Members > Newsletters > Special Edition Summer 2009

Social responsibility and good governance

Governance

A growing focus for the Plan's investment program in recent years has been a commitment on the part of the Board of Trustees to consider environmental, social and governance factors.

The primary goal of the investment program is, of course, to maximize the fund's risk-adjusted returns. The CAAT Plan's investment policy states that the Trustees believe that over the long term, companies that have sound corporate governance structures and practices will outperform those that do not. And we believe that managing our risks includes awareness and monitoring of the environmental and social impacts of a company's business activities.

The CAAT Plan's Responsible Investing Policy has three components:

Proxy voting – through a voting agent, the Plan votes its proxies in a thoughtful, responsible manner, considering issues such as corporate disclosure and executive compensation. During the past year, there were a number of proposals for change on governance issues for which the Plan voted, because it was felt the change could help to maximize the value of the company. In some cases the Plan has voted against management positions. Several of these votes were successful.

Corporate engagement – the Plan joins with other institutional investors to engage with corporations and regulators and encourage good governance. The Plan is a member of the Canadian Coalition for Good Governance and the Pension Investment Association of Canada, and is a signatory to the Carbon Disclosure Project and the Extractive Industries Transparency Initiative.

Encouragement of investment managers– each year the Plan sends a survey to each of its investment managers, asking a series of questions about how environmental, social and governance factors are integrated into their investment processes. Every manager has indicated that these considerations are closely examined if they are potentially material to an investment's financial performance, or to sustainable business practices.

The Plan remains committed to the principles and processes of the Responsible Investing Policy. It is clear that awareness of these issues has increased in both the investing and corporate communities in recent years, and the Plan is pleased with the contribution it makes in this regard. Over the longer term, it is reasonable to believe that our activities, along with those of other investors, will result in improved corporate practices and therefore improved long-term financial performance.

July 2009