As global ESG narratives become increasingly polarized, Canadian institutional investors are demonstrating resilience, maintaining their commitment to responsible investing even amid shifting U.S. policies and legal challenges. According to Millani’s Semi-Annual ESG Sentiment Study of Canadian Institutional Investors, 93% of Canadian investors continue integrating ESG considerations into their strategies, focusing on risk management and long-term engagement rather than headline-driven shifts.
The 2024 U.S. election has introduced new uncertainties into global markets, with investors closely watching potential shifts in sustainability policies, trade relations, and climate regulations. While some feared that Donald Trump's return could set back ESG momentum, Canadian investors remain largely undeterred.
“We are entering more of a defense mindset, really focusing on financial materiality and fiduciary duty,” one asset manager explained. Investors acknowledge that public-facing ESG marketing may decline, but the underlying focus on risk-adjusted returns and long-term sustainability remains unchanged.
A defining moment in 2024 was Exxon Mobil’s lawsuit against investor groups pushing for stricter climate policies. While some viewed this as a signal of increased resistance to ESG-related shareholder activism, 86% of Canadian institutional investors stated that such lawsuits would not change their engagement approach.
For these investors, engagement remains a long-term, partnership-driven process rather than an adversarial one. “We view companies as partners. We give them pushback and challenge them, but we are here for the long haul,” noted one institutional investor.
While anti-ESG shareholder proposals have surged, growing from 2% in 2021 to 11% in 2024, many investors see this as an opportunity to improve proposal quality. “Sometimes proposals are rushed and not well-researched. If this scrutiny makes them stronger, it’s ultimately a good thing,” said one respondent.
One of the most notable trends among Canadian institutional investors is the evolution of ESG priorities. Beyond climate, investors are emphasizing the interconnection between climate and biodiversity—with 15% now prioritizing nature-based solutions.
Additionally, Indigenous reconciliation and economic development have emerged as major investment themes. Canadian investors are actively seeking partnerships with Indigenous communities, positioning Canada as a leader in sustainable, community-driven investment strategies.
The study also revealed a shift from external ESG branding to internal execution. Investors are moving beyond broad commitments to focus on:
Rather than abandoning ESG, investors are becoming more sophisticated, embedding sustainability considerations into core investment decision-making rather than treating ESG as a separate category.
As Canada approaches its 2025 federal election, investors are pressing to establish a clear, standardized transition taxonomy to guide decarbonization efforts. The lack of a unified framework has led to market fragmentation and greenwashing risks, with investors relying on European standards or self-created definitions.
“Market participants are waiting for this promised taxonomy, and it’s getting very political when it shouldn’t be,” warned one investor. Without it, Canada risks losing competitiveness in global sustainable finance markets.
Despite political challenges, Canadian institutional investors are not stepping back from ESG—they are simply refining their approach. The focus is now on material outcomes, risk-adjusted returns, and strategic engagement rather than high-profile ESG branding.
