The Canada Pension Plan Investment Board is emphasizing the issue of gender composition on investee companies’ boards in its latest sustainable investing report.
With this fifth area of focus joining climate change, water, human rights and executive compensation, the CPPIB is aiming to address the issues of gender diversity in relation to long-term investment. In 2017, the pension fund voted on measures at 45 Canadian companies with no female directors, seeking to demonstrate its focus on further diversity. According to the report, almost half of these businesses have now appointed at least one woman to their boards.
“It’s crucial for companies in which we invest capital to assemble boards that reflect the full range of talent available,” said Mark Machin, president and chief executive officer of the CPPIB, in a press release. “If companies don’t take the required action to achieve the board effectiveness that today’s business environment requires, it falls to investors to provide a nudge and, when necessary, a push.”
The CPPIB believes more diverse boards are more likely to achieve better financial performance, citing research from Credit Suisse and Catalyst Inc. that showed companies with a higher female representation deliver higher returns.
The sustainability report also included action on climate change. Along with the CPPIB’s ongoing efforts to encourage companies to improve disclosure practices on climate change, the report outlined a new toolkit it’s developed to better instruct investment teams on how events related to climate change could impact potential and current investments.
“We aim to be a leader among asset owners and managers in understanding the investment risks and opportunities presented by climate change,” said Machin.
The report also touched on the CPPIB’s expanded renewable energy portfolio, its first issuance of a green bond and its ongoing support for the Financial Stability Board’s task force on climate-related financial disclosures.