Ontario recommendation could herald SRI reports by Canadian pension plans

Expert Commission says Ontario funds should mirror OECD best practice proposals.

Some of Canada’s biggest pension plans, including the $108.5bn Ontario Teachers Pensions Plan, could be required to declare whether they include socially responsible practices in their investments, following a high-level recommendation to the Ontario Government. The report, by the Ontario Expert Commission on Pensions, said the move would echo international best practices in good governance in the UK, France, Germany, Sweden and Belgium and mirror draft pension governance guidelines released recently by the OECD. Similar reports on pensions governance, which could include related SRI clauses, are expected in the coming weeks from a joint panel for the Canadian provinces of Alberta and British Columbia and from Nova Scotia. The Ontario report said the SRI aspect of investment policy deserved special mention because pension plan beneficiaries and trustees increasingly wanted to know not only that pension funds were profitably and safely invested, but also invested in companies that behaved as good corporate citizens: “In particular, they are sometimes keen to ensure that the leverage exercised by their plan as a significant shareholder is being deployed in support of decent social and environmental policieswhen these concerns are raised at annual shareholder meetings or in other forums,” the report said. Canada’s federal pension regulator, the Office of the Superintendent of Financial Institutions (OSFI), already requires plans to disclose how they vote their proxies at shareholders’ meetings on SRI issues. The report added: “There is a growing global consensus that trustees must at least have a considered and informed discussion on the issue.” Recommendation 8-23 in the Expert Commission’s report, says: “Plan statements of investment policy should reveal whether, and if so, how, socially responsible investment practices are reflected in the plan’s approach to investment decisions.” Peter Chapman, executive director of Canada’s Shareholder Association for Research and Education (SHARE), said: “We strongly support the Commission’s recommendation and urge the Government of Ontario to move ahead with its implementation. As recent market turmoil illustrates, the security of retirement savings rests on building sustainability into our capital markets. This recommendation is a timely and important step toward that goal.”