Andrea Moffat, Senior Director, Investment Stewardship

At Addenda Capital, our investment stewardship involves a spectrum of practices that seek to catalyze progress on the climate transition and other environmental, social, and governance issues, such as biodiversity, human rights, diversity, equity, and inclusion. In Co-operators' 2023 Integrated Annual Report, Andrea Moffat, Senior Director of Investment Stewardship, discusses how we can utilize our role as an investor to influence the companies we invest in and advance the goal of strengthening alignment with the direction of a sustainable, low-carbon economy.

Using climate change as an example, how does stewardship help us achieve our vision of catalyzing a sustainable, resilient society?

Andrea Moffat: Transitioning our economy from one based on a high carbon energy system to one that is net zero and climate resilient is a complex task. The same is true for other sustainability goals. Stewardship is about using our role as an investor to contribute to this system change. We do this by building relationships and engaging a wide range of stakeholders to move in the same positive direction. Using this collaborative approach to provide input to policy makers, for example, influences how rules and standards are set to drive actions and to mobilize capital for climate transition. This helps Canadian companies transition their business strategies including producing the solutions needed for the future, preparing to deal with disruptions to their supply chains and more.

“We want companies to develop successful climate transition plans, disclose emission reductions and demonstrate performance improvements, so they are resilient and contributing to a sustainable economy.”

AM: Climate transition will take time and requires changes to all components of corporate management. By engaging with companies, we can encourage them to make commitments and implement net zero targets that are aligned with scientific decarbonization and net zero pathways and report on their progress.

Can you give an example of 2023 stewardship activities that have had a positive impact towards the climate transition?

AM: There are so many, but I’ll share one resulting from a recent direct engagement with a utility company. Addenda had several objectives going into this engagement. We asked them to update their climate goals to align with government commitments to 100% clean electricity by 2035; to disclose more specifics on their adaptation and resiliency plans; and to share their strategy on a just climate transition for their workforce, and Indigenous Reconciliation plans, just to name a few objectives. In response, we learned specifics about their investing strategy in addition to challenges with regulatory structures to support transition investments. They disclosed their board and management’s prioritization of climate adaptation and committed to sharing more specifics. They described initial efforts on engaging employees in just transition planning and committed to increasing their capacity and expertise on Indigenous reconciliation planning. At the end of the day, by engaging on multiple issues we have established a strong baseline for future dialogue. Our ongoing stewardship will involve following up on the progress and challenges of the issues we discussed, as well as deeper engagement on the company’s policy advocacy supporting clean electricity regulations.

What are the greatest challenges we face?

AM: We aren’t moving fast enough. All of us – governments, businesses, investors and citizens – are struggling to make the changes required. A more fulsome strategy is needed in Canada to ensure we have alignment between net-zero transition and
economic targets that position us to be competitive within global supply chains (such as hydrogen, wind, and battery storage), and attract private investment.

“Transition is hard. The science tells us we need to move faster, and we know that the human, ecological and financial costs increase with any delays in actions and increases in temperature.”

AM: Many of the technologies and practices that can reduce emissions are available now, yet it takes effort to break through entrenched economic and societal systems. It takes work for companies and investors and requires unparalleled collaborations across multiple stakeholders to understand the science, technology, labour skills, community resilience, capital requirements and innovations to tackle the low carbon transition at scale.

What excites you most about opportunities to transition our economy?

AM: I’m most excited about clean energy development and electrification in Canada. I’m also excited that the market is starting to focus on the nexus between climate/biodiversity/natural capital and the implications for company cash flow and balance sheets. It seems like we are starting to value our environment and understand that we need to operate our economy within the constraints of ecological boundaries, not the other way around.

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