Reports Set the Stage for Improved Responsible Investment Practices
The following is a press release from the Social Investment Organization (SIO).
Toronto, Ontario - November 12, 2009 - Two seminal reports commissioned by the Social Investment Organization (SIO) and funded by Environment Canada set the stage for enhanced adoption of responsible investment practices in the Canadian foundations and pensions sectors.
Responsible investment (RI) can be defined as any area of the financial industry that integrates environment, social and governance (ESG) issues into investment decision-making or ownership practices.
The first report, Best Practices in Responsible Investment for Canadian Pension Funds, authored by Mercer's Responsible Investment Team, provides an overview of responsible investment in Canada - the trends, the drivers, the global initiatives and how the Canadian pension community is involved - and provides recommendations that could help pension funds move from consideration of responsible investment to implementation.
Since 2004, invested pension fund assets using RI guidelines have ballooned from $25.4 billion to $544.1 billion in 2008. The primary reason for the dramatic increase is the adoption of RI policies by a number of public and private pension funds and endowments, including large funds like the BC Investment Management Corporation, the Caisse de dépôt et placement du Québec, and the Canada Pension Plan Investment Board.
The erosion in funded status of many pension plans since the onset of the global financial crisis has prompted closer examination of existing risk-management models and greater consideration of systemic risk factors. Of particular importance is the renewed interest in pension plans shown by policy makers and academics - a reflection of the expanded influence that pension fund management practices are exerting over the wider global economy.
"The release of a best practices roadmap for Canadian pension funds is timely," said Jane Ambachtsheer, Mercer's Global Head of Responsible Investment. "With the recent financial crisis, expectations for financial reform -- and a longer-term approach to investment risks and opportunities -- have never been stronger. Institutions around the world, from smaller corporate plans to mega funds, are embracing responsible investment strategies; this can only serve as further encouragement for Canadian asset owners to roll up their sleeves and engage as well."
The second report, Education and Training on Responsible Investing for Canadian Foundations and Endowments: An Inventory and Needs Analysis, co-authored by RI consultants Betsy Martin and Coro Strandberg, looks at the availability of resources and training on RI targeted at Canadian foundations and endowments.
The report sets out a needs analysis for future training and education requirements and makes a number of recommendations for action by the SIO and the foundation umbrella groups to mount training initiatives to increase capability in responsible investment by foundation trustees and managers.
"Interest in RI is definitely growing among the community foundation movement," said Monica Patten, President & CEO of Community Foundations of Canada, "but we're clear that our work in this area is just beginning. This report will be an important resource for community foundation boards that are interested in engaging in RI more actively in the coming months and years."
"This report is an excellent first step towards defining the needs and the resources that can be made available to support foundations in their RI work, said Hilary Pearson, President & CEO of Philanthropic Foundations Canada. "We will certainly be using this as a source book for our future training plans."
Now that the RI industry has overcome negative stereotyping regarding financial performance, legality and fiduciary viability, this is an opportune time for RI proponents to develop and pursue an educational and training strategy aimed at dramatically increasing the RI activity of foundations and endowments.
"Canadian pension funds, endowments and foundations are increasingly recognizing the benefits of responsible investment policies," said Eugene Ellmen, Executive Director of the Social Investment Organization. "Responsible investment is legally prudent and a means to identify and manage risk. RI can also help generate long-term value for stakeholders. With the publication of these two reports, the SIO can move forward to work collaboratively with pension and foundation associations and umbrella groups, government and RI consultants to help pension funds, endowments and foundations to realize these benefits."
The Social Investment Organization is a national membership-based organization that includes financial institutions, investment firms, financial advisors and various organizations and individuals interested in socially responsible investing. The SIO's mandate is to promote the practice of socially responsible investment in Canada.
The reports
Best Practices in Responsible Investment for Canadian Pension Funds
Education and Training on Responsible Investing for Canadian Foundations and Endowments
To learn more about Mercer's Responsible Investment Service: http://www.mercer.com/ri
To learn more about Betsy Martin Consulting: betsy.martin@sympatico.ca and 514-488-3682
To learn more about Strandberg Consulting: www.corostrandberg.com
For more information or to schedule an interview, contact:
Sarah Thomson, Membership & Communications Coordinator, Social Investment Organization;
416-461-6042 ext. 113; thomson@socialinvestment.ca
