ESG Now Global Phenomenon

ESG (environment, social, and governance) is a global phenomenon as a full 67 per cent of respondents to a global survey by RBC Global Asset Management (RBC GAM) use ESG principles as part of their investment approach. However, by region, ‘Responsible Investing: The Evolution of Ownership’ shows more investors in Europe (85 per cent) than in Canada (73 per cent) and the U.S. (49 per cent) incorporate ESG analysis. While these results suggest that responsible investing has moved into the mainstream, the survey also reveals how investor perceptions differ starkly by region. When it comes to ESG investing, there are sharp differences among institutional investors as to whether ESG analysis can mitigate risk and drive alpha in a portfolio. Some institutions plan to increase their exposure to ESG strategies in the near term while others are holding back, unconvinced of its value and unimpressed with available data about corporate performance on ESG. The survey also uncovered broad disagreement over the proper role of shareholders, industry groups, and regulators when it comes to improving corporate reporting and driving change on issues such as gender diversity among directors. “Globally, we are seeing a clear trend toward greater awareness, interest, and adoption of ESG analysis and responsible investing,” says Judy Cotte, vice-president and head of corporate governance and responsible investment at RBC GAM. “This survey reveals that many institutional investors are actively discussing these issues within their organizations and with consultants and stakeholders. And while some institutions are moving at a cautious pace, others are moving rapidly to adopt an ESG-based investment approach.”

Contingent Workers Must Be Considered

Employers have to consider the implications the dynamic shift to contingent workers will have on their workforce, says a Mercer whitepaper. ‘Start Preparing For Super-temp Employees ‒ The Workforce Of Tomorrow’ says there are currently 1.8 million workers in Canada with temporary employment contracts, making the contingent workforce a reality. Younger workers are leading the way toward the free agent workforce as business necessity and the economic transformation to a knowledge-based economy are moving this trend further forward. This means employers need re-assess their talent management strategies, employee healthcare benefits plans, and employment costs and risks. They need to consider if they will move away from traditional employer provided benefits to minimize risk or change compensation strategies to account for increasingly skilled free agents.

Confidence Falls Over Brexit

Institutional investors are less confident regarding the UK’s departure from the European Union, with a fall in the proportion of respondents expecting positive global economic growth in the near to medium term, says State Street Corp.’s ‘Brexometer’ index. It shows 40 per cent of institutional investors expect positive growth in the next three to five years, compared with 45.1 per cent of respondents in the previous survey. The proportion of investors expecting Brexit to have an impact on their business operating models grew to 82 per cent from 72 per cent in the third-quarter survey. As well, 22 per cent think Brexit will have a significant impact versus 17 per cent in the previous survey. For asset allocation, 60 per cent of investors expect it to stay the same, up from 53.4 per cent in the last survey.

Money Held By Managers To Double

The amount of money managed by investment managers around the world is set to almost double in size to US$145.4 trillion by 2025, says a report from PwC. However, it says the proportion held by active managers will decline from 71 per cent to 60 per cent and many asset management firms will need to take urgent action “if they’re to survive an exponential level of change” over the coming years. ‘Asset & Wealth Management Revolution: Embracing Exponential Change’ predicts active investments will continue to lose market share to passives and alternatives as passively-managed index-tracking funds will gain “huge” market share, rising from 17 per cent of assets under management (AuM) to 25 per cent in 2025. Alternatives are set to rise from 12 per cent to 15 per cent as assets increase from $10.1 trillion to $21.1 trillion.

Engagement Pillar Of ESG

The UN PRI thinks engagement is a pillar of ESG (environment, social, and governance) integration, says Nalini Feuilloley, its head of Canada. In a panel discussion at the RBC Global Asset Management (RBC GAM) ‘Responsible Investing: The Evolution of Ownership’ survey session with Julie Cays, chief investment officer at the CAAT Pension Plan, Karen Lockridge, a principal in responsible investment at Mercer, and Michael Jantzi, CEO of Sustainalytics, she said engagement is very important as you “can’t effect change if you are not in the conversation.” This kind of dialogue, for example, is prompting some energy companies to evolve into clean tech, she said. Cays said engagement can be constructive. For example, the Canadian Coalition for Good Governance is moving into the ‘S’ and ‘E’ in its conversations with company boards of director and getting a good response on how they are dealing with these. The survey shows Canadian institutions are significantly more likely to view engagement with companies to be more effective than divestment. And while there is an argument for divestment in areas like tobacco, said Feuilloley, how this is implemented is important, said Lockridge. For many large funds, divesting from fossil fuels is not reasonable. However, they can divest themselves of certain companies which may not looking at reducing carbon. Part of the issue is information. Getting the right information and getting information that is material to investors is the issue, said Jantzi, and that is the right approach to take.

