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A report released
by the Social Investment Organization (SIO) estimates that
socially responsible investment (SRI) in Canada has grown to $65.5
billion, a 27 per cent increase in the last two years.
The report, entitled Canadian Social
Investment Review 2004, shows that there has been solid growth
across most categories of SRI, including asset management, retail
investment funds, community investment, shareholder advocacy and
socially responsible lending. The report was released May 6 in
English. A French-language version was released May 12.
"The market for socially responsible
investment shows great potential,” states the report, based on a
survey of assets conducted by the SIO every two years. “It’s
clear that there is much room for growth in this market both for
mainstream and non-mainstream players, and for the introduction of
new products and services.”
Highlights include:
o
A total of $21.2 billion managed by asset managers on behalf of
outside clients, up from $16.7 billion in 2002.
o
Retail investment funds are $14.8 billion, up from $9.9 billion in
2002, propelled by alternative energy income trusts, SRI mutual
funds and labour sponsored funds.
o
SRI assets managed by institutions are estimated at
$25.4 billion, up from $24.1 billion in 2002.
o
Assets voted in favour of socially responsible shareholder
proposals are $2.1 billion, a four-fold increase from 2002.
o
Community investments are $546 million, a
substantial increase from $69 million reported in 2002, mostly
due to the addition of new "social economy" assets
in Quebec.
o
Lending subject to social and environmental policies
is $1.3 billion, up sharply from $127 million in 2002.
o
Sustainable venture capital, a new category in the report, is
estimated at $52 million.
In spite of the growth in SRI, the report notes that
relatively few investment companies in Canada
pay attention to this market.
“It is apparent that the firms currently offering SRI
services are capturing a larger share of thismarket, and average
SRI assets per firm are growing sharply,” states the report.
“Unless mainstream asset management firms become more aware of
the potential of the SRI market, and introduce SRI products and
services, this industry will continue to be dominated by a small
number of players.”
Sponsors of the study commented on its findings.
“The Canadian
market will expand as more consumers leverage their power by
demanding greater corporate social responsibility from their
investments,” said Don Rolfe, President and CEO of The Ethical
Funds Company. “Today, shareholders want investments that are
smart for the planet and smart for their portfolios, too, and SRI
is delivering that in a big way.”
“This report
mirrors what we have seen at Meritas Mutual Funds,” said Meritas
CEO Gary Hawton. “Retail demand for our mutual funds has been
very strong and is driven by both advisors and investors. We have
also seen increasing demand within our institutional division from
foundations, endowment funds and employee pension funds.”
“We have observed that
interest in sustainable and socially responsible investment is
rising among major institutional investors in Canada,” said
Ian Ihnatowycz, President, Acuity Investment Management Inc.
"Institutions are becoming increasingly aware of the
long-term benefits of incorporating sustainability analysis into
the investment process.”
Michael Jantzi,
president of Jantzi Research Inc., said: “The Canadian Social
Investment Review provides valuable insight into the traditional
socially responsible investment market in Canada, allowing us to
track its growth over time. It also provides a glimpse into the
growing acceptance on the part of mainstream institutions that
evaluating these intangibles, or ‘non-financial risks,’ is an
essential part of any investment process.”
“Certainly the
findings in the Canadian Social Investment Review support our view
that the SRI market in Europe and North America is large and
growing,” said Renee Arnold, Vice President, Canadian Marketing
at Aberdeen Asset Management.
“There’s no
doubt the financial services sector is an important segment of
investment portfolios. Vancity and Citizens Bank have incorporated
ethical policy screens into our business loans and we encourage
other institutions to consider the importance of lending and
investment screening to raise the level of social responsibility
in their portfolios,” said Elain Duvall, Vancity Board Chair.
In spite of the
growth, one sponsor commented that the relatively small number of
asset managers offering SRI services could put the Canadian
financial industry at a competitive disadvantage.
“The mainstream
Canadian banking and investment community should heed the warning
this study points to,” said Matthew Kiernan, CEO of Innovest
Strategic Value Advisors. “With very few offering SRI products
of any sort in Canada, this sector is falling further behind its
global competitors, even from the United States, who are becoming
more conscious of the segment of potential investors in SRI.”
SIO is the national
association for socially responsible investment in Canada. It has
about 400 members, comprised of financial advisors and investors,
and staff of asset management firms, mutual fund companies and
financial institutions
The
report in English is available at http://www.socialinvestment.ca/SIReview04.pdf.
The report in French is available at http://www.socialinvestment.ca/French/SIReview04fr.pdf.
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