The Public Sector Pension Investment Board is revealing details about its responsible investment strategy in a new report.
PSP Investment’s responsible investment report highlights its efforts to integrate material environmental, social and governance factors into its investment process. It also includes a climate-related financial disclosure based on the recommendations of the task force on climate-related financial disclosures.
“As the world grapples with the lingering pandemic, . . . we at PSP Investments believe that considering material ESG risk factors and opportunities in our decision-making is more important than ever,” wrote Eduard van Gelderen, chief executive officer of PSP Investments, in the report’s introduction.
During the year, the investment organization developed an internal green asset taxonomy to improve its ability to assess portfolio exposure to climate-related risks. This was used in a quantitative and qualitative review of its investee companies’ carbon intensity and an assessment of the credibility of their transition plans.
Upon the completion of the taxonomy, PSP Investments found a significant increase in the amount of self-reported climate data it has received from its investee companies. “Going forward, we will use
this approach to monitor and report progress against our climate targets and guide our investment and active ownership activities,” wrote van Gelderen.
The information garnered through the taxonomy was used to create an overall climate strategy that sets emissions reductions targets for the portfolio. Among these targets, PSP Investments aims to reduce its emissions intensity by at least 20 per cent by 2026. It’s also committed to achieving net-zero emissions portfolio-wide by 2050.
“PSP Investments’ climate commitment is a prime example of how, within the context of our mandate, we are aligning with the global transition to a de-carbonized economy,” wrote Herman Bril, the organization’s managing director and head of responsible investment, in an article included in the report. “Similarly, our active ownership approach . . . aims to communicate . . . our views on important matters such as diversity, equity and inclusion, human rights and climate change.”
In 2021, PSP Investments liaised with 811 companies on key ESG issues, with 346 companies discussing environment-related issues. It also voted in 5,837 shareholder meetings, casting ballots on 58,678 resolutions. In about 12,300 of these resolutions, it cast ballots against management wishes. In most cases, these votes related to board diversity issues.
PSP Investments also introduced ESG-related key performance indicators used for tracking investee companies’ progress on climate change, diversity and inclusion, business ethics, cybersecurity, data privacy and human capital management. This information was used in its corporate engagement efforts.