61134864 Copyright : Andriy Popov

A New Democratic Party member of parliament is proposing to legislate responsible investing into the mandate of the Canadian Pension Plan Investment Board.

Alistair MacGregor, the MP for the British Columbia riding of Cowichan-Malahat-Langford, has drafted a bill to amend section 35 of the CPPIB Act to prevent the board from investing in companies that have violated human or labour or environmental rights, or engaged in unethical business practices.

Read: CPPIB highlights efforts to encourage women on boards in sustainability report

“I think there’s a heightened awareness around the world for some of these big issues and how . . . we can change our tactics to make the world a better place,” says MacGregor. “We’ve had, over the past number of decades, some very bad behaving companies that have done some terrible things, and I think we should try to figure out ways to reward companies for good behaviour and let others know we’re just not going to tolerate that kind of behaviour anymore.”

MacGregor says his bill wouldn’t conflict with the fiduciary duty of the CPPIB, as it would leave it up to the board to determine how to fulfill the responsible investment mandate, and to explain that in its annual report.

He says giving the CPPIB an explicit mandate for responsible investing could provide a strong incentive for companies with poor records to improve, or for other investors to follow its lead. “Because the Canadian Pension Plan is one of the largest sovereign wealth funds in the world it can move markets just by the sheer size of funds it has under its control.”

Read: CPPIB issues Euro-denominated green bonds

The CPPIB has held investments in companies such as Royal Dutch Shell, Gazprom and India’s largest coal companies, which are “some of the biggest polluters on the planet,” says MacGregor. 

“Some people would be fairly surprised if they saw the track records of some of the companies we’re investing in,” he adds.

The CPPIB, which has a responsible investing policy, has said it prefers to engage with companies it invests in to improve their performance, rather than to divest.

The bill, which was first introduced in February, is expected to get an hour of debate in June. “There’s no way this bill is going to get passed in this parliament, much less even come to a vote,” says MacGregor. “But it’s my hope that at least the one thing it could achieve is to get the conversation started so maybe more people become aware and engaged on this issue.”

Read: CPPIB strives for gender equality with new voting policy

Copyright © 2020 Transcontinental Media G.P. Originally published on benefitscanada.com

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Randy Bauslaugh:

This is not a helpful proposal. It is not a conversation starter. It is a distraction. The conversation has been in progress since 2005 at least, with the UN’s Principles of Responsible Investment (PRI). I believe CPPIB was an early signatory to the PRI. Banning investment or requiring divestment is a last resort kind of measure that might help if understanding or progress were not being made. It shouldn’t be a starting point.
The fact is, understanding and progress is being made, and more than this, it is accelerating. As fiduciary investors, most pension funds now appreciate that environmental, social and governance (ESG) factors are not non-financial factors. Pension funds, particularly funds like CPPIB, are increasingly insisting that managers and owners demonstrate a broad spectrum of ESG engagement strategies to mitigate financial risk and improve value. Banning investment or forcing divestment simply eliminates the ability of significant owners like CPPIB to initiate engagement strategies to make meaningful sustainable change.

Monday, May 27 at 12:02 pm | Reply

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