Factoring environmental, social and governance considerations into investment decisions is good risk management, according to one pension plan sponsor.
“Definitely for real assets, we see it presenting risks, but also opportunities,” said Donna Mathieu, chief executive officer of NAV Canada Corp.’s pension plan, while speaking on a panel at the Canadian Pension and Benefits Institute’s 2018 Ontario regional conference in Ottawa on Thursday.
The Ottawa-based organization is in the early stages of its ESG journey. Recently, the pension fund’s board has asked it to present on ESG, including what it’s doing, what it sees and how it fits into the investment process, said Mathieu. “For real assets, in particular, what we did was we went through all of our asset classes and analyzed whether we think ESG is material, and whether it fits with the investment strategy, because we truly believe that the risks vary by type of asset class, sector . . . so we did that analysis. And particular, for real assets, we think that it really does matter.”
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NAV Canada’s pension fund is also focused on making sure risks that aren’t recorded are covered, said Mathieu. When it comes to real estate and infrastructure, for instance, that means ensuring there’s excellent governance and these investments are following environmental or social best practices.
“But on the opportunity side, with real estate, we see a lot of opportunity in seniors housing, student housing,” said Mathieu. “We see opportunities with respect to LEED-certification buildings . . . on the agriculture front, we see a lot of opportunities.”
The pension fund has a very large allocation to Canadian farmland, according to Mathieu, who noted it’s taking advantage of opportunities around the positive effects of climate change. “Canada is expected to benefit from a water point of view . . . and also thinking about food needs in the future,” she said.
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