The University of St. Michael’s College in Toronto is the latest institutional investor to join the Shareholder Association for Research and Education, an organization that brokers conversations between investors and the companies in which they invest about environmental, social and corporate governance concerns.
In doing so, an institutional investor takes active ownership in their investments, says Kevin Thomas, director of shareholder engagement at SHARE in Toronto. “It’s a shareholder in the company, it has the right to speak to the board of directors of the companies about concerns with the company’s operations or oversight or management of a particular issue… We can engage with the company as shareholder and ask that the board and the management actively look at it and try to improve practices year over year.”
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More than 30 institutional investors across Canada, with a combined $14 billion in assets under management, participate in SHARE, including the United Church of Canada’s pension plan. According to the Canadian Institutional Investment Network, the pension plan has $1.348 billion in assets, and the University of St. Michael’s College endowment has $106 million in assets.
“We are pleased to be joining SHARE and a broader group of institutional investors to collectively communicate our expectations regarding corporate performance in areas important to St. Michael’s such as worker safety and environmental protection among others,” David Mulroney, president and vice-chancellor of the University of St. Michael’s College, said in a news release.
Each year, SHARE speaks with 50 to 100 companies — often in the mining, oil and gas, and financial services industries — about health and safety, climate change, water use and Aboriginal relations issues.
“There are very specific risks to each [industry],” Thomas says. “The mining sector has had overseas issues with human rights over the years. And many of the leading companies have [processes] in place to try and address that, but there are ones that keep running up against problems like that. [There are] environmental questions around water — just in the last couple of weeks, we see the terrible spill at the Husky facility, which speaks to the need of oil and gas companies to pay close attention how they’re managing water risks.”
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SHARE recommends changes based on industry best practices. “We look to see which [companies] are the leaders and which ones are the laggards, and part of our role is to compare them and to speak to the ones that need improvement about reaching the heights that their competitors are reaching,” Thomas says.
Change implementation timelines vary depending on the issue.
“When a company has a very straightforward governance question, say, we think it needs to take a stronger approach to board diversity, for example, that change can happen over the course of a year,” Thomas says.
But a company trying to adapt to climate change risks will take several years, and even that varies by industry. “If it’s an energy company, it’s going to be quite a long period to transition, but if it’s, say, a retailer that wants to find a way to reduce its energy use, those things can happen quite quickly, if they’re serious about it.”
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