The desire to invest in Canada’s green and sustainable economy is clear, but a third of market participants see the path blocked by obstacles.
Many more investors, 48%, perceive hurdles than issuers, of whom only 19% report them. This echoes our 2020 global survey, in which we asked investors if they felt anything was holding them back from pursuing environmental, social and governance investing more fully and broadly. Of Canadian investors, 47% said they felt hindered, above the global average of 44%. The offputting factors they cited most often were financial returns, inconsistent ESG data and lack of opportunities.
In this Canada survey, we asked a slightly different question: not whether investors generally adopt an ESG approach, but whether they see obstacles to investing in the green and sustainable economy in Canada. To the 48% of investors who see obstacles, we asked a follow-up question: which are the main obstacles? The primary barrier, cited by 55% of this subset or 26% of all investors, is the length of commitment involved in green and sustainable investments. Surprisingly, as many as 24% of all investors are put off because they believe the government — the question did not specify federal or provincial — does not want them to invest in the green and sustainable economy.
This view is held by 17% of the asset managers that took part in the survey, 24% of the banks and 31% of the insurance companies. The third key barrier, felt by 23% of all investors, is insufficient disclosure.
However, worries about risk and return — which stood out as a concern for investors throughout our 2020 global survey — do not feature strongly in investors’ views. Only 3% of the whole sample are deterred because sustainable investments are too risky.
For issuers, meanwhile, the biggest obstacle is communication. Fully 65% judge that investment opportunities in the Canadian green and sustainable economy are not communicated clearly. Like investors, issuers are also concerned about the length of commitments required (47%) and regulatory or legal barriers (41%).