The sustainability advantage
Over time, a sustainable business model creates value for stakeholders without depleting the natural, economic, and social capital it relies on.
Especially in volatile times, sustainability offers a future-proof strategy that’s good for business:
- Improved financial performance due to ESG becomes more marked over a longer time horizon. A proxy model aggregating 1,000 studies suggests that with all else being constant, a long-term ESG focus is 76% more likely to find a positive or neutral result.3
- It improves employee attraction and retention for those seeking to an employer whose values are aligned with their own. 80% of millennials say they want to work for socially responsible companies.4
- It improves brand perception and loyalty and attracts customers hoping to make a difference by voting with their wallets. 56% of consumers would pay more for a sustainable product.5
There is growing recognition that ESG factors are key drivers of value. Integrating these factors does not mean sacrificing returns. On the contrary, corporate profits and investment returns can actually be enhanced by adopting ESG principles. The MSCI Canada ESG Leaders Index outperformed the MSCI Canada Index in 11 of the past 14 years.6 According to Morningstar, Canadian Responsible Investment funds on average outperformed the returns in their respective asset class over a 3-year, 5- year and 10-year period.7
These factors have led 81% of institutional investors in Canada to employ ESG principles in their investment strategy.8 There are also indications that access to sustainable investment options can improve plan participation and overall retirement outcomes.
We found that 55% of Clients are likely to contribute more if their plan offered sustainable investing options.9