Canadian pension plans endorse Canadian Coalition for Good Governance stewardship principles

For the first time, organizations are publicly endorsing the Canadian Coalition for Good Governance’s stewardship principles.

To date, the endorsers include the Alberta Investment Management Corp., the Caisse de dépôt et placement du Québec, the Canada Post Corp. pension plan, the Colleges of Applied Arts and Technology pension plan, the Healthcare of Ontario Pension Plan, the Ontario Teachers’ Pension Plan, the OPSEU Pension Trust, the Public Sector Pension Investment Board, University of Toronto Asset Management Corp. and Vestcor Inc.

The seven stewardship principles include: developing an approach to stewardship, monitoring companies, reporting on voting activities, engaging with companies, collaborating with other institutional investors, working with policy-makers and focusing on long-term sustainable value.

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The stewardship principles were first introduced by the coalition in 2005, with significant updates in 2017 and further minor wording updates this year. Although the principles have existed for years, the organization only began engaging with members about publicly endorsing the principles in June.

Institutional investors that endorse the principles don’t need to publicly disclose how they comply and compliance isn’t monitored. However, by providing endorsements, they can showcase their commitment and bring attention to the role of shareholders in strong capital markets, says Catherine McCall, executive director at the Canadian Coalition for Good Governance. “It’s also a way for investors to communicate what their priorities are and how they approach the companies in which they’re invested.”

The stewardship principles initiative is investor-led rather than imposed by regulators, which is consistent with the historical development of corporate governance best practices in Canada, she adds. For example, the chair and chief executive officer role are almost universally split, which came about voluntarily. “There’s differences in how we develop in Canada and I think the fact that this is voluntary is [a] very meaningful first step.”

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Vestcor Inc., which is owned by the New Brunswick Public Service Pension Plan and the New Brunswick Teachers Pension Plan, noted its support for the CCGG principles in a press release earlier this month. “As a long-term investor, we seek to enhance shareholder value for the benefit of the funds under our management, with the objectives of maximizing risk-adjusted investment returns and protecting accumulated assets,” it said. “Endorsing CCGG’s stewardship principles helps us to further focus our intentions.”