Responsible fund providers say too early for new regulations amid rapid evolution

·2 min read

TORONTO — Providers of responsible investing products told a roundtable Monday that the sector is evolving too rapidly to impose new regulations yet.

The roundtable organized the Canadian Securities Administrators comes as the still developing sector has seen tremendous growth, coupled with rising concerns about potentially misleading claims and a lack of information for investors.

Mari Brossard, National Bank of Canada's senior manager of sustainable investment, told the roundtable that it was important the industry had space to evolve.

“Our industry is in a daily evolution, and we don’t want to paint ourselves in the corner. We all need a bit of time to settle, to come up with a consensus.”

She said that Canadian regulators already have oversight powers on misleading representation that should cover concerns over greenwashing in the industry.

BlackRock managing director of investment stewardship Michelle Edkins said there is a clear need for more consensus around terminology but that it needs to happen at a global level, led by industry.

“Blackrock definitely agrees that it’s way to early to be establishing regulation here, just because we see it rapidly changing.”

Jean-Paul Bureaud, executive director of investor advocacy group FAIR Canada, said that while current regulations may be sufficient to cover the environmental, social and governance investment space, it hasn't translated to transparency for consumers on how companies will achieve ESG goals.

“The problem is the practice of providing the kind of transparency that investors want and need today, is not yet caught up to the standards we would expect.”

He said that prospectuses and requests for proposals in the space are largely still focused on investor returns, even as investors in the space increasingly want both to make returns and a difference.

Ian Howard, executive director of corporate solutions at Sustainalytics, said that there was room for more requirements on company disclosures around sustainability issues while still allowing the sector to grow.

This report by The Canadian Press was first published Sept. 27, 2021.

Ian Bickis, The Canadian Press

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