Position Paper 12 May 2020
ESG Integration in Canada
A CFA Institute report with partner PRI on the state of ESG Integration in Canada featuring local cases studies.
ESG Integration in Canada
View the full article (PDF)Survey Overview
Portfolio managers and analysts are increasingly incorporating environmental, social, and governance (ESG) factors in their investment analyses and processes. However, ESG integration remains in its relative infancy, with investors and analysts calling for more guidance on exactly “how” they can “do ESG” and integrate ESG data into their analysis.
CFA Institute and Principles for Responsible Investment (PRI) set out to create a best practice report (Guidance and Case Studies for ESG Integration: Equities and Fixed Income) and subsequently produced a series of regional reports. This focuses on Canada.
TOP FINDINGS FROM CANADA
- Environmental issues affect share prices and corporate bond yields/spreads more frequently than social issues; for sovereign debt yields, the opposite is true.
- ESG integration practices in Canada are more prevalent among equity practitioners than among fixed-income practitioners. Like equity practitioners, fixed income practitioners are predominantly performing ESG-integrated qualitative analysis of issuers.
- When analyzing ESG company disclosure scores, the social scores of companies are higher than their environmental scores across all sectors.
About the Author(s)
Matt Orsagh, CFA, CIPM, is a director of capital markets policy at CFA Institute, where he focuses on corporate governance issues. He was named one of the 2008 “Rising Stars of Corporate Governance” by the Millstein Center for Corporate Governance and Performance at the Yale School of Management.
Jim Allen, CFA, is head, capital markets policy, Americas, at CFA Institute. The capital markets group develops and promotes capital markets positions, policies, and standards.