If responsible investing piques your interest, don’t wait for your financial advisor to discuss it with you in depth. Because you may never own mutual funds or stocks that uphold the principles you hold dear.
Posted at 6:30 am
Although the media has published an incalculable number of texts on responsible investments and ESG (environmental, social and governance) criteria, it is clear that the information does not always go where it should.
A survey conducted by Léger for ÉducÉpargne, the results of which will be released on Monday, reveals that 65% of Quebecers who entrust their money to a financial professional have never heard of the subject. Worse yet, only 9% were entitled to explanations worthy of the name. While climate change is worrying and the values of good governance are at the heart of concern, it is quite worrying.
At ÉducÉpargne, an NPO dedicated to financial education for Quebecers, CEO Louis-Alexandre Lacoste agrees that there are “many efforts to be made” by financial institutions to better inform savers. “I get the impression that those who deal with responsible investment are not necessarily in direct contact with clients,” he says.
Avoiding the subject causes a vicious circle. The less advisors talk about responsible investing, the less interest and curiosity their clients will develop in the topic. At the limit, the lack of enthusiasm and promotion can even generate mistrust.
The silence is all the more unfortunate given that 53% of Quebec workers say they are very (11%) or somewhat (42%) interested in responsible investment strategies and products, according to ÉducÉpargne. That’s a lot of people who remain in their appetite when it comes to investing.
Professionals mainly justify their lack of peace of mind by the lack of information, reveals a report by the Association for Responsible Investment (AIR) published at the beginning of the year. The reason “I don’t know much about it” was chosen by 70% of the assessors.
The vast majority are right to avoid the subject. Imagine, among the 539 advisors who participated in the study in Canada, only 32 (6%) were able to correctly identify, among ten responsible investment statements, the three that were correct.
“Furthermore, some advisors seem to overestimate their knowledge, with nearly one-fifth of advisors reporting excellent or very good knowledge of IR failing to correctly identify one of the three true statements,” reports the ‘AIR. It is not reassuring.
Surveyed advisors also expressed some level of concern about greenwashing (green wash), lack of standards, financial performance, quality of products offered, lack of certification of funds, etc. Admittedly, these are very legitimate questions.
Even so, “50% of investors do not receive the information they would like their advisers to give them,” calculates the AIR.
The ÉducÉpargne survey also reveals significant disparities in the interest of Quebecers in financial products and investment strategies that respect ESG criteria.
In the Montreal region, 63% of respondents would like to learn more about the topic. The rate plummets to 34% in the Quebec region. Quite a gap.
“It is particularly those respondents with a university degree, a mother tongue other than French and who were not born in Canada who have a significantly higher interest in responsible investing. These profiles of people live more in Montreal”, explains Roxanne Bazinet, director of research at Léger.
As for the acronym ESG, it would need a lot of viral publicity to increase its notoriety.
Fewer than one in four people (23%) can identify the meaning of all three letters, even when response options are provided! And 40% of those surveyed did not even dare to select an answer. These figures show that there is still a long way to go before environmental, social and governance criteria are a natural part of the talks.
It is also necessary to clarify once and for all the issue of profitability generated by responsible investment products. Generally speaking, half of Quebecers believe that responsible investments generate the same or more.
The other half believes the opposite or ignores the answer. Opinions are very divided. However, studies have concluded for years that taking into account ESG factors has a neutral or positive impact on returns.
I agree, removing weapons, oil, tobacco or pornography from your RRSP is far from obvious. But efforts are being made to make life easier for savers. Desjardins, for example, has summarized his policy and approach to creating his responsible mutual funds in five short pages.
On the ÉducÉpargne side, we will hold a webinar on the issue on September 23 that we promise will allow everyone to understand and then ask the right questions. But you still have to get the right answers.
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