June 19, 2020

Canada’s Responsible Investment Association (RIA) may have gone virtual for 2020, but the escalating interest in responsible investing remained very much on track. As this year’s conference proved, although RI is rapidly becoming a fully embedded investment approach, making a true connection to investor demand for RI remains a challenge.

Just a few short years ago, in 2017, the RIA held its annual conference in Vancouver and attracted around 350 participants. There were plenty of familiar faces. It was a cozy group.

When NEI presented to a group of about 50 advisors at a conference breakout, most had practices well entrenched in RI and were all approaching it the same way with their clients: values-driven investments for values-focused clients.

At the 2019 conference in Montreal you could sense things were changing fast. This time over 500 people attended and at NEI’s advisor breakout, the majority in the room were attending their first RIA conference.

In 2020, the RIA went virtual with its conference (due to the coronavirus) and attracted over 900 participants. This paralleled the expected attendance, had the conference been held live as planned in Toronto. And NEI’s advisor practice management session on incorporating RI into your advice business attracted an audience of over 400.

Besides the obvious – that attendance at the RIA conference has matched the general jump in interest in RI – the 2020 RIA conference presented some important lessons for RI practitioners and the firms that support them:

  1. The RI world is rapidly becoming more sophisticated and specialized. The kinds of resources once reserved for ‘mainstream’ investment management analysis now routinely find application in the RI space. We should expect more of this. The demand for responsible solutions means the RI industry is upping its game on defining the materiality of ESG factors, which means companies and regulators will need to do the same when it comes to the disclosure of ESG-related data. The RIA conference dedicated a full day to the intricacies of ESG in financial analysis as part of its conference segmentation into distinct content streams (this was the Analyst stream).
  2. The investor connection remains elusive. For all the advancements in RI, making a strong connection with end investors, especially retail investors who are the source of such incredible demand for responsible solutions, is a challenge. Two conferences ago, NEI introduced a needs-based framework for conversations about responsible investing – a framework that focused not on what RI is, but rather what RI The investment needs RI can meet. That framework still applies to a degree, but the investor consciousness that drives demand for RI is shifting in real time – both in response to and as a catalyst for the massive social change we’re witnessing today. The associated rise of the ‘S’ in ESG should cause us to re-think how we make the connection to RI more meaningful for investors.
  3. There is (still) an overemphasis on RI products. A clue to making that stronger connection with investors lies in the fact that many providers still want to make RI primarily a product discussion. While fulfilment of the demand for RI necessitates a range of investment solutions, viewing RI as simply a product ignores the foundational shift in social and investor attitudes that is fueling this demand. RI providers and advisors must connect with the core purpose of investors, not only as a pre-requisite to any product discussion but also, as it applies to RI product manufacturers, as a precursor to solution development. The solutions we use today may not be right for tomorrow. But we won’t know if that’s the case if we promote products over insights, thought leadership and conversation.

This understanding of, and connection to the real source of demand for responsible solutions, and how to best meet that demand, are topics we’ll explore in future blogs.