The Covid-19 pandemic swiftly highlighted how supply chains can become vulnerable, and in doing so also drew attention to the importance of making them sustainable. Our survey confirms that Canadian market participants see this as an important issue.
We asked specific questions about supply chains to both issuers and investors.
Issuers were asked whether having a sustainable supply chain was important to their businesses. Nearly three quarters said it was, but they have varying degrees of commitment.
The largest group (37%) simply asks their suppliers to behave sustainably. Another 22% go further by perfoming sustainability checks, while 8% go as far as rating their suppliers on sustainability.
Investors are also focused on this issue. We asked them how much attention they paid to supply chain sustainability, when deciding which companies to invest in.
The largest group, 34%, say it is not a high priority for them. But the other two thirds consider it to some extent. A minority, 22%, say they regard it as important but do not take any consistent measures on it. But 29% expect companies they invest in to have policies requiring suppliers to behave in a sustainable way. A further 15% say they demand that companies are able to demonstrate that their suppliers do this.
of investors prefer to invest in companies with sustainable supply chains
These findings broadly align with our 2020 global survey, which also explored supply chains.
Canada had an above average proportion of issuers (56% versus 41% globally) which said they regarded flexible and resilient supply chains as more important since the pandemic, and a below average proportion (17% versus 20%) that regard these as less important now.
Canadian investors, on the other hand, were less likely than the global average to say having resilient and flexible supply chains had become more important since the pandemic (20% versus 32%). Equally, Canadian investors were above average in viewing resilient supply chains as less important than before the pandemic (52% compared with 33%).
Conclusion Environment takes centre stage
This survey shows sustainability considerations — especially environmental challenges and opportunities — gaining increasing focus in Canadian financing and investing, as issuers and investors respond to climate change.
All but 2% of Canadian issuers are already factoring sustainability into their activities. Moreover, over 80% report no obstacles to investing in the country’s green and sustainable economy.
Investors are more cautious. Around half report obstacles like lengthy commitments and a third do not factor sustainability into their decision-making. However, nearly 60% of those investors intend to start doing so.
Issuers support government direction of the sustainable finance market much more than investors. But both groups highlight the need to address forms of environmental degradation, such as air pollution and non-recyclable plastics.
They also see potential in infrastructure investment, such as energy-efficient buildings and sustainable public transport, as well as renewable energy sources. Issuers are attracted by solar power, investors by hydrogen.
As these efforts gain further momentum, the next stage for Canadian market participants is likely to be devoting more attention to social issues in their financing and investing approaches.