Sustainable investing materializes when institutional investors start adding intentionality to their strategies and actions, said Maxime Chevalier, alternative investments specialist at Desjardins Global Asset Management (pictured left), during a session at the Canadian Investment Review’s 2024 Endowment & Foundation Investment Forum in June.

For instance, ESG integration strategies can range from protecting investments from material social and environmental risks to a more proactive approach that avoids harm to society and the environment. It’s important for institutional investors to appreciate the nuances before making investment decisions.

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Bridging the gap between ESG integration and impact investing is the sustainable outcome category. “Intentionality really is what enables sustainability. It allows [institutional investors] to bridge from strong ESG to sustainable outcome type of strategy.”

Confusion over impact investing often stems from semantics, because at the end of the day, everyone is essentially talking about the same concepts but using different terms.

According to data from the Canadian Institutional Investment Network that was presented during the session, the average asset mix of endowments and foundations between 2020 and 2023 was led by equities (35 per cent), followed by cash (27 per cent), bonds (23 per cent), other assets (eight per cent) and alternatives (six per cent).

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Also speaking during the session, Pascal Bernier, portfolio manager of strategic asset allocation at DGAM (pictured right), said while responsible investment objectives can be integrated at different stages of portfolio construction, investors must keep a good understanding of their total invested assets at all time.

Not all organizations are at the same place in their responsible investment journey and it’s crucial for them to clearly define and prioritize their investment objectives and assess risk tolerance before making investment decisions.

“Every asset class has a different role to play within an investment strategy,” he said. “A calculated risk-taking approach can provide higher returns over time for patient investors.”

Read more coverage of the 2024 Endowment & Foundation Investment Forum.