This article is the sixth in our special report Outlook 2026, which puts 2025 in the rear-view mirror and spotlights challenges expected in the year ahead. See the other articles here.
It seems like only yesterday that the largest companies and financial institutions were clamouring to show they were addressing environmental, social and governance concerns. Even the most agnostic of firms treated ESG as an important risk-management tool.
Fast-forward to now. The concern isn’t just about some businesses understating those risks and “greenwashing”—purporting to be more environmentally friendly than they actually are. Now there’s “green-hushing,” with ESG so politicized in the U.S. that major State-side companies are conversely trying to draw less attention to their ongoing investments and commitments to sustainability.
Inevitably, the discourse has seeped into Canada.
“You might still be doing the same things, but you’re not talking about it. You’re not using it as a marketing strategy anymore, because you’re worried about attracting any unwanted attention,” said Ben Rabinovitch, head of relationship management at Rally Assets in Toronto.
The importance of addressing environmental risk, social issues or good governance hasn’t changed, but the language has. There’s a tendency now toward wording such as “resource efficiency,” while keeping a lower public profile.
Some of the larger institutional investors in the U.S. and in Canada are still investing in a lot of these infrastructures that enable energy transition.
Stephanie Tsui, chief sustainability officer, Genus Capital Management
“So, it’s relabelling. It’s reframing. It’s talking about things in terms that are just smart business sense, like resource efficiency, instead of terms that are perceived to be politically risky, like ‘sustainability’ or ‘ESG’,” Rabinovitch says.
Family offices are seen as relatively removed from political optics compared to, say, institutional investors. Unlike pension funds or community foundations, “family offices are beholden to no one,” Rabinovitch says.
Arguably, that gives them a certain nimbleness, or at least a different perspective.
“Family offices have always been front-of-the-line, the leading edge on a number of investment practices. This is another one where they continue to compensate for the headwinds that we are facing and the pendulum that has swung in that opposite direction,” Rabinovitch says.
Global sustainable fund flows have been up and down in 2025, although Canada continued to see small net inflows, mostly into fixed income, says Stephanie Tsui, chief sustainability officer at Genus Capital Management in Vancouver.
“With a lot of the investors that have previously committed or signalled commitment to sustainable investing, they have been staying the course,” she says. She noted some signs of a slowdown in new money from investors, “but they are definitely not retreating.”
Waiting for returns
As earlier waves of private impact investments now start to pay distributions, Tsui sees investors waiting to choose where they want to reinvest that money.
“They are waiting for that to happen before they decide to redeploy that new capital into the space, which is reasonable,” she says. That wait-and-see approach may be contributing to the “stagnant growth in terms of new capital,” she adds.
In the larger corporate world, the ESG-related optics continue, leading to major banks pulling out of the Net-Zero Banking Alliance, for instance. As Tsui says, “They are not using ESG as an advertising or marketing strategy as much, because they want to avoid this potential backlash or regulatory scrutiny.”
You might still be doing the same things, but you’re not talking about it.
Ben Rabinovitch, head of relationship management, Rally Assets
Take global investment in renewable energy. Institutions “are not really talking as much about what they are doing on the energy transition front, for example. … But then some of the larger institutional investors in the U.S. and in Canada are still investing in a lot of these infrastructures that enable energy transition,” she says.
Meanwhile, changes to the Competition Act in Canada have tightened oversight of sustainability claims by companies in order to help ward off greenwashing, although the recent federal budget noted plans to scale back the new rules to some extent, as the Canadian Press has reported.
Business groups have argued that the unintended effect has been green-hushing and even movement away from environmental commitments by some businesses.
“But I don’t see it so negatively,” Tsui says. “I feel like those [companies] that are really truthful and genuine about what they are doing in terms of promoting sustainability through their products [and] how they treat their employees, they will stand out.”
Most impact investing is in private markets
To be clear, says Brad Jesson, vice-president, family office advisory at Northwood Family Office in Toronto, “when you think about ESG, it’s predominantly dealing with publicly traded companies. A lot of that anti-greenwashing in the Competition Act is around, in my perspective, the public markets.”
Most impact investing today is in private markets, he adds, “so it’s private funds working on green transition, litigation finance, on and on.”
A recent report on North American family offices by RBC Wealth Management and Campden Wealth found that wealthy families typically focus their attention on sustainability themes that resonate with them the most, but they don’t expect that to mean sacrificing investment returns.
As Tsui at Genus notes, “There are ebbs and flows. Some periods of time you will see that these sustainable funds underperform, but there are also a lot of other times that they have outperformed.”
Companies that can show their resilience to greater scrutiny are the ones that may better withstand risk, she says. “I think it is actually a very essential risk-management tool, at the minimum.”
The RBC report found that the themes wealthy families supported the most were climate solutions (75 per cent), education (52 per cent) and healthcare (51 per cent). At the bottom of the list were systemic themes concerned with improving circular economies (26 per cent), financial inclusion (25 per cent) and fair trade (14 per cent).
And yet, altruism hasn’t diminished.
In the report, 88 per cent of respondents said that their prime motivation to invest responsibly is an “increased recognition of the importance of responsible investing.” Also, 75 per cent said their impetus was a “responsibility to make the world a better place.”
However, family offices also agreed emphatically (75 per cent) that “responsible investing does not mean accepting lower financial returns.”
The term for that is concessionary returns, notes Jesson at Northwood. With impact funds, for instance, “a lot of people think that to invest in impact you have to give up return, that you have concessionary returns.
“But that’s really not the case,” he adds. “It’s just like any investment, it depends on the fund.”
Guy Dixon began his career at Dow Jones Newswires in New York before joining the Globe and Mail, covering financial markets, business news, the arts and other topics over the years. He has written for the CBC and The Walrus among other publications.
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