Asset Management CultureDecember 2, 2020

Canadian Pension CEOs Call for Increased ESG Disclosure

The eight funds, which represent $1.23 trillion in assets, said it is ‘vital’ that companies report standardized ESG data.

Reported by Michael Katz

The CEOs of eight of Canada’s largest pension plan investment managers, which have approximately C$1.6 trillion ($1.23 trillion) in assets under management (AUM), are calling on companies and investors to “measure and disclose their performance on material, industry-relevant ESG [environmental, social, and governance] factors” in order to bolster investment decisionmaking and help assess and manage risk exposure.

In a joint statement, the CEOs asked companies to use standards from the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-Related Financial Disclosures (TCFD) to further standardize ESG-related reporting.

The CEOs represent the Alberta Investment Management Corporation (AIMCo), British Columbia Investment Management Corporation (BCI), Caisse de dépôt et placement du Québec (CDPQ), Canada Pension Plan Investment Board (CPPIB), Healthcare of Ontario Pension Plan (HOOPP), Ontario Municipal Employees Retirement System (OMERS), Ontario Teachers’ Pension Plan (OTPP), and Public Sector Pension Investment Board (PSP Investments).

While SASB standards focus broadly on industry-relevant sustainability reporting, the TCFD framework calls for climate-specific disclosures across several reporting categories, such as governance, strategy, risk, and metrics and targets. The CEOs said both standards are useful to investors and informative to companies working to frame their ESG reporting.

The signatories of the letter said they have also committed to strengthening ESG disclosures within their own organizations and will allocate capital to investments that they believe can deliver long-term sustainable value.

“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 CEOs said in the letter. “Companies have an obligation to disclose their material business risks and opportunities to financial markets and should provide financially relevant, comparable, and decision-useful information.”

They added that “while we recognize companies face a myriad of disclosure frameworks and requests, it is vital that they report relevant ESG data in a standardized way.”

In the letter, the CEOs also noted the COVID-19 pandemic and widespread protests against systemic racism have brought to light long-standing inequalities concerning social inequity, environmental threats, and board effectiveness. They said companies and investment partners must to use “this historic opportunity” to drive change and create more inclusive economic growth.

“A strong commitment to environmental sustainability, diversity and inclusion, and good governance principles will not only make our economy and financial system more resilient, it’s also the right thing to do,” Tiff Macklem, governor of the Bank of Canada, said in a statement. “Leadership from Canada’s financial sector is essential as we focus on building an enduring and more equal economic recovery from the pandemic.”