Pension Percolator

What’s brewing for BC and the Canadian retirement landscape. 


October 23, 2017

2017 Proxy voting – strengthening our voice on climate change

Through pooled funds, approximately 46.7 per cent of BC’s Municipal Pension Plan’s portfolio is invested in company shares that trade on the public stock exchanges.

When you own a share in a publicly traded company, you also receive the right to vote at the company’s annual general meeting (AGM). Municipal Pension Plan (plan) takes its role as a responsible investor seriously, and through our investment manager, we vote on all Canadian and U.S. holdings, and on about 75 per cent of all other international holdings by market value. This translates into voting on almost $20 billion of the value of the public equity portfolio.

Voting is one of a number of day-to-day investment decisions the plan delegates to British Columbia Investment Management Corporation (bcIMC). In turn, bcIMC conducts all their proxy (delegated) voting activities in-house: researching issues, consulting with a multidisciplinary internal team and like-minded external institutional investors, and engaging with some companies on contentious or high-profile issues.

To ensure their staff are able to make principled and consistent decisions during the proxy voting season, bcIMC developed a set of proxy voting guidelines, in consultation with clients such as the plan. The guidelines are publicly available, so those interested can understand how our votes will be cast. The guidelines evolve over time to address emerging best practices and issues.

Then, once our votes are cast, bcIMC publishes its entire voting record online, in real time – in advance of companies’ AGMs – to serve the same purpose of facilitating understanding. bcIMC also discloses the rationale when it votes against management recommendations and when it votes for or against shareholder proposals.


Through membership in the Municipal Pension Plan, members are the beneficial owners of thousands of publicly traded companies.


The plan firmly believes accounting for environmental, social and governance (ESG) factors enables better management and mitigation of long-term investment risks. Proxy voting is at the heart of how the plan integrates ESG factors into its active ownership and engagement activities. It enables input on material ESG issues at public companies and encourages companies to identify practical, realistic solutions to mitigating ESG risks. The plan believes companies employing robust ESG practices are better positioned to generate long-term value for investors than those with less favourable practices.

Believing that it is in long-term shareholders’ best financial interests, in 2017, bcIMC voted for a number of shareholder proposals seeking public reports on the impact of global climate change policies on the company over the long term. The reports will include a scenario analysis consistent with the global commitment to limit global temperature change to two degrees Celsius.

Three key resolutions – supported by bcIMC – passed:

  • ExxonMobil – New York State Common Retirement Fund filed the shareholder proposal, which received more than 60 per cent support
  • Occidental Petroleum Corporation – California Public Employees’ Retirement System and other institutional investors filed the shareholder proposal, which received more than 65 per cent support
  • PPL Corporation – New York State Common Retirement Fund filed the shareholder proposal, which received more than 55 per cent support

A number of other climate-related resolutions came close to passing.[1] Collectively, these voting results reflect the growing influence that shareholders and pension plans have on advancing ESG issues – like climate change – with companies.

The plan is proud of its proxy voting practices and record, and you as a plan member should be too. Through bcIMC, the plan’s votes were pooled with other like-minded investors and organizations, strengthening our voice on climate change.

 

[1] Ronald O. Mueller and Elizabeth Ising, “Shareholder Proposal Developments During the 2017 Proxy Voting Season,” Gibson, Dunn & Crutcher LLP, July 12, 2017, posted on Harvard Law School Forum on Corporate Governance and Financial Regulation, https://corpgov.law.harvard.edu/2017/07/12/shareholder-proposal-developments-during-the-2017-proxy-season/.


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Disclaimer

The views and opinions expressed in this blog are those of the author and do not necessarily reflect the official policy or position of the Municipal Pension Board of Trustees.


 

Judy Payne is the Executive Director
of the Municipal Pension Plan