Responsible Investing

The CAAT Pension Plan believes that, over the long term, companies that have sound corporate governance structures and practices will outperform those that do not, and that managing the risk to long-term shareholder return includes awareness and management of the environmental and social impacts of a corporation’s business activities. Inattention to these impacts can result in, among other things, reputational harm that in turn can lead to financial underperformance.

In carrying out investment activities, the Plan follows its Responsible Investing Policy that covers:

  1. proxy voting
  2. corporate engagement
  3. encouraging the integration of environmental, social, and governance (ESG) factors in investment processes.

Click here to read the Responsible Investing Policy in its entirety

Objective

The objective of the Responsible Investing Policy is to communicate the principles behind and the approach to the CAAT Pension Plan’s initiatives relating to the incorporation of environmental, social and governance (ESG) factors into its investment program. 

Principles

The CAAT Plan’s Board of Trustees believes that, as part of its fiduciary duty to Plan beneficiaries, consideration of risks related to the investment of the Plan’s assets includes consideration of non-financial risks such as ESG factors. 

In particular, the Board believes that over the long term, companies that have sound corporate governance structures and practices will outperform those that do not. 

The Board believes that managing the risk to the sustainability of a corporation includes the awareness and management of the environmental and social impacts of the corporation’s business activities. Inattention to these impacts can result in, among other things, reputational harm that in turn can lead to financial underperformance.

The Board supports and encourages fair wages, benefits and working conditions for workers employed by our assets.  In particular, we point to the ILO Principles addressing the right to form and join trade unions and bargain collectively and freedom for workers’ representatives from discrimination and their right to access all workplaces necessary to enable them to carry out their representation functions.

The Board recognizes the important role and contribution of public employees – and a public sector with sufficient capacity and resources – in ensuring the long-term prosperity of our society and economy.

Approach

Principles for Responsible Investment (PRI)

The CAAT Plan is a signatory to the PRI, which is a global organization that is a leading proponent of responsible investment.  It is made up of an international network of institutional investors that are committed to incorporating responsible investment issues into their decision making and ownership practices.

Proxy Voting

One of the most important ways for the Plan to encourage corporations to be environmentally and socially responsible and to adopt sound governance practices is by using its proxy vote.  The Plan or its voting service provider will:

  • Vote proxies in a thoughtful, responsible manner.  Shareholder proposals on environmental, social and governance (ESG) issues will be examined on a case-by-case basis taking into account the possible effects that any proposed actions would have on the long-term shareholder value of the corporation.
  • Encourage disclosure by corporations on ESG factors and risks so that investors can be better informed as they do their financial and fundamental analysis.
  • Vote for proposals that corporations adopt policies that embrace the following third party guidelines/ principles:
    • The International Labour Organization’s Conventions
    • The Ceres Principles on the Environment
    • OECD Guidelines for Multinational Enterprises - General Principles

Corporate Engagement

The CAAT Plan will join with other institutional investors in engaging with the boards and management of corporations in which it invests to encourage better environmental, social and governance practices.  Organizations that facilitate collaboration include:

  • The Canadian Coalition for Good Governance (CCGG)
  • The Pension Investment Association of Canada (PIAC)
  • CDP (carbon emissions disclosure and water use)
  • Shareholder Association for Research and Education (SHARE)
  • Other initiatives that are consistent with the principles of this Policy and approved by the Managing Fiduciaries

Investment Managers and General Partners

In due diligence meetings with the Fund’s Investment Managers and General Partners, where appropriate to the type of mandate, the CAAT Plan will encourage the incorporation of environmental, social and governance factors into the investment management processes.

On an annual basis, Investment Managers and General Partners are asked to respond to a series of questions about how ESG issues are integrated into their investment processes.

Direct and Co-investments

In due diligence processes relating to private market direct and co-investment opportunities, the CAAT Plan will consider ESG factors in due diligence and risk (including reputational risk) analysis.

Reporting

Each year a report is provided to the Investment Committee on how this Policy is incorporated into the CAAT Plan’s investment activities.

Policy Review

The Board of Trustees will review this policy at least once every three years to ensure that it remains relevant and appropriate.

Policy History

The Board of Trustees approved this policy on March 27, 2007.

The Board of Trustees last reviewed this policy on May 31, 2016.

The Board of Trustees approved an amended policy on May 28, 2019.


 

Principles for Responsible Investment (PRI)

unpri logo


The CAAT Plan is a signatory to the United Nations supported Principles for Responsible Investment, together with over 2,000 institutional investors from more than 50 countries. The signatories to the six Principles for Responsible Investment believe that: “an economically efficient, sustainable global financial system is a necessity for long-term value creation. Such a system will reward long-term, responsible investment and benefit the environment and society as a whole.”

 

Proxy voting

 

The Plan will vote the proxies attached to its shareholdings thoughtfully and responsibly. Shareholder proposals dealing with ESG factors will be examined on a case-by-case basis, taking into account the effects of the proposals on shareholder value. 

 


 

Corporate Engagement

The CAAT Pension Plan joins with other institutional investors to encourage Canadian regulators and the management of Canadian public corporations to strive for better governance practices and more comprehensive disclosure of ESG risks.

The Plan participates in or is a signatory to the following responsible investing initiatives:

 

CCGG logo

Canadian Coalition for Good Governance (CCGG)
The Plan has been a member of the CCGG since 2005. The CCGG represents the interests of institutional investors in promoting good governance practices in Canadian public companies and the improvement of the regulatory environment to best align the interests of boards and management with those of their shareholders.
 

 

Shareholder Association for Research & Education (SHARE)

The CAAT Plan is an affiliate of SHARE – the Shareholder Association for Research & Education. SHARE is a Canadian organization that works with institutional investors to promote responsible investment practices through active ownership, research, and education.
 

 

piac logo

Pension Investment Association of Canada (PIAC)
The CAAT Plan investment team members are active members of PIAC, whose mission is to promote sound investment practices and good governance for the benefit of pension plan sponsors and beneficiaries. PIAC also promotes sound standards of corporate governance in Canada.

 

ilpa logo

Institutional Limited Partners Association (ILPA)
The CAAT Plan is an active member of ILPA and has endorsed ILPA's Private Equity Principles, which promote the alignment of interest, good governance, and transparency that form the basis of effective relationships between limited and general partners.
 

 

cdp logo

CDP (formerly known as the Carbon Disclosure Project)
The CAAT Plan is a signatory to the CDP which acts on behalf of hundreds of institutional investors in encouraging companies around the world to disclose information related to environmental impacts, enabling investors to evaluate the risks in their portfolios relating to these factors.

 

Incorporating ESG considerations into the Investment Process

As a long-term investor, the CAAT Plan encourages its investment and fund managers to integrate the consideration of ESG factors into their investment decisions. This is done through the due diligence process for existing and potential managers as well as through an annual questionnaire that is sent out to the investment managers and general partners asking a series of questions about how sustainability factors are integrated into their investment processes.

The Plan has tracked these responses over more than 10 years and has found that investment and fund managers are increasingly considering the impact of ESG factors when making investment decisions.