(Tyrone Siu/Reuters)
Another day, another large pension-fund manager playing politics with pension money.
Canada Pension Plan Investment Board, the country’s biggest pension fund, said on Thursday that directors of its portfolio companies presiding material environmental, social and corporate governance (ESG) failures should be asked to resign immediately.
The change is part of revised proxy voting rules for the fund, known as CPP Investments, which will allow it to vote against a director seeking re-election following failures of oversight, along with voting against the director deemed most responsible for failing to remove them from the board.
CPP Investments, with C$550.4 billion ($431 billion) in assets, will also consider voting against all directors at portfolio companies with classified boards where ESG oversight failures have occurred. Classified boards are companies in which only a subset of directors are up for election…
The move is aimed at ensuring that CPP’s portfolio companies are compliant with climate change, board gender diversity and corporate governance issues, which are high on investors’ minds.
I wonder how high these issues really are on investors’ minds. High perhaps on the minds of professional investment managers, but on the minds of the people whose money they manage?
“We cannot nor do we choose to walk away from companies by selling our shares every time we disagree with a position taken by management or a board of directors,” said Richard Manley, Managing Director, Head of Sustainable Investing, CPP Investments.
Ah, a “Head of Sustainable Investing,” just one of the many jobs that the flourishing ESG ecosystem has thrown up. ESG may be going through a slightly rockier patch at the moment, but the amount of people who now have a vested interest in its continuance means that it will, I fear, be around for a very long time yet.
“We plan to step up our engagement in cases of oversight failures related to climate change, board gender diversity and governance,” Manley said in the statement.
Meanwhile, quick googling throws up this line in an October story from China Digital Times:
Canada’s Pension Plan Investment Board has invested US$2.23 billion in Alibaba and US$3.51 billion in Tencent.
Perhaps CPP will have sold those investments by now, along with any other investments in China. If not, perhaps it is its directors that need to be considering their position.
ESG. China. Pick one.