Canadian market participants are eager for guidance from banks on sustainability strategies and ESG investing.
That echoes the wishes of peers around the world in our 2020 global survey. It found that Canadian issuers’ appetite for sustainability advice was notably above average: 41% reported demand for ‘a lot’ of input, against 26% globally.
In this Canada survey, issuers particularly seek advice from banks on what ESG investors are looking for and how best to present their sustainability stories. This need, reported by 58% of issuers, chimes with the growing importance of ESG considerations in investment decision-making, which is evident in our global surveys in 2020 and previous years. Among issuers, 48% would also welcome advice on clean technologies they could integrate into their operations. The largest organisations, with annual revenues of $10bn and higher, do not need this help as much, however.
Appetite for financial advice is less pronounced. Only around a fifth of Canadian issuers seek guidance on issuing green bonds (21%) or ESG ratings (19%), while as few as 15% want insights into mergers and acquisitions that could make them more sustainable.
Moreover, just 1% want advice on issuing social bonds, despite the product’s greater visibility since the Covid-19 pandemic. Issuers appear either to regard these areas as not relevant to them, or to feel they are already well supplied with advice. Investors, on the other hand, are particularly interested in social or sustainable bonds: 46% want guidance on them, suggesting issuers may be missing an opportunity.
There is also very strong interest from investors in two newer financial products: green deposits, in which money is invested in green projects or assets, and sustainability-linked loans, whose margins can change depending on whether the issuer hits sustainability targets. On both of these, 56% of issuers are keen to hear more.
Issuers’ indifference to ESG ratings appears disconnected from investors’ strong desire (44%) for advice on these. Investors also articulate significant appetite (45%) for research on trends in the sustainable economy. This echoes Canadian institutions’ above average (53% versus 47%) call in the 2020 global survey for more advice on environmental risks.