BCI’s 2021 ESG Annual Report: Integral to Our Approach
A message from Gordon J. Fyfe, Chief Executive Officer / Chief Investment Officer
The world has certainly changed in the past two years, with some shifts being only temporary, while others can be considered permanent.
Even though many of us paused daily activities, the collective urgency to address climate change continued. Recent reports from the Intergovernmental Panel on Climate Change and the UN Climate Change Conference (COP26) increased global awareness of the need for action. As climate change is one of the most pressing issues for our clients and investments, BCI joined 35 other institutional investors in advance of COP26 to sign the Canadian Investor Statement on Climate Change, making clear our expectations of the companies in which we invest and reinforcing our commitment to supporting the transition to a low-carbon economy.
Closer to home, British Columbians felt the impacts of extreme weather events as we experienced deadly wildfires, unprecedented heat, and flooding during the year. These events took lives, forever impacted communities, and resulted in major damage to infrastructure and the environment. The people of British Columbia showed their resilience as they worked together to rebuild and to collectively address and identify climate solutions.
We talk about resilience a lot at BCI. Our clients have long-term investment horizons and building a portfolio that performs through market cycles and periods of volatility is paramount to meeting their investment needs. Physical climate risk, regulatory risk, and decarbonizing the economy will impact the portfolio, and it is our job to understand and manage these implications, relying on a combination of in-house and market-leading tools and methodologies, so that we can deliver long-term returns.
Some estimate that trillions of dollars annually are needed over several decades to address climate change. Governments will contribute, but significant investment will come from the private sector and institutional investors, like BCI. We actively look across asset classes for opportunities benefiting from, or supporting, the energy transition, while always keeping our focus on meeting return expectations. We have made substantial progress:
We are also evolving our climate strategy to remain competitive and reflect the latest science. Later this year, we will release our updated Climate Action Plan, setting out our comprehensive strategy for managing climate change across asset classes.
THE POWER OF PARTNERSHIPS
Decarbonizing our economy is an immense challenge that requires multi-stakeholder collaboration. BCI partners locally and globally to support initiatives driving meaningful change and to advance our knowledge and influence on matters most material to our clients.
领英推荐
In 2021, we announced a three-year climate finance research project with the University of Victoria and the Pacific Institute for Climate Solutions. Our partnership combines BCI’s climate scenario and valuation expertise with leading academic and applied research to build data and capacity in the field, and broadly share learnings with peers, academia, policymakers, and the public.
Supportive government policy is critical to accelerating the transition to a low-carbon economy and BCI actively engages with policymakers. We advocate for policies aligned with achieving the global goal of driving emissions to net zero by 2050 and support mandatory public company disclosure in line with the Task Force on Climate-related Financial Disclosures. In 2021, we were appointed to the federal government’s Sustainable Finance Action Council, where we are helping to shape sustainable finance markets in Canada. At a provincial level in British Columbia, we participated on the new ESG Advisory Council, consulting with the Minister of Finance on ESG-related issues for the 2022 budget.
INCREASING OUR EXPECTATIONS OF COMPANIES
As the private sector plays a large role in transitioning to a low-carbon economy, we increased our expectations for how companies report on and address climate change risk. Our proxy voting record in 2021 demonstrates these expectations: we supported 80 per cent of climate change shareholder proposals and voted against 51 directors at 34 companies for a lack of climate disclosure or poor performance — sharp increases in both metrics compared to the prior year. Where climate performance is not keeping pace, we engage with directors and leadership of publicly traded companies.
We also work with our privately held companies to adopt best practices in climate management and disclosure, and actively support their transition to low-carbon operations — including net-zero commitments like those made by Puget Sound Energy and Thames Water last year. At the end of the day, our portfolio companies must evolve and thrive so that they continue to generate value for our clients.
CHAMPIONING INCLUSIVE AND SAFE WORKPLACES
The pandemic has exacerbated inequities and occupational health and safety concerns. Research demonstrates the link between financial benefits and workplaces following best practices in these areas. In the past two years, we raised our expectations of companies on gender, ethnic, and racial diversity and actively engaged on the workforce impacts of the pandemic. We also supported the development of reporting frameworks and introduced key performance indicators to effectively measure broader progress.
SECURING FINANCIAL FUTURES
Addressing climate change and ESG issues is not only a source of potential investment opportunities, it also allows us to manage long-term financial risks.
At BCI, we are guided by our fiduciary duty to clients and our organizational purpose of helping hundreds of thousands of British Columbians secure a strong financial future. The people we are serving include our children's teachers, our health care providers, our municipal workers, and our neighbours.
Gordon J. Fyfe
Chief Executive Officer / Chief Investment Officer
To learn more about BCI's approach to ESG and read our 2021 ESG Annual Report, visit BCI.ca/esg