The Canada Pension Plan Investment Board has released a new Policy on Responsible Investing, opening up the fund to corporate engagement, a more active proxy voting policy and research into the relationship between SRI and financial return.

The new policy was announced Oct. 20.

In a note to its members, the SIO “welcomed the policy as a step forward in the integration of social, environmental and governance issues into investment analysis and management by one of Canada's largest pension investors.”

The Policy commits CPPIB to the following new activities:

• Holding open the option of direct engagement with corporate boards or management to directly discuss concerns over issues of corporate conduct.
• Where appropriate, the CPPIB pledges to work with other investors to draft and recommend shareholder proposals.
• The CPPIB will support and conduct research into the long-term financial materiality of ESG factors, including the development of better tools for quantifying how these factors affect securities valuation.

The Policy reiterates CPPIB's traditional position that it will not screen out particular sectors such as tobacco, alcohol, military production or companies with poor human rights records.

In its note to members, SIO Executive Director Eugene Ellmen said the SIO welcomes the statement in the new policy that "investment analysis should incorporate ESG (environmental, social, governance) factors to the extent that they affect long-term risk and return."

The Policy pledges CPPIB to "participating in the broader domestic and international discussion about definitions, priorities, standards and best practices in the emerging fields of responsible investing."

A copy of the full policy is at http://www.cppib.ca/who/policy/Responsible_Investing_Policy.pdf.

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