As the CEO of Invest in Canada, I am constantly in contact with international executives—assessing and addressing their most pressing business challenges while presenting investment opportunities all across Canada. Like the rest of us, global investors have experienced a year unlike any other in our lifetimes. They too are looking to navigate the uncertainties of the post-COVID-19 world.
The global outlook for 2021 offers something that has been in short supply for some time—optimism. Companies ended 2020 with more capital on hand, and there is a renewed urgency to deploy that capital in the post-pandemic global economy. With vaccination programs now underway worldwide, investors are able to realistically look ahead and make investment decisions that will shape the future.
In 2021, investors are looking for markets with political and economic stability, openness to trade and investment, access to the world’s wealthiest markets and the talent and innovation to deliver world-class results. When investors take that big-picture perspective, Canada inevitably shines.
I see four trends shaping 2021 investment strategies.
Countries that look outward get a closer look
While some countries turn inward out of concerns and uncertainty about multi-lateralism and globalization, Canada is doing the opposite. We see increased trade flows and investment as critical factors to recovery. This is especially the case in sectors that have been disrupted by the pandemic—such as advanced manufacturing and agribusiness.
The Honourable Mary Ng, Canada’s Minister of Small Business, Export Promotion and International Trade, has signalled that Canada “intends to continue being a forceful voice for stable, reliable, rules-based international trade because Canadians’ prosperity depends on it.” I consistently emphasize Canada’s openness to investment and its welcoming business environment in virtually every conversation I have with executives at global firms.
ESG means business
The more I hear from investors, the more it becomes clear that a focus on environmental, social, and corporate governance (ESG) principles are guiding their decisions. It is more than a secondary component of business deals; it is quite rightly fundamental to the investment decision. Capital will flow to sectors, jurisdictions and individual companies that respect ESG. Shareholders, customers and corporate boards alike will insist that goods and services are produced in sustainable ways and in sustainable jurisdictions.
Canada is an attractive destination for investors making ESG-influenced decisions. Bold action on climate change, ample availability of socially responsible investment opportunities, and unmatched corporate governance are all factors that will encourage more investment all across Canada.
Climate changes the calculation
Going hand in hand with the increasing salience of ESG is the impact of climate change. No other factors are as likely to affect international investment, and not just in 2021—but for decades to come. Established supply chain hubs are being threatened by the increasing frequency and severity of climate related events. Companies are factoring climate risk into their location decisions like never before.
Investors are looking at countries that have well-developed climate plans and investment-ready business opportunities. Canada has both. The next generation of clean technology – like hydrogen-powered transportation and electric vehicle batteries – will require public and private sector investments.
Developing resilience in global supply chains
COVID-19 exposed vulnerabilities in global supply chains. The world took notice that low-cost, globally dispersed production chains were vulnerable to shutdowns and sudden logistical restrictions. While global supply chains will adjust, more resilient systems will become a priority.
Canada is an ideal location for investment in manufacturing production chains, especially for European or Asian firms who want to ensure access to the vital U.S. market. It also offers a secure and globally connected farm-to-fork food system, while being a global leader in plant-based proteins, a rapidly growing market segment.
2021 trends point to opportunities
These investment trends will likely evolve as the year progresses—2021 will be a year with more unknowns than normal. While global companies undertake strategic thinking to build resilience and foster innovation, Canada offers unmatched advantages.
My team and I are ready to support your business objectives. To discuss your company’s investment plans for 2021 and beyond, contact us now.