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Attention: Diane Lafleur

Financial Sector Policy Branch , Department of Finance

L’Esplanade Laurier , 20^th floor East Tower

140 O’Connor St.

Ottawa ON K1A 0G5  

Dear Ms. Lafleur:

Re:  Consultation on defined benefit pension plans and the Pension Benefits Standards Act

I am writing in response to your request for comments on regulatory and legislative issues regarding defined benefit pension plans under the federal Pension Benefits Standards Act (PBSA).

I believe that your consultation paper on regulatory issues misses two key issues. It fails to discuss the importance of requiring pension funds under PBSA to disclose their social and environmental policies and practices; and it fails to raise the issue of disclosure of proxy voting policies and voting records by pension funds.

Increasingly, there is a consensus in the investment community that social and environmental factors are critically important in avoiding risk and adding long-term portfolio value. I believe that  fiduciaries must incorporate social and sustainability analysis into their portfolio assessments in order to be responsible managers. Yet, in spite of this, pension plan members still have no right of access to information on how their plans incorporate – or fail to incorporate – such strategies. This is an important deficiency in pension plan accountability and transparency.

Similarly, I believe that pension funds have a fiduciary duty to vote their shares on behalf of their plan members. This fiduciary duty is only meaningful if it is accountable, and the accountability mechanism is through the trustees that oversee the plans. Without disclosure of voting policies and records, pension plan members and their trustees have no way of knowing if plans are in fact acting according to their fiduciary duty when voting their shares. Transparency on voting policies and records is essential.

Therefore I would like to support the Social Investment Organization in its brief to you of Aug. 25, in which it has called for regulatory change to require pension funds under the PBSA to disclose their social and environmental policies and to make public their voting policies and voting records.

Social and environmental disclosure would ensure that pension funds consider the importance of critical long-term, non-financial factors as part of their risk management and value-added strategies. Proxy voting disclosure would require PBSA-pension funds to review their policies on their voting obligations, and to vote their shares in accordance with those policies.

Such disclosure would help to improve returns at PBSA pension funds and to improve the overall level of accountability and transparency among Canadian pension funds.

Sincerely,