Importance of SRI
Taking responsibility
- SRI is:
• Most important to large pension plans
• Least important to plans closed to new members
Investing more responsibly
The Responsible Investment Association reports a total of $3.2 trillion in responsible investment (RI) assets under management in Canada at the end of 2019, including SRI. This represents a 48% growth rate over the past two years. Pension plans are estimated to account for half of Canadian RI assets, totalling $1.6 trillion at the end of 2019 and up from $1.4 trillion in 2017.1
- 50%
of Canadian RI assets are held by pensions
The narrowing gap
RBC Investor & Treasury Services’ recent survey of Canadian asset and wealth managers reported that 54% of respondents view SRI to be important with an average score of 3.6—only slightly higher than Canadian pension plans (53% and 3.5). Asset and wealth managers have historically ranked SRI at a significantly higher level of importance than pension plans, but the gap has narrowed of late to the point that SRI is currently more important to large pension plans than large managers (3.9 versus 3.8).2
Seizing the opportunity
The narrowing “SRI gap” between pension plans and asset managers may reflect a heightened focus on sustainable investing within the pension community, particularly among large plans. For example, in a recent precedent-setting move, the CEOs from eight of Canada’s leading pension managers jointly called on companies and investors to provide consistent and complete environmental, social, and governance (ESG) information in order to strengthen investment decision-making and better manage collective ESG risk exposures. The joint statement also recognizes the ongoing impact of COVID-19 and recent events that have highlighted long-standing social inequity, including systemic racism, environmental threats and board effectiveness. The signatories implore companies to “seize the tremendous opportunity available at this historic moment to actively take steps to drive lasting change.”3
How companies identify and address issues such as diversity and inclusion, human capital, and climate change can significantly contribute to value creation or erosion.
—Joint statement by CEOs of eight leading Canadian pension managers
How important is SRI to your plan’s overall strategy?
What is socially responsible investing?
SRI is a responsible investment strategy that screens companies from the investment universe (positive and negative screening) based on ESG factors in order to generate measurable impact and a market rate of return.
- *Based on a 5-point scale where 5=extremely important and 1=not at all important
- 1Responsible Investment Association, Canadian Responsible Investment Trends Report, November 2020
- 2RBC Investor & Treasury Services, Canadian Asset and Wealth Manager Survey, October 2020
- 3BCI, Leading Canadian Pension Plan Investment Managers Issue Joint Statement on ESG, November 25, 2020