Socially responsible investing
The importance of SRI increases but interest remains lukewarm

More than half of respondents (53%) perceive SRI to be important to their overall strategy (rating of 4 or 5 on a 5-point scale)—an average overall score of 3.5.* SRI is most popular among large plans (3.9) and least popular among those closed to new members (3.3).

The current rating of 3.5 represents a considerable increase over last year when 43% of pension plans found SRI to be important with an average score of 3.1. This upward trend occurred across all categories and, while the average SRI score continues to be somewhat lukewarm, a significantly higher proportion of respondents rated SRI as “extremely important” in this year’s survey (8% to 20%), particularly large and public plans.

Importance of SRI
This chart shows respondent perception of the importance of SRI overall, as well as by size, type and status. This is based on respondents’ average importance scores using a 5-point rating scale where 5=extremely important and 1=not at all important.

Taking responsibility

This chart shows that the proportion of respondents rating SRI as important (score of 4 or 5 on a 5-point scale) increased from 43% in 2019 to 53% in 2020.
  • 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?
This chart shows the year-over-year change in respondents’ SRI importance ratings based on a 5-point scale where 5= extremely important and 1=not at all important.

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