{"id":20244,"date":"2020-11-19T09:00:36","date_gmt":"2020-11-19T14:00:36","guid":{"rendered":"https:\/\/www.benefitscanada.com\/news\/spotlight-on-esg-issues-seeing-pension-plans-focus-on-ethical-responsible-investing-152850"},"modified":"2020-11-19T09:00:36","modified_gmt":"2020-11-19T14:00:36","slug":"spotlight-on-esg-issues-seeing-pension-plans-focus-on-ethical-responsible-investing","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2020\/11\/19\/spotlight-on-esg-issues-seeing-pension-plans-focus-on-ethical-responsible-investing\/","title":{"rendered":"Spotlight on ESG issues seeing pension plans focus on ethical, responsible investing"},"content":{"rendered":"
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Melissa Dunne<\/span> | November 19, 2020 <\/p>\n

Demand for defined benefit pension plan sponsors to focus on environmental, social and governance factors through their investments is growing.<\/p>\n

Both plan sponsors and members have been increasingly vocal about keeping ESG issues top of mind. For example, the Healthcare of Ontario Pension Plan has worked on balancing this increased appetite for ethical investing with an overall responsible investing strategy.<\/p>\n

\u201cAt HOOPP, we think, while it\u2019s challenging, the investment universe is large and there are opportunities where those two seemingly different aims overlap,\u201d said Sarah Takaki, the pension fund\u2019s senior director of sustainable investing, during an Association of Canadian Pension Management virtual roundtable on Tuesday. \u201cWith the pandemic, the changes we\u2019re experiencing now even highlight that overlap. . . . Those two circles really overlap and that\u2019s a space we really like to play in as an investor.\u201d<\/p>\n

Read: Benefits of integrating ESG include long-term alpha, minimized risk: survey<\/a><\/strong><\/p>\n

The Alberta Investment Management Corp. has taken a similar approach, focusing on investments that are ethical while balancing ESG issues with other considerations such as the long-term viability of investment portfolios, according to Alison Schneider, the organization\u2019s vice-president of responsible investment, also speaking during the roundtable.<\/p>\n

While there\u2019s sometimes pressure to take immediate action if a company\u2019s ethics come under fire, she noted the AIMCo\u2019s leadership first looks for ways to fix the problem. \u201cOur mantra is voice over exit. We prefer to be invested and stay invested and stay engaged with companies rather than unnecessarily divest and reduce the investable universe.\u201d<\/p>\n

For example, following the Rana Plaza tragedy in Bangladesh in April 2013, the AIMCo stayed the course<\/a>. Instead of divesting from any investments in the country, it worked with business and government leaders to ensure higher labour standards were met going forward.<\/p>\n

\u201cOut of something really horrible came something better and companies not only improved their supply chains out of Bangladesh but [elsewhere, too],\u201d said Schneider.<\/p>\n

Read: AIMCo\u2019s philosophy on sustainable investing<\/a><\/strong><\/p>\n

On the flip side, divestment is sometimes the right choice. After news outlets reported last year that the AIMCo was among a list of Canadian pension plans that had invested in private U.S. prison companies that run immigration detention centres, it first looked at not divesting, but ultimately chose to do so, she said.<\/p>\n

In other cases, it isn\u2019t only public criticism that brings about change, but direct feedback from concerned plan sponsors and members. In March, Desjardins Investments Inc. announced it would be excluding fossil fuels from the investing policy of certain funds. The change came after fielding many phone calls on the heels of a visit from environmental activist Greta Thunberg to Canada last fall, said Deborah Debas, <\/b>responsible investment specialist for Desjardins Group\u2019s investment solutions and wealth management, during the webinar.<\/p>\n

Complex ESG issues can\u2019t all be solved with swift policy changes; consistent stakeholder engagement is often required to bring companies around, said Schneider, recounting the story of a male executive who recently pushed back hard when called out for the lack of women on his company\u2019s board. The executive even went as far as to claim there were no qualified women and suggested they should be focused on their families, not work.<\/p>\n

She\u2019d heard these types of objections before and wasn\u2019t hopeful for change but the next time she talked to the executive, his company had found a qualified woman to put on its board. Going forward, engagement and accountability will remain key, as will increased standards around ESG disclosure, added Schneider.<\/p>\n

Read: How investors are turning the gender diversity dial on corporate boards<\/a><\/strong><\/p>\n

Being on the right side of history on a range of ESG issues \u2014 from equal representation of women on boards to labour rights to climate change \u2014 can result in lower risks for investors, noted Takaki.<\/p>\n

While ensuring strong returns for pension members can seem in direct opposition to doing good in the world, she argued the two goals can co-exist. \u201cSustainable investing is really about what we do and how we do it. We believe that ESG factors can impact the risk return profile of an investment and, therefore, integrating ESG factors is really part of our robust approach to investment management.\u201d<\/p>\n

Read the full article at BenefitsCanada.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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