- Climate/carbon is the number one priority for asset owners in Canada at 47%, followed by governance at 46%
- 47% of asset owners in Canada feel regulation helps them meet sustainable investment (SI) goals very well, compared to 36% of global respondents
- 55% of asset owners in Canada find the greatest challenge with regulation to be the inability to align portfolio / index with SI, compared to 35% on average globally
FTSE Russell, the leading global index provider, has today published the results of its annual survey analyzing how SI is perceived, considered and used by asset owners across the world.
By and large, this year’s survey findings indicate global asset owners continue to take a robust long-term view of their SI strategies, although macroeconomic and geopolitical factors have also influenced respondents’ short-term sentiment.
Tony Campos, Head of Sustainable Investment, Index Investments Group at FTSE Russell comments: “Despite challenging short-term macroeconomic and geopolitical factors causing a directional dip this year in terms of how global asset owners are evaluating and implementing their SI strategies, we found trends still suggest long-term growth. This year’s survey highlights the long-term outlook for asset owners in Canada consistently implementing SI remains positive as we see regulatory requirements driving demand.”
Paul Bowes, Canada Country Head at FTSE Russell comments: “We’re seeing a contrast in Canada compared to other countries where regulatory requirement is driving asset owners’ long-term conviction of adopting SI strategies within portfolios. Almost half of the survey respondents view regulation as helpful in meeting their SI goals, rather than a barrier. This is consistent with how independent Canadian pension boards have worked together with regulatory bodies to create one of the best run pension industries in the world.”
Sustainable investment continues to mature
Following five years of steady growth as our previous surveys indicate, there has been a directional dip to 80% this year from 88% in 2022 in the level of asset owners globally that are implementing and evaluating SI. This dip can be attributed to influential macroeconomic factors, such as high interest rates to combat inflation, and geopolitical volatility caused by the war in Ukraine.
Despite short-term influences on sentiment towards SI, respondents maintain long-term conviction for this continually maturing investment theme, with asset owners in Canada now driven primarily by regulatory requirements (40%).
Asset owners prioritize climate / carbon
Governance is a priority that has significantly risen across all regions, increasing notably from one in three (33%) in 2022 to 54% of asset owners globally in 2023. In Canada, climate / carbon is a priority for 47% of asset owners, followed closely by governance at 46%.
Regulation viewed as largely supportive
Regulation of SI and ESG helps asset owners meet their SI goals very well, according to 47% of Canadian respondents.
Over half (58%) of respondents in Canada say regulation is helpful in removing barriers to SI adoption while 50% note it may improve investor disclosures to the market around SI strategies and SI outcomes. Another 32% say regulation helps improve the quality and consistency of corporate reporting and disclosures, with 23% indicating it might be helpful with respect to providing guidance around fiduciary / investor duty.
Certain pressures on asset owners appear to be more complex as sustainable investment industry matures
As SI matures, asset owners believe their firms are successfully meeting top priorities for governance and climate/carbon related strategies, although some data and regulatory challenges do persist as perceived barriers to increased implementation of sustainable investment.
57% of respondents in Canada expressed concerns around the availability of ESG data and use of estimated data. Respondents also indicated the most challenging factors to meet regulatory requirements as the inability to align portfolio / index with SI / climate (55%) and the lack of transparency across ESG ratings (45%).
For more information about the survey, please visit: https://www.ftserussell.com/index/spotlight/sustainable-investment-global-survey-findings-asset-owners
Notes to editors:
Since 2018, FTSE Russell has annually interviewed asset owners globally to understand their priorities, frustrations, and opportunities in SI.
FTSE Russell spoke to 350 asset owners with AUM between US$7.9 trillion and US$14.2 trillion between March 27 – April 28, 2023.
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