IN
VEST
ING
RESPONSIBLY

PUBLIC SECTOR PENSION INVESTMENT BOARD 2017 RESPONSIBLE INVESTMENT REPORT

RESPONSIBLE INVESTMENT

At PSP Investments, we believe that responsible corporate behaviour with respect to environmental, social and governance (ESG) factors generally has a positive influence on long-term financial performance.

We take a pragmatic view when applying our approach to responsible investing. This approach is tailored to local social and legal environments, and to the commercial imperatives of the companies in which we invest. We expect these companies to comply with the legal and regulatory regimes applicable to them.

TURNING ESG RISKS INTO OPPORTUNITIES

André Bourbonnais

WE ARE EXTREMELY
PROUD
TO PRESENT
YOU WITH OUR
INAUGURAL RESPONSIBLE
INVESTMENT REPORT.

At PSP Investments, we know that environmental, social and governance (ESG) factors have a direct impact on both risk and long-term profitability.

If there is one takeaway from this report, it is that responsible investment is at the very core of our investment strategy.

A TOTAL FUND PERSPECTIVE

Our responsible investment approach is aligned with our total fund perspective. It is rooted in the belief that good corporate conduct and strong governance enhance long-term financial performance. Our approach is inspired by our shared purpose to act in the best interests of pension plan contributors and beneficiaries – the men and women who have served Canada throughout their careers.

As in our business strategy, we count on our partnerships with like-minded organizations for responsible investment success. Our definition of success goes beyond mere financial considerations. It means acting as a corporate steward to create long-term, sustainable value for all of our stakeholders.

We approach ESG from a double-edged perspective: risks and opportunities. Rather than simply noting investment risks in our assessments, we view them as value-creation opportunities, and we work closely with our partners to unlock the value they present.

I encourage you to read about our many important successes throughout fiscal year 2017, from supporting a major oil and gas company to enhance transparency, to helping to improve the health and safety practices of an Asian semiconductor manufacturer. You will also discover how we work with many world-class ESG-related associations, such as the UN-supported Principles for Responsible Investment and the Canadian Coalition for Good Governance.

A STRATEGICALLY LOCATED TEAM

To fulfill our responsible investment mandate, in the last fiscal year, we built a dedicated seven-member team. Led by Stéphanie Lachance, Vice President, Responsible Investment, the team is housed within the Chief Investment Officer Group for a clear view across the organization. It analyzes investments and works with all of our asset classes to manage ESG factors. This supports our belief that, as a long-term investor, establishing strong responsible investment oversight is not only necessary for value creation — it is the right thing to do.

I would like to thank the Responsible Investment group for their invaluable contribution to our organization, and I would like to thank all employees for their continued commitment to helping PSP Investments incorporate ESG into all of our activities.

André Bourbonnais President and Chief Executive Officer

PILLAR

POLICY DEVELOPMENT AND STRATEGY

OBJECTIVES
Develop responsible investment policy and strategic initiatives. Monitor ESG themes and measure risks for each asset and sub-asset class, and on a total portfolio basis.
FISCAL YEAR 2017 ACHIEVEMENTS
  • Adoption of the Responsible Investment group roadmap detailing our strategy, activities, key initiatives and projects.
  • Portfolio monitoring in respect to ESG themes, such as board diversity and climate change.
  • Promotion of greater gender diversity on the boards of TSX listed issuers.
PILLAR

ADVISORY ROLE TO THE BOARD, PRESIDENT AND CEO AND INVESTMENT GROUPS

OBJECTIVE
Provide advice and guidance to the Board, the President and CEO and investment groups on ESG trends and practices to ensure they form part of the investment decision making process.
FISCAL YEAR 2017 ACHIEVEMENTS
  • Systematic ESG assessment by the Responsible Investment group for all significant private market transactions.
  • Implementation of general partner and external manager interview processes to foster adoption of sound ESG practices.
PILLAR

RESPONSIBLE INVESTMENT OVERSIGHT

OBJECTIVE
Pursue active ownership through proxy voting and engagement activities with public issuers.
FISCAL YEAR 2017 ACHIEVEMENTS
  • Refinement of our proxy voting-related activities.
  • Development of in-house capabilities to engage portfolio companies on their ESG practices and performance.
PILLAR

ESG TRAINING

OBJECTIVE
Increase internal capabilities so ESG factors are adequately considered during the investment decision making process.
FISCAL YEAR 2017 ACHIEVEMENTS
  • Delivery of internal training sessions in respect of ESG activities and integration across asset classes.
  • ESG subject matter presentations at conferences and to external parties.