Hadekel: Responsible investing is a growing movement

Hundreds of investment professionals are gathered in Montreal this week to debate one of the hot topics in the industry: responsible investing.

It’s a big and all-encompassing subject that can include many kinds of environmental, social and governance issues. The shorthand term for it is ESG.

A global movement has started up around the Principles for Responsible Investment, an initiative started in partnership with the United Nations Global Compact.

Major investment firms and agencies like the Caisse de dépôt et placement du Québec and the Canada Pension Plan Investment Board (CPPIB) have signed on to PRI’s six principles, which commit signatories to incorporate ESG into their decision-making and investment practices.

It might have started out as a radical or somewhat impractical dream. But the growth in signatories to PRI has been startling, to the point where managers of some $45 trillion U.S. worth of financial assets now adhere to the principles.

The initiative calls for transparency and disclosure among the 1,300 signatories who must commit to full reporting on their progress.

On Thursday, a panel of Canadian investment industry leaders assessed the industry’s progress on ESG in this country.

Marie Giguère, executive vice-president of legal affairs at the Caisse de dépôt et placement, noted that the Caisse is a long-term investor because of its pension fund mandate.

So it takes a long-term perspective on the investments it makes. As a mainstream rather than an ethical investor, it tries to work directly with the companies in which it owns shares.

“Responsible investing is integrated into all of our portfolios,” Giguère said, and the Caisse won’t shy away from voting for shareholder resolutions to effect change.

Among the issues it has to grapple with is how to handle investments in extractive industries such as mining and oil and gas.

“A lot has been done to reduce their environmental impact,” she said. But one problem is the way mining companies report on their activities. There are no common standards with which to compare one company against another.

One issue that comes up a lot is the lack of women on corporate boards. Canada seems to be behind Europe on that front, Giguère said.

And as the Caisse spreads its investment reach to emerging markets around the world, it must pay a lot more attention to ESG in places it doesn’t know much about.

Global investment funds pledge ‘carbon footprint’ disclosure

A group of global investment funds have signed on as the first participants in a new protocol that will require them to report on the amount of carbon pollution being generated by the companies in their portfolios.

The Montreal Carbon Pledge was unveiled Thursday at the annual conference of the United Nations-supported Principles for Responsible Investment (PRI) organization, held this year in Montreal. It will require investors to calculate the “carbon footprint” of their stock portfolios, measuring each company’s carbon emissions and displaying the total as a ratio to each million dollars the fund has invested.

Eight funds are inaugural participants, including the $298-billion (U.S.) California Public Employees’ Retirement System, which is the largest pension plan in the United States, and France’s public sector pension plan known as ERAFP. The only Canadian fund to commit so far is Montreal-based Bâtirente, which manages $1.2-billion in assets for members of unions affiliated with the Confédération des syndicats nationaux (CSN).

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In this BLOG we will look at pensions and their impact on what are called Public Private Partnerships or P3’s.  IT will also deal with other pension matters, such as Defined Contribution Plans (DC) vs Defined Benefit (DB) PLANS, the weakness in private plans, the need for pension reform in public pensions to have shareholder rights, directorships and ethical investment directives and policies.