Canada Pension Plan Investment Board (CPP Investments) has published an updated policy on sustainable investing, which reflects its increased conviction in the importance of environmental, social and governance (ESG) factors in considering where to invest its funds.
Integrating ESG factors, including climate change, into investment analysis and asset management activities supports the group’s clear legislative objective, which is to maximize long-term investment returns without undue risk of loss, the company said in a statement.
“ESG considerations are inextricably linked to our ability to successfully achieve our investment objectives,” says Richard Manley, managing director and head of sustainable investing. “Our policy reflects the growing body of evidence showing that companies that integrate consideration of ESG-related business risks and opportunities are more likely to preserve and create long-term value.”
The new policy on sustainable investing underscores CPP Investments’ support for companies aligning their reporting with the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate-related Financial Disclosures (TCFD) standards.
The policy also reiterates the importance of asset owners like CPP Investments engaging with the companies in their portfolios, CPP Investments says, noting that employees, customers, suppliers, governments and the community at large have a vested interest in forward-thinking corporate conduct and long-term business performance.
“We believe active ownership through constructive engagement can enhance and sustain returns over time and significantly reduce investment risks,” Manley says in the statement. “As a supplier of patient, engaged and productive capital, we are able to work with companies to bring about change, helping them deliver enduring value-building growth.”
Toronto-based CPP Investments manages assets for more than 20 million contributors and beneficiaries of the Canada Pension Plan. As of March 31, it had funds totalling C$409.6 billion (US$305.01 billion).