A new study has determined that over 90% of institutional investors in Canada are integrating ESG considerations into their strategies, with a focus on long-term engagement and risk management. The study, which was carried out by Millani, comes as shifts in sustainability policies, climate regulations and trade relations rock America.
The return of President Donald Trump to the White House has seen pushback against ESG grow significantly as companies come under fire for ESG and DEI policies. Just recently, major financial institutions like Wells Fargo, Goldman Sachs and Morgan Stanley pulled out of the Net Zero Banking Alliance. Additionally, Meta, Amazon and Google have rolled back their DEI initiatives.
Despite this, one of the Canadian asset managers surveyed in the study explained that they were now focused on fiduciary duty and financial materiality.
The study also found that over 85% of institutional investors were certain lawsuits wouldn’t cause a shift in their engagement approach. This is in reference to a lawsuit Exxon Mobil launched against investors who were calling for stricter climate policies. The investors note that ESG engagement for them remains a long-term process driven by partnerships with companies.
The study also determined that anti-ESG shareholder resolutions had increased to 11% as of last year, quite a surge from the 2% recorded in 2021. Investors see this as an opportunity to enhance the quality of their proposals though, explaining that scrutiny allows them to draw up proposals that are well-researched and stronger.
Another notable trend observed by the study is the growth in ESG priorities, with more investors calling attention to the link between biodiversity and climate. The study found that 15% of institutional investors now prioritize nature-based solutions.
Furthermore, economic development and indigenous reconciliation have come out as important themes for investment, as more investors in Canada seek partnerships with Indigenous communities. These moves have, in turn, positioned the country as a leader in community-driven, sustainable investment strategies.
In addition to this, the study uncovered a shift to internal execution from external ESG branding. Instead of making broad commitments, it found that more institutional investors were focusing on more direct and data-driven engagements with firms.
As Canada approaches this year’s federal election, investors continue to call for the establishment of a standardized taxonomy to steer decarbonization efforts. They argue that the absence of a unified framework has resulted in greenwashing risks and market fragmentation, with many of them depending on their own definitions or European standards.
One investor warns that the lack of this framework increases the country’s risk of losing competitiveness in international sustainable finance markets.
Many Canada-based firms, such as First Tellurium Corp. (CSE: FTEL) (OTCQB: FSTTF), are proof that the ESG movement is alive and growing in the country given the commitment they exhibiting in implementing ESG practices in their operations.
NOTE TO INVESTORS: The latest news and updates relating to First Tellurium Corp. (CSE: FTEL) (OTCQB: FSTTF) are available in the company’s newsroom at https://ibn.fm/FSTTF
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