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Global Sustainable Investement Alliance

Canada Canada has a robust sustainable investing market with strong representation in the retail and institutional spheres and asset allocation in all major investment strategies. The Canadian Social Investment Organization’s (SIO) review of the sustainable investing market, now in its seventh edition, found significant growth in sustainable investing over the last year-and-a-half (the last report measured assets to June 30, 2010) finding that sustainable investing assets equal US$ 589.1 billion, commanding 20 percent of total assets under management in the financial industry. This amount represents 16 percent growth in assets since the last survey and shows a marginally larger share of the overall market – in 2010, sustainable investing comprised 19 percent of the market. The strongest growth area since 2010 is in the institutional sphere, with pension plans increasingly integrating environmental, social and governance considerations into the selection and management of investments and adopting comprehensive ESG engagement and proxy voting strategies. Retail investment assets also grew – by approximately 8 percent -- continuing a trend dating back to the first Canadian study in 2000 of consistent year-over-year growth (with the exception of the period between 2008 and 2010 when retail assets were dragged down by the global financial crisis). This demonstrates that Canadian individual investors continue to have an appetite for sustainable investment and confidence in the funds. With respect to the strategies employed by Canadian investors, three strategies dominate the market, in descending order of market size, they are: corporate engagement and shareholder action, negative/exclusionary screening, and integration. This is largely a function of these being the main strategies employed by Canada’s large pension funds, which ultimately control the vast proportion of sustainable investing assets in Canada. Canada has a large and well-respected system of public management of our public pensions. These institutions represent some of the largest investment managers in Canada, as well as some of the largest institutional investors in the world. Many of these institutions have been early adopters of responsible investment policies and continue to show leadership in responsible investment worldwide. While corporate engagement and shareholder action are mainstays of sustainable investment for large institutional owners, it is remarkable, in the Canadian context, how many also screen assets to exclude investments in cluster munitions and landmine manufacturers. Unlike in some parts of Europe, there is no legal mandate restricting Canadian investors from holding shares in these companies. Negative or exclusionary screening is also the single largest strategy employed in the mutual fund industry, with 38 percent of funds screening on items such as alcohol, military weapons contracting, pornography and tobacco. However, it should be noted that many mutual funds are managed by a combination of sustainable investing strategies. The two other most significant strategies in the retail market include positive screening and integration. Approximately 11 percent of retail funds are managed with comprehensive corporate engagement strategies. Global Sustainable Investment Review 2012 24


Global Sustainable Investement Alliance
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