Proxy voting and responsible investing

How the Municipal Pension Plan uses its voice on environmental, social and governance issues

The Municipal Pension Plan uses environmental, social and governance (ESG) factors to assess the sustainability and societal impact of an investment. The plan and its investment manager, British Columbia Investment Management Corporation (BCI), believe that companies that take ESG factors into account generate more value for investors and manage risk better.

As a global investor in a broad range of publicly traded companies, BCI employs a variety of channels to engage and influence the companies it invests in. One of these channels is proxy voting.

Proxy voting: why it’s important and how it’s done

“Proxy voting” refers to a person or a firm casting a vote on behalf of another. BCI acts as the plan’s proxy and, as a shareholder, can represent the plan’s interests when voting. Shareholders vote at annual general meetings on a range of company practices, including the election or re-election of board directors, executive compensation and special items that require shareholder approval such as mergers. Through these engagements, BCI advocates for improvements in ESG disclosure and practices as a means to support overall company performance and value of the plan.

BCI aims to cast votes at all general meetings for every public company in the portfolio, recognizing there are still some hurdles in certain markets. BCI conducts the plan’s proxy voting activities in-house, including researching issues and consulting like-minded peers.

BCI’s proxy voting guidelines

In consultation with clients, BCI developed proxy voting guidelines that express their view on specific issues and how they are likely to vote on them. The guidelines establish BCI’s primary beliefs on corporate governance practices, as well as on expectations for how companies they invest in should address environmental and social risks. BCI updates the publicly available guidelines every two years to reflect emerging best practices and evolving risks.

In February 2021, BCI published its 10th edition of the proxy voting guidelines. Significant updates include:

• BCI now expects that women will comprise at least 30 per cent of a company’s board of directors
• BCI will consider more prescriptive shareholder proposals on climate change, and will escalate targeting of directors of weak responses to climate change risk
• BCI will escalate votes against company directors for poor compensation practices in the context of COVID-19 and its impact on workers.

BCI is transparent about its proxy voting activity, and its entire voting record is available online at bci.ca. The plan is proud of BCI’s proxy voting practices and record and, as a plan member, you can be too.