Pension funds defy expectations for sustainable investing

Pension fund managers who are slow to integrate sustainable investing standards risk failing in their “fiduciary responsibility” to the members of the pension plans they are responsible for managing.

Martin Valeris

This is one of the points of view heard during the symposium “Challenges and prospects for pension plans in 2022” held Wednesday in Montreal by the Institute for the Management of Private and Public Organizations (IGOPP).

“Take the impact of climate change. It becomes a systemic risk in the financial sector for asset management. Therefore, pension fund managers who remain passive on this issue increase the risk of litigation or lawsuit for breach of their fiduciary responsibility,” said Bruno Caron, partner at the law firm. Miller Thompson is an expert member of the Canadian Climate Law Initiative, which brings together legal professionals and academics.

“The magnitude of the social and economic impacts of climate change is becoming increasingly measurable. We also find that it can affect the sustainability of pension schemes with expected reductions in returns depending on whether key international targets for reducing carbon emissions and transitioning to a green economy are met. Or not,” Asia said. The Office of the Superintendent of Financial Institutions (OSFI) and the Canada Pension Plan (CPP), which is the federal counterpart of the Quebec Pension Plan (QPP).

However, IGOPP speakers agreed that the challenge of integrating responsible investment principles and ESG (Environment, Society and Governance) standards remains complex for pension plan managers.

Especially since the entire financial and accounting community continues to develop more precise and better harmonized accounting and regulatory standards at the international and national levels.

The creation of the international body for accounting standards relating to sustainable development, that is to say the ISSB, only dates from last year. [le bureau des Amériques de l’lnternational Sustainability Standards Board sera établi à Montréal]. And in Canada, a project by the Accounting Standards Board for the Sustainable Economy of Canada has been in consultation since December 2021,” said Geneviève Beutchmin, Vice-President Professional Support at the Quebec CPA Order.

Concern for “doing well”

Meanwhile, Asia Peleg, chief actuarial expert at OSFI, reported that the federal regulator is set to release “draft guidelines” on sustainable investing for asset managers and investors. pension plan managers.

“Pension fund managers are increasingly concerned with ‘doing the right thing’ in sustainable and responsible investing, and not doing it in any way,” testified Serge Germain, Director of the Pension Plan Committee of the University of Sherbrooke. , which has accumulated 1.3 billion in assets among 6,500 employees – shareholder and pensioner.

Pension committees are often made up of volunteers with limited resources to properly integrate the principles of sustainable investment and ESG criteria. In addition, their monitoring priorities are mainly oriented towards the long term, whereas the integration of standards or ESG-type standards often falls under short-term objectives or expectations, noted Pierre Bergeron, senior consultant and partner. at PBI Actuarial Consultants.

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