Call Made To Examine Opioid Risks

A coalition of 30 investors representing more than $1.3 trillion in assets is calling on 10 opioid distributors and manufacturers to examine how they are responding to business risks related to opioids. Investors for Opioid Accountability says, “The opioid crisis has already taken many lives and is a blight on the pharmaceutical industry.” It calls on independent board chairs and directors of companies that manufacture and distribute opioids to fortify their leadership roles in protecting shareholder interests. This means addressing the risks associated with reputational harm, escalating fines, and mounting legal costs arising from the toll that misuse of opioids is causing.

Teachers’ Partners In UK Airports

The Ontario Teachers’ Pension Plan, Australia’s New South Wales Treasury Corporation, and Sunsuper Superannuation Fund will become investment partners in Bristol Airport and Birmingham Airport, two of the UK’s leading regional airports. Ontario Teachers’ will sell 30 per cent of its stakes in both Bristol and Birmingham to the Treasury Corporation and Sunsuper who will each acquire a 15 per cent stake in the airport. Ontario Teachers’ is the largest private investor in airports in Europe, with holdings in five freehold airports: Copenhagen Airports, Brussels Airport, Bristol Airport, Birmingham Airport, and London City Airport. It has been an investor in the Bristol and Birmingham Airports since 2001. Bristol Airport is the ninth largest airport and Birmingham Airport the seventh largest in the UK.

Caisse Makes Loan To Innergex

La Caisse de dépôt et placement du Québec has loaned $150 million to Innergex Renewable Energy Inc., an independent Canadian leader in renewable energy. The investment takes place as Innergex announces the acquisition of Alterra Power Corp., a renewable energy company operating in Canada, the United States, and Iceland. The transaction will allow Innergex to diversify its asset portfolio, both geographically and in terms of energy sources. In business since 1990, Innergex develops, owns, and operates hydroelectric power plants, wind farms, and solar farms. In addition to strengthening these three activity sectors, acquiring Alterra allows Innergex to integrate geothermal energy into its offering.

Mann Gets New Role

Jay Mann (FSA) is senior director, total rewards, at CN. Most recently, he was director of compensation and pensions. He joined CN in 1994 as manager, SAP HR implementation.

Keynotes Set For ISCEBS Event

‘Innovation Meets Personalization: Pharmacogenetics & Financial Technologies in Group Health and Retirement’ will be the topics at the Toronto Chapter ISCEBS’ biennial keynote speaker event. Simon Chan, CEO at BAL Consulting, will lead a discussion of FinTech and retirement which will be followed by a panel discussion with Michael Prouse, director of operations at Personalized Prescribing Inc., and Veronika Litinski, of GeneYouIn, on pharmacogenetics. It takes place November 22 in Toronto, ON. For information, visit ISCEBS Keynote

November Interest Rate Assumptions

The interest assumptions required to calculate commuted values and marriage breakdown values for an event which occurs in any month up to and including November 2017 are now available at An Excel spreadsheet on the website contains nine worksheets:

  • Commuted Values ‒ February 2011 CIA
  • Marital Breakdown ‒ CSOP 4300, January 2012
  • Ontario (Bill 133) Prior Rates – Rates for Ontario Marital Breakdown with valuation date prior to January 1, 2012
  • Annuity Proxy for Solvency Calculations for Non-Indexed & Fully-Indexed Pensions
  • Minimum Interest on Employee Required Contributions
  • HISTORICAL Marital Breakdown ‒ CSOP 4300, May 2009 (Now Frozen)
  • HISTORICAL Commuted Values ‒ 2009 Basis (Now Frozen)
  • HISTORICAL Commuted Values ‒ 2005 Basis (Now Frozen)
  • HISTORICAL Commuted Values ‒ 1993 Basis (Now Frozen)