The sustainable investing universe is expanding, and it's up to advisors to support clients during the transition.Calvin Chan Wai Meng/iStockPhoto / Getty Images
As the U.S. grapples with backlash against environmental, social and governance (ESG) principles, and Canada’s securities regulators pause their work on mandatory climate disclosures, many investors are questioning the future of sustainable investing (SI). The landscape is no longer idealistic – it’s complex, contested and evolving. More than ever, clarity and commitment from advisors are required.
SI is not a silver bullet, nor is it immune to political and economic headwinds. But it remains an important consideration for Canadian investors. As an example, the most common approach – ESG integration – goes beyond values alignment; it’s linked fundamentally to fiduciary responsibility. Identifying material ESG risks and opportunities that traditional analysis may miss supports more informed, resilient portfolio construction and long-term risk-adjusted returns.
For advisors, that’s not just about staying relevant. It’s about deepening client trust, meeting growing demand for sustainable solutions, and navigating an evolving regulatory environment with confidence.
Sustainability still matters to investors – despite the noise
According to a recent study conducted by Mackenzie Investments, Canadian investors continue to find value in SI despite the political discourse that surrounds it. More than two-thirds of those surveyed (67 per cent) believe that investing in the energy transition, which focuses on shifting from traditional to low-carbon and renewable energy sources, will have a positive impact on the environment, and 56 per cent believe these investments will yield long-term positive financial results.
This aligns with the broader Canadian investment industry. The 2024 Canadian Responsible Investment Trends Report found that 71 per cent of all assets under management in Canada now employ ESG integration. That isn’t just a values-based movement – it’s a reflection of the impact of financially material factors. As such, understanding ESG is becoming a core part of advisors’ fiduciary duty, and advisors must be equipped to speak knowledgeably about how these factors influence risk, return and long-term strategy.
Yet, investors are increasingly aware of the risks of greenwashing, the lack of consistent ESG metrics, and the uncertainty around future regulations. Many are asking tougher questions – and rightly so. The rise of values-based investing is real, but it’s no longer just about doing good; it’s about doing good with accountability, transparency and measurable outcomes.
The advisor’s role in a changing landscape
Advisors have an important opportunity, and obligation, to bridge uncertainty and action. The confusion around SI is growing, and clients need more than encouragement; they need context, clarity and credible guidance.
Advisors can help clients understand what SI means and how ESG factors impact long-term performance by explaining, for example, how a company’s exposure to cybersecurity risks – or its ability to manage them – can affect its valuation materially by increasing reputational and operational risk. They can also guide clients to invest in a way that aligns with their personal goals by helping them identify social causes they care about and finding companies or funds that reflect those values.
Advisors can also tailor investment strategies to balance sustainability goals with financial goals by ensuring they understand the various approaches applied by different portfolio management teams.
The SI universe is expanding, giving advisors a unique opportunity to support clients through this transition while building portfolios that are better positioned for long-range growth and risk mitigation. As partners in both capital stewardship and client trust, advisors stand at the intersection of two powerful forces: the urgent need for environmental and social progress, and the growing demand for resilient investments.
SI is adapting; now, more than ever, advisors need to lead with purpose, integrity and long-term vision.
Luke Gould is president and chief executive officer of Mackenzie Investments, and Fate Saghir is senior vice-president, sustainability and brand, at the firm.