As a forerunner in terms of responsible investing in Canada, Desjardins offers a range of investment products that consider environmental, social and governance (ESG) issues. However, according to recent research, 28% of Canadians and 30% of Ontarians mistakenly believe responsible investments would be less profitable than traditional investments. Desjardins is looking to help its members and clients invest in a way that provides potential returns, but also has a positive impact on society and fight against climate change.
Desjardins Group is backed by the strength of a collective group moving toward a more human economy and a sustainable development of the communities it serves. As a cooperative striving to meet the needs of its members and clients and to support community development across Canada, Desjardins includes environmental, social and governance (ESG) issues in its strategic planning and relationships with partners.
For over a century, Desjardins has been one of the top-tier financial product providers in Canada, with innovative and effective investment products. Desjardins is proud to offer unique responsible investment solutions that consider ESG issues while still focusing on the potential for returns.
These responsible investing portfolios give Desjardins’ members and clients, who as investors, want to see their investments grow while supporting businesses that promote sustainable development, social responsibility and having a positive impact on their communities and the environment.
At Desjardins, their approach and strategies to responsible investing is best-in-class.
For instance:
- Exclusion of corporations that draw revenue from the nuclear, tobacco and armaments industries (exclusion filters).
- Evaluation of companies’ ESG practices, in addition to traditional financial analysis to select the best-in-class companies, build a theme-based investment strategy or assess the ESG performance of securities.
- Use of shareholder engagement levers to influence companies: engaging in dialogue to improve practices and exercising voting rights at company AGMs.
Desjardins also collaborates with other institutional investors to discuss best practices and advocate for improvements in corporate policy, industry standards and national and international regulations. For instance, Desjardins Investments has been a signatory to the Principles of Responsible Investment since 2010. This UN-supported initiative advocates for the integration of ESG issues in investment practices.
Sharp rise in responsible investments in Canada…but myths remain
In Canada, according to the Investment Funds Institute of Canada, responsible investment products (mutual funds and ETFs) represented CAD 20.1 billion in assets at 31 December 2020, marking a 55% increase1, year-over-year.
In a recent survey2 commissioned by Desjardins, 28% of Canadians3 believe that responsible investment (RI) products provide lower returns than traditional investments. The misconception is actually on the rise, from 16% in 2016 and 24% 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," said 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 criteria. In short, it could be very much possible to invest responsibly without sacrificing potential returns."
Reasons for choosing responsible investment products
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%), good return potential (54%), evidence demonstrating that their investments generate concrete benefits (53%) and the idea of being consistent with their lifestyle or convictions (48%).
Among respondents who weren't likely to invest in RI products, the main motivators would be good return potential (61%), evidence demonstrating that their investments generate concrete benefits (29%), a positive impact on society and the planet generated by the investment (28%), and a recommendation from their advisor (16%).
ESG concerns now dominate
Slightly more than half of survey respondents said they were very concerned about cybersecurity (51%), climate change (51%) and human rights (50%). Next came concerns for biodiversity (45%), air quality (43%), water management (41%), child labour in developing countries (41%), integrity of corporate governance practices (39%), workers' rights (38%), waste management (36%) and food waste (34%). "These concerns are central to the responsible investment mutual funds and exchange-traded funds (ETFs) that Desjardins offers Canadians," stated Marie-Justine Labelle.
With approximately 30 different options (mutual funds, structured products, and ETFs), Desjardins has the most comprehensive RI product line in Canada, with CAD 7.3 billion in assets under management. That leadership is reflected in the fact that 30% of Desjardins members hold mutual funds that include Desjardins SocieTerra Funds and SocieTerra Portfolios, totalling almost CAD 5 billion in assets. Desjardins also has nine Low CO2 ETFs, the largest range in Canada.
Desjardins focused on net zero emissions for 2040
In April, Desjardins Group announced an ambitious action plan to achieve net zero emissions by 2040 in its extended operations and in its lending activities and own investments in three key carbon-intensive sectors: energy, transportation and real estate.
In response to growing expectations among members and clients for climate action, the plan builds on concrete measures in place since 2017 and reflects the organisation’s willingness to speed up its climate action and adaptation initiatives and play a leadership role in this area.
“Climate change has undeniable environmental, social and economic impacts. We know that our actions will shape the future of the planet for our children and that’s why we need to step up our efforts to support a just energy transition and lead the way to a low-carbon economy,” said Guy Cormier, President and CEO of Desjardins Group.
1 IFIC 2020 Investments Fund Report
2 The SOM survey commissioned by Desjardins surveyed 2,860 Canadians between November 25 and December 14, 2020. The maximum margin of error is ± 2.5%, 19 times out of 20.
3 2020 survey results differ from one province to another. While 28% of respondents, Canada-wide, mistakenly believe that RI delivers lower yields, regional numbers were 30% in Ontario, 22% in Quebec, and 33% in Alberta and British Columbia.
