ESG Regulations Ontario Pension Plans
ESG Incorporation for Ontario Pension Plans
Recent changes to regulations mean that starting in 2016, Ontario pension plans will need to begin providing information about “whether environmental, social and governance (ESG) factors are incorporated into the plan’s investment policies and procedures and, if so, how those factors are incorporated1.” The new regulations require more than just disclosure improvements as they apply to the plan’s statement of investment policies and procedures as well as the statements provided to members and former or retired members. Figure 1 below summarizes the changes.
| Document | What to include | Deadline |
| Statement of investment policies and procedures | Information as to whether ESG factors are incorporated into the plan’s investment policies and procedures and, if so, how those factors are incorporated | January 1, 2016, filed within 60 days |
| Annual or bi-annual statements to members and former or retired members | Information about whether ESG factors are incorporated into the plan’s investment policies and procedures and, if so, how those factors are incorporated | Statements sent after July 1, 2016 |
1Ontario Regulation 235/14 made under the Pension Benefits Act, made on November 26, 2014 and filed on November 27, 2014. The updated regulations can be found under http://www.e-laws.gov.on.ca/html/regs/english/elaws_regs_900909_e.htm
Regulatory Changes Present Opportunities
There are several ways to convert this regulatory development into an opportunity to further enhance your overall approach to investing:
- Enhance your understanding of ESG factors and sustainable investing
- Consider feedback on potential ESG related changes to a statement of investment policies and procedures
- Develop new language for contracts with service providers that addresses incorporation of ESG factors
- Implement enhanced reporting from investment managers to enable oversight of incorporation of ESG factors and to facilitate preparation of statements for members
- Incorporate discussion of ESG factors into presentations
Addenda Capital’s Approach to Incorporating ESG Factors
Addenda Capital’s focus on ESG factors has developed over several years, as shown below:
Sustainable investing is how we integrate consideration of ESG factors into investment and stewardship activities with the objective of enhancing long-term investment performance. Our approach is based on the evidence that disciplined and meticulous consideration of ESG factors can generate added value for our clients. As highlighted in figure 3 below, our approach has three key aspects: promoting sustainable financial markets, ESG integration and stewardship.
Do not hesitate to contact us for further information on ESG incorporation.
Brian Minns, CFA
Manager, Sustainable Investing
647-253-1029
Michel Jalbert, CFA, FCIA, FSA
Senior Vice-President, Business
Development & Client Partnerships
514-908-7910