The chief executive officers of eight Canadian pension funds, collectively representing about $1.6 trillion in assets under management, are calling for a green recovery from the COVID-19 economic slump.
In a letter published on Wednesday, the executives implored investors and companies to put sustainability and inclusive growth at the centre of the economic recovery. Signatories include the CEOs of AIMCo, BCI, Caisse de dépôt et placement du Québec, CPP Investments, HOOPP, OMERS, Ontario Teachers' Pension Plan, and PSP Investments.
"Our objective is to invest in companies that build a better future for their employees and communities while at the same time provide the appropriate risk-adjusted returns to help us meet our promise to our members,” Jo Taylor, president and chief executive officer of the $204.7 billion Ontario Teachers' Pension Plan, stated in a news release accompanying the letter.
The signatories said the COVID-19 pandemic and “other tragic events of 2020” have revealed pre-existing business strengths and shortcomings with respect to social inequity, including systemic racism and environmental threats.
They pledged to demand more transparency from companies on how issues such as diversity and inclusion, human capital, board effectiveness and climate change can contribute to value creation or erosion.
“It is vital that they report relevant ESG data in a standardized way,” the letter reads. “We ask that companies measure and disclose their performance on material, industry-relevant ESG factors by leveraging the Sustainability Accounting Standards Board (SASB) standards and the Task Force on Climate-related Financial Disclosures (TCFD) framework to further standardize ESG-related reporting.”
The support for environmental, social and governance (ESG) investment practices from some of Canada’s largest money managers follows a survey last week showing 95 per cent of Canadian institutional investors have shunned such criteria amid the pandemic. It also comes on the heels of the Bank of Canada and the Office of the Superintendent of Financial Institutions’ (OSFI) announcement of a pilot project to study the economic impact of transitioning to a low-carbon economy.
The central bank’s governor, Tiff Macklem, applauded the show of support for ESG from the financial sector.
“A strong commitment to environmental sustainability, diversity and inclusion and good governance principles will not only make our economy and financial system more resilient, it's also the right thing to do,” he stated in the release accompanying the letter.
“Leadership from Canada's financial sector is essential as we focus on building an enduring and more equal economic recovery from the pandemic.”
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.