DC Plans Must Overcome ESG Myths

Defined contribution executives seeking to incorporate ESG principles into their investment lineups must overcome a series of myths that might dissuade them, says a report by the Defined Contribution Institutional Investment Association. It says that environmental, social, and governance (ESG) factors “historically have been misperceived.” Today’s ESG criteria are more comprehensive than in the earliest days of ESG investing, it says, and they are “increasingly independent of moral stances,” saying it’s a myth that there is insufficient research to support the concept of sustainable investing. It also challenged as myth that plan participants aren’t interested in this investing approach, that ESG investing is incompatible with fiduciary responsibilities, and that adding ESG-themed funds is identical to incorporating ESG principles into investment lineups. The DCIIA report identifies ESG integration as having a broad impact because it incorporates ESG criteria for all funds. This strategy requires “a thorough understanding of how ESG factors can be material in investment decision-making.”

Retirement Delayed To Help Children

The ‘Student Debt Survey,’ a Leger poll conducted on behalf of FP Canada, has found 16 per cent of Canadian parents say providing financial support for their children’s post-secondary education has forced them to postpone their retirement. That’s the case for nearly a quarter of Atlantic Canadians with adult children (23 per cent) and one-in-five respondents in Manitoba and Saskatchewan (19 per cent). The survey reveals that eight-in-10 (82 per cent) Canadians with children under 18 say they intend to assist their children with post-secondary costs and they’re expecting this to have an even bigger long-term impact on their finances than they were two years ago. Nearly half of parents (48 per cent) say they expect that providing this financial support will cause them to postpone their retirement, up from 41 per cent in FP Canada’s 2017 survey.

Transparency Of Climate-related Risk Should Be Improved

The energy sector has estimated potential climate-related financial losses of between $1 trillion and $4 trillion. On top of that, $20 trillion of assets globally could become worthless if climate change and the burning of fossil fuels is not properly addressed. In their article, ‘Improving Transparency Of Climate-related Risks In The Upstream Oil And Gas Sector,’ authors Kate Woolerton, senior accountant for the regulatory team at Carbon Tracker, and Rob Schuwerk, executive director of Carbon Tracker North America, say that climate-related risks are clearly material to the upstream oil and gas sector and warrant disclosure. The article states that transparency over future capital expenditure plans and project sanctioning criteria is critical. It looks at reserves and resources classifications and treatments as well as critical disclosures that would allow investors to fully understand a company’s potential exposure to climate risk. The article is available on the Benefits and Pensions Monitor website.

Factors Explain Bond Performance

A bond portfolio’s exposure to investment factors is what “really counts” in its returns, even if the portfolio is not explicitly labelled a factor strategy, says an Invesco study. ‘Active bond returns – powered by factors’ shows factors could have explained 66 per cent of a bond manager’s outperformance over the past decade. Investment factors are directly observable characteristics of securities, which can be used as part of live strategies to help investors achieve particular outcomes. The value factor – which identifies bonds priced lower than their peers – often helps explain excess returns. Additional fixed income factors include the carry factor, which explains risk-adjusted excess returns from holding higher-yielding bonds; the liquidity factor, which explains risk-adjusted excess returns from holding less liquid bonds; and the quality factor for risk-adjusted excess returns from holding low-volatility bonds.

Caisse Finances Solar Assets

The Caisse de dépôt et placement du Québec will finance a portfolio of solar assets owned and managed by Lightsource BP. Lightsource BP is a global developer and operator of solar projects. It will initially be used to finance a diversified portfolio composed of over 100 solar projects located across various countries and totalling more than 700 MW. Over time, the facility could expand with further investment from Caisse funding assets developed through the Lightsource BP pipeline.

Fridella Earns Award

Rita Fridella, president of LifeWorks and executive vice president of Morneau Shepell, won the 5th Annual Leadership Award for her 30+ year commitment to growth and innovation in the EAP industry. She advocates for more prevention-based models of care to transform employee assistance programs, building on traditional clinical treatment options with digital total well-being solutions that can support the entire global workforce. She has been instrumental in bringing digital EAP support to the forefront to improve outcomes, productivity, and well-being for clients and their employees.

Three-legged Stool Opens Conference

‘The Three-Legged Stool: Is It Still Standing?’ is the opening plenary at the 2019 ACPM National Conference. Frank Wiginton, of Eckler; Dr. Robert L. Brown, professor emeritus at the University of Waterloo; and Frédéric Létourneau, of National Bank; will discuss areas such as which leg of the stool could (or should) take on more or less responsibility as it relates to the retirement system and where the accountability falls if the stool is broken. Theme of this year’s event ‘Shifting Currents: Negotiating Retirement Diversity.’ Others sessions include ‘Moving from DB to DC: The Insider Perspective,’ ‘Capital Accumulation Plans: How to Balance Flexibility with Retirement Adequacy?,’ and ‘The Quest for Sustainability in Pension Plans with Contingent Benefits.’ It takes place September 10 to 12 in Vancouver, BC. For information, visit: ACPM Conference