-led or Indigenous-focused investment opportunities.

While 18 firms (39%) said they were unaware of any such opportunities, nearly half of firms said they knew about the Raven Indigenous Impact Fund. First Nations Finance Authority Bonds, the National Aboriginal Capital Corporations Association Indigenous Growth Fund and the Deshkan Ziibi Conservation Impact Bond were the other opportunities named by the firms.

Perhaps a result of this limited awareness, only 10 firms (21%) reported raising Indigenous-focused opportunities with their Indigenous clients, and only eight firms (17%) said they’d done so with non-Indigenous clients.

The survey also looked at investment managers’ internal policies for promoting reconciliation.

Twenty-three firms (49%) had enacted policies to attract, retain and/or promote Indigenous employees, while 21 firms (45%) reported having educational programs for management and staff on the history of Indigenous peoples. The least-common policy was related to procurement from Indigenous suppliers, which only eight firms (17%) had adopted.

Wheatley said investment managers have many opportunities to up their game.

“Some Australian investment industry firms have built reconciliation action plans to articulate a firm vision for reconciliation and set targets and responsibilities to guide their actions. We would love to see Canadian firms draw inspiration from these models,” she said.

“Investment management firms have wide spheres of influence within the industry; their direct interface with clients and investee companies and their interaction with regulatory institutions and industry peers position them to be drivers of positive change,” Wheatley added.

The report detailing the survey results included five broad recommendations for investment managers: develop a clear vision on reconciliation; deepen engagement with Indigenous people; identify opportunities to support reconciliation; promote reconciliation across the investment chain; and partner and/or invest in Indigenous communities and businesses.

Truth and Reconciliation Call to Action 92 defined reconciliation for corporate Canada by asking it to adopt the United Nations Declaration on the Rights of Indigenous Peoples. Doing so would involve actions such as ensuring equitable job access for Indigenous peoples and educating staff on Indigenous rights.

The RRII survey was conducted between February and March 2021. Of the firms that provided their location, 27 were headquartered in Canada, one in the U.S. and one in the U.K.

Melissa Shin

Melissa is the editorial director of Advisor.ca and leads Newcom Media Inc.’s group of financial publications. She has been with the team since 2011 and been recognized by PMAC and CFA Society Toronto for her reporting. Reach her at mshin@newcom.ca. You may also call or text 416-847-8038 to provide a confidential tip.