Conscious that in every part of the world, there are barriers to sustainable investment, we asked Canadian market participants what measures would be most effective at encouraging investment in Canada.
Their responses suggest many actors — government, regulators, investment firms and banks — could take steps that would help. At the head of this broad coalition, in our sample’s view, is the government. Over half of respondents judge that the most effective means of stimulating sustainable finance is for government or regulators to instruct providers of capital, both banks and investors, to consider sustainability factors in their investment decision-making.
This is the only measure that attracts majority combined support from market participants. They were invited to select their top picks among 11 possible approaches. However, while 38% of investors call for capital allocation to be centrally directed in this way, making it their fourth most popular choice, they are less enthusiastic than issuers, of whom 63% want it.
of issuers think they will be able to invest in Canada’s green economy now or in future
The same divergence occurs on the idea that investment firms should encourage companies they invest in to become more sustainable.
Surprisingly, investors are more reticent about this: only 31% see it as a good way to stimulate sustainable finance. In contrast, 64% of issuers think it would be effective.
The third most popular choice overall, with even support from issuers and investors, is better information about how sustainable individual companies are. The question did not specify whose responsibility it would be to supply this information. This demand for better understanding of companies’ performance echoes the calls for greater disclosure made in this survey and for more comparable ESG data in our 2020 global survey.
Issuers and investors also agree that granting banks capital relief to promote sustainable lending would be effective.
But they disagree about the level of responsibility banks should assume and pricing incentives they should offer in pushing their borrowers to adopt sustainable behaviour. While investors see both of these as effective, issuers are lukewarm. Fewer than 30% favour either measure. Investors are less keen on their own sector taking greater responsibility for companies’ transitions.
Issuers are notably enthusiastic about the prospect of regulatory frameworks for industry that might enable easier approvals for projects, for example. As many as 52% support these.