Top pension funds call for stronger ESG disclosure

Group says better disclosure will help with decision making, risk management

Agroup of Canadian pension plan investment managers is calling on companies to standardize their environmental, social, and governance disclosure to help them in their investment decision-making and better assess and manage their risks.

The eight fund managers together manage a total of about $1.6 trillion in assets.

In a joint statement Wednesday, the group — which includes the Canada Pension Plan Investment Board, Ontario Teachers’ Pension Plan and AIberta Investment Management Corp. — said it is committed to creating more sustainable and inclusive growth by integrating environmental, social and governance factors into their strategies and investment decisions.

They said it is an integral part of their duty to contributors and beneficiaries and will unlock opportunities and mitigate risks, but that they require transparency from companies.

“How companies identify and address issues such as diversity and inclusion, human capital, board effectiveness and climate change can significantly contribute to value creation or erosion,” the statement said.

“Companies have an obligation to disclose their material business risks and opportunities to financial markets and should provide financially relevant, comparable and decisionuseful information.”

The statement is signed by the chief executives of AIMCo., B.C. Investment Management Corp., the Caisse de depot et placement du Quebec, CPP Investments, the Healthcare of Ontario Pension Plan, the Ontario Municipal Employees Retirement System, Ontario Teachers and the Public Sector Pension Investment Board.

The investment managers said the pandemic and other events this year have revealed preexisting business strengths and shortcomings with respect to social inequity, including systemic racism and environmental threats.

“It is imperative we rebuild our economies in ways that create greater systemic resiliency and inclusive growth,” the statement said.

“The time to act is now, and each of us has a role to play. We call on companies and investment partners to help drive lasting change by placing sustainability at the centre of their planning, operations and reporting.”

Fund managers around the world have been increasingly looking at environmental, social and governance or ESG issues when evaluating investments.

In doing so, investment managers examine performance on the environment and other sustainability issues along with financial results.

Earlier this year, Brookfield Asset Management named former Bank of Canada and Bank of England governor

Mark Carney as vice-chair and head of ESG and impact fund investing.