Sustainable investment management in Canada

Canadian law likely requires asset managers with discretion over client funds to consider the sustainability impacts of their investment decisions, but there is little to no case law elaborating on this obligation—perhaps due to procedural barriers to litigation in this field. Managers of publicly traded collective investment schemes must disclose material information on how sustainability factors influence their investment decisions, but Canada’s provincial and territorial securities regulators have stopped short of standardizing these disclosures. Nonetheless, asset managers can draw on a wealth of commentary and soft law to harmonize their disclosure practices and adapt their investing approaches to better reflect the financial and other challenges posed by climate change and other threats to environmental sustainability. The likelihood that Canada’s federal government will make greater use of its own powers to drive financial sector action on sustainability gives asset managers reason to be proactive in this vein.