Environmental, social and governance issues are key to the board’s investment approach.
Environmental, social and governance matters
Companies with strong environmental, social and governance (ESG) practices are better positioned to generate long-term value for investors than similar companies with less favourable practices. For this reason, BCI, as the board’s investment agent, integrates ESG considerations into its investment analysis, decisions, and processes. This helps ensure the plan fulfills its legal obligation to act in the best financial interest of all plan beneficiaries.
What are some of the key ESG factors?
- Environmental factors include systemic risks such as climate change, as well as how individual companies affect air and water pollution, carbon emissions, deforestation and energy efficiency
- Social factors include equity, human rights, labour standards, and workplace health and safety
- Governance factors can mean board compensation and structure, diversity, and transparency and disclosure
Influencing positive change
BCI is an active owner on behalf of the plan. It engages with companies to raise awareness that good corporate governance is the overarching framework for effectively managing risks. BCI also uses its influence as a shareholder to encourage companies to manage and report on ESG risks. Divestment eliminates any ongoing opportunity, as a shareholder, to positively impact company behavior.
The board and BCI are signatories to the United Nations–supported Principles for Responsible Investment (PRI).
Through this association, we are part of an international network of investors working together to better understand the investment implications of ESG issues and integrate ESG considerations into investment and ownership decisions.
Each year the board and BCI take part in a PRI assessment to measure our progress. The assessment is a tool used to benchmark the board’s responsible investing practice against others. Over the years, the Municipal Pension Plan has consistently received positive scores.
The board co-founded the Western North America (WNA) PRI network. This group brings together like-minded investors in British Columbia, Alberta, Saskatchewan, California and Washington with opportunities to share information and best practices about ESG integration, discuss issues of regional concern and move the responsible investment conversation forward.
Following the success of the WNA PRI network, the UN PRI formed the Western North America Advisory Committee and appointed the plan’s executive director as co-chair. Today the chair of the plan’s investment committee is the co-chair of PRI’s WNA advisory committee.
We support BCI in its work leading or co-leading engagement with North American companies in the oil and gas and mining sectors as part of the Climate Action 100+. This work helps ensure the world’s largest corporate greenhouse emitters take necessary action on climate change.
The board also supports BCI’s efforts in responsible investing as an active member and contributor to a number of initiatives. For example, BCI is a member of the steering committee for the 30% Club, which advocates for companies to enhance gender diversity. BCI is also part of the Value Reporting Foundation, formerly the Sustainability Accounting Standards Board, which promotes standards of sustainability reporting.
The board is an affiliate member of SHARE, a leading not-for-profit organization in responsible investment services, research and education. SHARE supports institutional investors to become active owners and develop and implement responsible investment policies and practices.
Principles for Responsible Investment: six principles for responsible investment
PRI, the world’s leading proponent of responsible investment, has six principles, developed by investors for investors. The principles are voluntary and aspirational and offer a menu of possible actions for incorporating ESG issues into investment practice.
Principle 1: We will incorporate ESG issues into investment analysis and decision-making processes.
Principle 2: We will be active owners and incorporate ESG issues into our ownership policies and practices.
Principle 3: We will seek appropriate disclosure on ESG issues by the entities in which we invest.
Principle 4: We will promote acceptance and implementation of the principles within the investment industry.
Principle 5: We will work together to enhance our effectiveness in implementing the principles.
Principle 6: We will each report on our activities and progress towards implementing the principles.