Desjardins survey reveals 28 per cent of Canadians believe responsible investments less profitable than traditional investments
According to a survey commissioned by Desjardins, 28 per cent of Canadians believe that responsible investment (RI) products provide lower returns than traditional investments.
The misconception is on the rise, from 16 per cent in 2016 and 24 per cent in 2018. And yet, the Responsible Investment Association (RIA) recently released data showing that the average returns of RI funds matched or outperformed the average for all funds in each of the main asset classes, across all reference periods.
"Clearly, the myth that responsible investments are less profitable persists, despite actual results," says Marie-Justine Labelle, Head of Responsible Investment at Desjardins Investments Inc, the manager of Desjardins Funds. "The RIA's data compilation for the main asset classes, dated 31 December, 2020, leaves no room for doubt. These numbers aren't surprising. They reflect the broader approach to risk management associated with the application of environmental, social and governance (ESG) criteria. In short, it could be very much possible to invest responsibly without sacrificing potential returns."
Survey respondents who expressed interest in responsible investing stated their main reasons for choosing RI products as positive impacts for society and the planet (75 per cent), good return potential (54 per cent), evidence demonstrating that their investments generate concrete benefits (53 per cent) and the idea of being consistent with their lifestyle or convictions (48 per cent).
Among respondents who weren't likely to invest in RI products, the main motivators to do so would be good return potential (61 per cent), evidence demonstrating that their investments generate concrete benefits (29 per cent), a positive impact on society and the planet generated by the investment (28 per cent), and a recommendation from their advisor (16 per cent).
Slightly more than half of survey respondents said they were very concerned about cybersecurity (51 per cent), climate change (51 per cent) and human rights (50 per cent). Next came concerns for biodiversity (45 per cent), air quality (43 per cent), water management (41 per cent), child labour in developing countries (41 per cent), integrity of corporate governance practices (39 per cent), workers' rights (38 per cent), waste management (36 per cent) and food waste (34 per cent). "These concerns are central to the responsible investment mutual funds and exchange-traded funds (ETFs) that Desjardins offers Canadians," stated Marie-Justine Labelle, who holds a master's degree in Environmental Policy and Regulation from the London School of Economics and Political Science.
Responsible Investing is a form of investing that considers environmental, social and governance (ESG) issues while still focusing on the potential for returns. Responsible investing portfolios are designed for investors who want to see their investments grow while supporting businesses that promote sustainable development and social responsibility. In Canada, according to the Investment Funds Institute of Canada (IFIC), RI products (mutual funds and ETFs) represented CAD20.1 billion in assets at 31 December, 2020, marking a 55 per cen3 increase over the last year.