Exposure to green assets increased by $6.2 billion to $46.5 billion, driven, in part, by new climate-aligned investments
Companies representing 42% of our portfolio carbon footprint now report GHG data, a 14% increase in data coverage relative to the last year
Climate disclosures made based on the key recommendations of the Task Force on Climate-related Financial Disclosures
Engaged with 811 listed companies on key ESG issues and voted at 5,837 shareholders’ meetings on 58,678 resolutions, with 21% of the votes being against management mainly related to board composition issues
The Public Sector Pension Investment Board (PSP Investments) today published its annual Responsible Investment Report, which outlines how the organization seeks to integrate material environmental, social and governance (ESG) factors in its investment practices. Accompanying reporting also includes PSP Investments’ climate-related financial disclosures based on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
“Given our long-term horizon, sustainability factors are inextricably linked to our ability to achieve our investment objectives,” said Deborah Orida, President and Chief Executive Officer, PSP Investments. “I look forward to working with colleagues across our organization to deepen and leverage our sustainability expertise to make the most well-informed investment decisions for the contributors and beneficiaries of the pension plans we support.”
The 2022 Responsible Investment Report features updates on PSP Investments’ inaugural Climate Strategy Roadmap, including key achievements and upcoming priorities. PSP Investments’ climate change approach continues to strengthen and evolve, seeking to become increasingly data-driven, linked to asset-level value creation and technology-enabled in our due-diligence and engagement workflows.
“As the world grapples with the lingering pandemic, increasing pressure from climate change and other disruptive forces that are intersecting critically with geopolitics and affecting society and the economy – we believe that considering material ESG risk factors and opportunities in our decision-making is more important than ever,” said Eduard van Gelderen, Senior Vice President and Chief Investment Officer at PSP Investments.
Among the significant milestones reached during fiscal year 2022:
Launched a climate strategy which sets out emissions reduction targets across investment portfolios which we believe are ambitious but achievable. Through its investment and engagement efforts, PSP Investments aims to reduce portfolio GHG emissions intensity by 20-25% by 2026, relative to a 2021 baseline.
Released a comprehensive Green Bond Framework and issued a C$1.0 billion green bond, PSP’s first-ever such issuance, to fund specific climate and environmental projects and to meet growing investor demand for sustainable products. The Framework was awarded an environmental rating of “medium green” and the highest possible governance score of “excellent” by CICERO Shades of Green.
Developed a bespoke green asset taxonomy to better assess portfolio exposure to different types of climate-relevant investments, and to support the transition to global net-zero emissions by 2050. The taxonomy is a quantitative and qualitative framework that is based on investee companies’ carbon intensity and an assessment of the credibility of their transition plans.
Enhanced disclosure of how PSP Investments manages climate change-related financial risks and responds to opportunities, based on the recommendations of the TCFD. For the first time, PSP Investments is disclosing a portfolio financed emissions metric, informed by guidance from the Partnership for Carbon Accounting Financials (PCAF), and drawing on emerging innovations and best practices.
A data-driven approach
Developed the ESG composite score, a proprietary scoring system which is designed to enable the quantitative assessment and monitoring of a [portfolio] company’s performance on key ESG considerations.
Significantly increased the self-reported GHG data available from PSP Investments’ portfolio companies, which was critical for developing the climate strategy and setting emissions-reduction targets.
Introduced total-fund ESG key performance indicators for tracking progress in the areas of climate change, diversity and inclusion, business ethics, cybersecurity and data privacy, and human capital management.
Creating value through active ownership
Engaged with 811 listed companies on key ESG issues, as a means of encouraging responsible business practices. Of the various engagements, 346 had climate-related objectives.
Voted at 5,837 shareholders’ meetings on 58,678 resolutions. Approximately 21% of the votes were against management, mainly related to board diversity.
Conducted 14 cybersecurity assessments of PSP Investments’ portfolio companies to help these firms protect themselves against cybersecurity risks.
“As a long-term investor, we believe that promoting sustainability adds value to our investments. We are working with our partners and portfolio companies to consider their environmental and social impacts in managing those investments,” said Herman Bril, Managing Director and Head of Responsible Investment at PSP Investments. “By actively embracing this opportunity, we believe we can support the achievement of our mandate.”
To read PSP Investments’ 2022 Responsible Investment and TCFD reports, visit our website here.
About PSP Investments
The Public Sector Pension Investment Board (PSP Investments) is one of Canada’s largest pension investment managers with $230.5 billion of net assets under management as of March 31, 2022. It manages a diversified global portfolio composed of investments in capital markets, private equity, real estate, infrastructure, natural resources and credit investments. Established in 1999, PSP Investments manages and invests amounts transferred to it by the Government of Canada for the pension plans of the federal Public Service, the Canadian Forces, the Royal Canadian Mounted Police and the Reserve Force. Headquartered in Ottawa, PSP Investments has its principal business office in Montreal and offices in New York, London and Hong Kong. For more information, visit investpsp.com or follow us on Twitter and LinkedIn.
Media Contact: Maria Constantinescu, PSP Investments, Phone: (514) 218-3795 | 1 844 525 3795, Email: [email protected]