The Plan has a responsible investment policy in place since 2004. This policy has been regularly reviewed in light of new developments in responsible investing, or as part of regular strategic discussions. More recently, the Plan's oversight committee approved in July 2014 an updated and reinforced policy on ESG integration based on a principled and pragmatic approach in accordance with the fiduciary standard applicable to the administration and investment of Plan assets, and endorsed an investment approach that encompasses an informed consideration of ESG risks and opportunities underlying plan investments, where such issues are material and relevant. Ongoing work is also currently undertaken to enhance the Plan’s approach to engagement and active ownership.
Thus, the Plan's ESG Policy is based on the following principles:
1. It is important for the Plan - as long-term investors and asset owner - to integrate environmental, social and governance (ESG) factors in the overall investment decision-making process.
2. Consideration of ESG factors, including but not limited to environmental practices, worker safety and health standards, and corporate governance, can add value to the Plan's investment process, and can affect the assessment of the risk and return characteristics of investments, even as the relative importance of these factors can vary across asset classes, industry sectors, geography, time, and structure of the investment opportunities.
3. Commitment to encouraging external managers that manage plans assets to adopt policies and practices that enhance good governance and long-term corporate financial performance.
In the context of the objective of seeking the best risk-adjusted returns compatible with its risk profile and in line with the applicable fiduciary standards, staff implement this policy and its underlying principles by, inter alia:
4. Integrating ESG factors into investment and risk analysis.
5. Taking into account ESG factors in due diligence, manager selection, structuring and monitoring of investments and assessment of portfolio risks in asset classes and investments, particularly where such factors are considered likely to be significant, and in keeping with applicable regulatory standards, industry norms and investment best practices.
6. Staying abreast of evolving developments and best practices by engaging with and reaching out to like-minded institutional investors and asset owners, and by collaborating on improved and greater ESG-related disclosures.