CPP Investments, the investment manager of the Canada Pension Plan with over $400 billion AUM announced today an updated policy on sustainable investing. The investment manager stated that the new policy reflects an increased conviction in the importance of ESG factors in investing, and the related risks and opportunities related to these issues.

Commenting on the updated policy, Richard Manley, Managing Director, Head of Sustainable Investing, CPP Investments, said:

“ESG considerations are inextricably linked to our ability to successfully achieve our investment objectives. Our Policy reflects the growing body of evidence showing that companies that integrate consideration of ESG-related business risks and opportunities are more likely to preserve and create long-term value.”

According to CPP Investments, the integration of ESG factors into the investment manager’s investment analysis and asset management activities supports its objective to maximize long-term investment returns without undue risk of loss.

As part of its sustainable investing policy, CPP Investments asks that companies report material ESG risks and opportunities relevant to their industries and business models, with a clear preference for this disclosure to focus on performance and targets.

CPP Investments has also indicated its preference for companies to align their reporting with the SASB and TCFD standards. Additionally, the policy reiterates the importance of asset owners like CPP Investments engaging with the companies in their portfolios, to promote forward-thinking corporate conduct and long-term business performance. These policies are similar to those adopted by other major investors, including BlackRock, who earlier this year announced support for companies adopting SASB and TCFD, and increased engagement efforts.

Manley added:

“We believe active ownership through constructive engagement can enhance and sustain returns over time and significantly reduce investment risks. As a supplier of patient, engaged and productive capital, we are able to work with companies to bring about change, helping them deliver enduring value-building growth.”