Socially Responsible Investing in ”High-Net-Worth” Asset Management Firms in Canada: An Exploratory Study

Abstract

Socially responsible investing (SRI) is an increasingly well-known investment strategy. However, in most nations, SRI is not mainstream practice. This paper investigates perceptions of SRI amongst investment professionals from “high-net-worth” investment firms in Toronto, Canada. Existing corporate practices in relation to stock selection and client relations are documented, in order to assess how these practices might facilitate or prevent SRI. Views of SRI, and its current and potential future role in investment practice, were also explored. Results suggest that, while awareness of SRI has increased in recent years, it has not become accepted practice in high-net-worth investment firms. This lack of adoption stems from the perceived additional burden of researching the ethical (and not just financial) performance of companies, rather than any fundamental disagreement with the principles of SRI. In addition, interview participants pointed to low levels of client demand. Increased awareness of SRI among both professionals and clients was seen as the most effective way of increasing its adoption. The paper concludes by discussing the implications of this research for social responsible investing in Canada’s high-net-worth investment firms as well as in the broader investment world.