Client interest in environmental, social, and governance (ESG) investing continues to grow. As more products are available on the market, Annamaria Testani, Senior Vice President, National Sales, at National Bank Investments (NBI), believes advisors have a great opportunity to educate clients on ESG investing.

How would you define ESG investing?

There are many different definitions of ESG. Twenty years ago, ESG investing started with exclusions—different companies looking at their values and deciding not to invest in certain sectors. That has evolved. Now it’s about looking at every investment that’s made through ESG factors. And that’s on top of doing traditional financial analysis. But there are still a lot of misconceptions about ESG investment on the client’s part.

How can advisors fight misconceptions about ESG?

We’re at the beginning of another 10-year journey, because there are now governing laws on ESG. So, you need to take a certain amount of time every week and educate yourself.

Next, you have to manage clients’ expectations. For instance, if they want their whole portfolio to include ESG factors, then you have to ask, “What does that mean? Do you want it to be in sustainable investing? Ethical investing?” We must help investors master ESG terminology. Sustainable investing is often confused with ethical investing, which uses personal principles as a filter and has little relationship to sustainability. When clients hear sustainable, they tend to think about environmental protection. Social and governance causes aren’t necessarily top of mind.

So, ask questions, listen, and understand what RI or ESG investing means for your clients. Get to know your clients’ needs and expectations, and then share your knowledge with them.

With more ESG products coming to market, how can advisors manage their product shelves and stay on top of their game?

There’s a balancing act between managing your time and knowing your clients. For instance, I’d love to learn all about the 6,000 products in the industry, but I may not have that capability. So, advisors should find the five or 10 buckets of needs that are common with their clients. Once you know what the buckets are, then you can get two to four viable solutions per need and do the due diligence.

And once you apply ESG factors, you start looking at companies in a different way and managing your risk in a different way. You should embed filters in your models. For instance, you might ask a company about the average salary of the president versus the employees. I’ve noticed that investors are interested in robust diversity and inclusion policies. They want to see corporate transparency and fair executive compensation. So, if that aspect of a company is ridiculous, you might give that stock a substandard mark.

At NBI, we believe those additional filters can give you at least as good a return, if not better. It definitely helps you manage your downside risk. Showcasing that value to clients is an important step.

What’s the range of NBI’s Responsible investment solutions?

Almost all of our portfolio managers are PRI signatories, which means they committed to integrate ESG factors in their investment decision-making practices. We’re looking at RI at the heart of our processes and product lines.

Many of the products launched today track a specific index. But what we’re doing is different because we’re not passive. We think value can be added through active management. We offer the first platform of actively managed ETFs and mutual funds based on the UN Sustainable Development Goals in Canada. Our managers dig into the business plans of every company and find the ones that are going to benefit from their investments toward sustainable development goals.

What are the benefits of a business relationship with NBI?

We have an asset management governance process called OP4+. When I said advisors need to pick two to four viable solutions per need, we do that for you. We outsource our portfolio managers. So, with us, you’re buying into that efficiency. We’ll do the heavy lifting and due diligence, so you can concentrate on having more enriched conversations with your clients.

Annamaria Testani“Once you apply ESG factors, you start looking at companies in a different way and managing your risk in a different way.”

Annamaria Testani
Senior Vice President, National Sales

For more information on NBI’s responsible investing approach, visit