Environmental, Social, and Corporate Governance, popularly known as ESG, is here to stay, and many investors in Canada are making it their top priority. Responsible investment or RI shot up from C$2.1 trillion in 2017 to C$3.2 trillion by 2019, reflecting a 48 per cent increase in RI assets under management, as per the 2020 Canadian Responsible Investment Trends report. RI accounts for 61.8 per cent of Canadian assets under management, up from 50.6 per cent in 2017.
High ESG score can drive performance and help build and protect a company’s brand. It can also attract a talented pool of candidates, especially the millennials and the Gen Zers, who prefer working for companies with strong ethical and inclusive practices. The federal government has diverted billions of Canadian dollars towards clean energy.
Canadian energy firms that have started an arduous recovery path, after being battered by the pandemic in 2020, have earmarked funds for green energy and storage technologies. As the market gradually transitions to sustainability and clean energy, future growth opportunities lie in ESG. The socially responsible investing market is estimated to be worth US$ 23 trillion globally, according to a study by JP Morgan.