What’s hindering institutions from sustainable investing

Nearly two in three Canadian institutional investors are finding challenges — such as greenwashing — to sustainable investing, a study released Wednesday found.

In its sixth annual global institutional investor study, Schroders reported that 65% of Canadian investors said investing sustainably is “somewhat” or “very” challenging.

Those challenges include lack of consistency in disclosures/reporting frameworks (65%, compared to 47% of U.S. respondents), lack of transparency and data (56%, compared to 51% of U.S. respondents) and greenwashing — due to the lack of clear, agreed upon definitions of sustainable investment (52%, compared to 43% of U.S. respondents).

Nearly nine in 10 Canadian respondents (88%) ranked ESG integration into the investment process as their preferred approach when looking to invest sustainably, Schroders reported, followed by thematic investing and active company engagement.

“When considering the various sustainable investment opportunities, 62% of Canadian respondents indicated they would like to invest in funds or solutions that focus primarily on delivering financial returns while broadly integrating ESG factors,” said Schroders.

Worldwide there were 770 respondents in the survey, commissioned by Schroders to CoreData. The survey analyzed the world’s largest investors’ key areas of focus and concern including the macroeconomic and geopolitical climate, return expectations, asset allocation and attitudes to private assets and sustainable investing.

Respondents to the survey — conducted this past March — included corporate and public pension plans, insurance companies, official institutions, private banks, endowments and foundations collectively responsible for US$27.5 trillion in assets.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.