Environmental, social and governance issues are key to the board’s investment approach.
Environmental, social and governance matters
Taking environmental, social and governance (ESG) matters into account helps the board better understand, manage and mitigate risks of long-term investments. The board believes that social, environmental and economic sustainability help the plan fulfill its financial obligations to members and beneficiaries and that companies with strong ESG practices are better positioned to generate long-term value for investors than similar companies with less favourable practices.
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
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 integrates such considerations into its investment analysis, decisions and processes. It uses its influence as a shareholder to encourage companies to manage and report on ESG risks.
The board collaborates with like-minded investors and organizations to enhance governance practices and standards across financial markets. The board and BCI are signatories to the Principles for Responsible Investment (PRI). This is an international network of investors supported by the UN that share the goal of incorporating ESG elements into the activities of institutional investors. As part of this commitment, the board and BCI communicate their activities and approach to responsible investing as part of an annual PRI assessment.
In addition, the board supports BCI 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 Sustainability Accounting Standards Board, which has a mandate to promote standards of sustainability reporting.