CEC appoints firms to assess target companies against benchmark

CAPSA consults on pension plan risk management guideline; CSA extends open period on DE&I disclosure amendments.

Canada flag with coins

Climate Engagement Canada (CEC) has appointed Manifest Climate and Quinn+Partners to assess the initiative’s target companies against its Net Zero Benchmark.

Launched in 2021, CEC is a $4.4 trillion collaborative engagement initiative targeting the country’s heaviest emitters. It is co-ordinated by Canada’s Responsible Investment Association, the Shareholder Association for Research and Education (SHARE) and Ceres. 

Its 27 founding members include RBC Global Asset Management, Alberta Investment Management Corporation, Addenda Capital, Manulife Investment Management, BMO Global Asset Management, Scotiabank and University Pension Plan Ontario. 

The 40 firms selected for engagement – which began in mid-2022 – operate across the Canadian economy in the following sectors: oil and gas, utilities, mining, agriculture and food, transportation, materials, industrials and consumer discretionary. 

In May, CEC published its net-zero benchmark as a way to provide a set of common standards for investors to evaluate companies’ progress towards aligning with the Paris Agreement.

The benchmark is closely aligned with that developed by Climate Action 100+, with an enhanced focus on the Just Transition and the need to safeguard Indigenous rights to reflect the Canadian context. 

The inaugural benchmarking of the firms will be powered by Manifest Climate’s proprietary AI-powered software engine to identify relevant public company disclosures. Quinn+Partners’ advisory team will then complement the software outputs to assess company performance on each benchmark indicator and produce the final assessment, which is due later this year.

CAPSA consults on pension plan risk management guideline 

In related news, the Canadian Association of Pension Supervisory Authorities (CAPSA) has called for comment on a revised draft of its guideline for pension plan risk management, which includes a section dedicated to ESG. 

The document, which is open for consultation until 30 September, aims to support plan administrators in fulfilling their fiduciary obligations, including appropriate consideration of their applicable standard of care.  

Published on Wednesday, it was produced by CAPSA’s risk management committee, along with relevant subcommittees and industry working groups. Stakeholder consultation on individual risk areas – including ESG – and the proposal to develop an inclusive guideline was also conducted. 

A previous ESG draft guideline from last year claimed that using ESG information to provide financial insight is consistent with an administrator’s fiduciary duty.  

It also warned that “ignoring or failing to consider ESG factors that may be potentially material to the fund’s financial performance could be a breach of fiduciary duty”, noting that ESG factors that have the potential to materially affect the plan should not be considered differently than any other types of risk.

Stewardship also received attention. Pension plans were advised to consider what constitutes an appropriate approach to ESG-related stewardship given investment strategy, fund structure and size.  

According to a spokesperson for CAPSA, the section on ESG in the latest version is largely consistent with the prior ESG draft guideline.

Changes include addressing comments received from the previous consultation, removing content addressed elsewhere in the consolidated guideline, clarifying the principles-based nature of the guidance, and explicitly framing it in a risk management perspective. 

Once the consultation closes, the risk management committee and its sub-committees will meet and review all comments in order to create a final risk management guideline. 

CSA extends consultation

Finally, the Canadian Securities Administrators (CSA) has announced an extension to the comment period for its consultation on proposed amendments to the corporate governance disclosure requirements and policy relating to the director nomination process, board renewal and diversity. 

When the consultation was launched in April, the CSA said the proposed amendments were intended to prompt “meaningful disclosure” about how issuers select candidates for nomination to the board and how diversity is incorporated into the process. 

The comment period was originally scheduled to close on 12 July. The CSA said this week that stakeholder feedback has indicated it would be beneficial to have additional time to review the proposals and prepare comments. The new closing date is 29 September.