According to a recent Desjardins survey, 52% of Quebecers said they were familiar with responsible investing, while 79% said they were interested after learning more about it. A full 69% said they would likely, very likely or definitely invest in responsible investment (RI) given the chance.
Responsible investing is an approach that incorporates environmental, social and governance (ESG) criteria into investment decision-making and management.
Those interested in RI said they saw three main pros:
- The opportunity to make a positive social and environmental impact (71%)
- Strong return potential (42%)
- The ability to maintain their lifestyle while staying true to their values (34%)
Quebecers also said they were somewhat or very concerned about ESG issues, many of which RI takes into account:
- Human rights (91%)
- Nature and forest conservation (91%)
- Air quality (90%)
- Workers’ rights (88%)
- Climate change (87%)
- Gender pay equity (81%)
While we’re on the topic, let’s debunk a few RI myths
When asked how RI stacks up to traditional investments, respondents mentioned three cons:
- 18% think RI has lower returns
- 11% think RI is riskier
- 10% think RI has higher fees
Nothing could be further from the truth.
The myth of lower RI returns is a persistent one among Quebec investors. But 90% of the more than 2,200 studies published since 1970 show that there is either no correlation or a positive correlation between ESG criteria and financial performance.
People may think RI is riskier, but before companies can be included in a responsible investment strategy, their ESG practices have to be reviewed. That’s in addition to the rigorous financial analysis they already undergo to ensure that the investment offers value to investors. In fact, many specialists believe RI risk management is more stringent precisely because it incorporates ESG practices. With a more comprehensive risk assessment process, there’s no reason RI should be considered riskier than traditional investments.
Are RI fees really higher? Though RI security selection and portfolio management also incorporate ESG criteria, the fees are similar to those of comparable traditional investments. And the concept of responsible investing can be applied to all sorts of investments, including mutual funds and exchanged traded funds.
To learn more about responsible investing, visit disnat.com/RI.
1Online survey of 2,212 Quebecers conducted on behalf of Desjardins from September 6 to 17, 2018, with a margin of error of ± 2.6% 19 times out of 20.
2ESG & Financial Performance: Aggregated Evidence from More than 2,000 Empirical Studies. Deutsche Asset & Wealth Management and the University of Hamburg.