BCI ESG Engagement

BCI ESG Engagement: Public Equities Priorities and Process

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ESG ENGAGEMENT: PUBLIC EQUITIES PRIORITIES AND PROCESS 1 We believe that if a company enhances its governance and operational practices to effectively address ESG performance, its risk profile, reputation, and long-term ability to compete is improved, contributing to reliable long-term returns for our clients. You can't change a company you don't own. Therefore, BCI believes the effectiveness of share ownership lies not in divesting or avoiding companies with poor ESG practices, but by raising awareness that the effective management of ESG risks contributes to creating long-term financial value. In discharging our fiduciary obligation of working in our clients' best financial interests to generate returns, BCI aims to manage the long-term risks and opportunities that ESG matters present, both now and into the future. As an active owner, we monitor ESG risks and engage with our companies to raise awareness that mismanagement of ESG risks can lead to a range of business impacts. These may include stricter regulation, lawsuits, loss of consumer trust and sales, damage to reputation, higher operational costs or, in some circumstances, the loss of an ability to operate. Some international markets have looked to the concept of stewardship codes to guide interaction between investors and their investee companies, the most prominent one being the UK Stewardship Code. This Code, and others like it, seeks to improve the quality of engagement between companies and investors with the ultimate goal of improving long- term, risk-adjusted returns for shareholders. While Canada does not have its own stewardship code, there are organizations that BCI belongs to that provide guidance for investors, including the Canadian Coalition for Good Governance (CCGG) and the International Corporate Governance Network (ICGN). Some of the more instructive documents that address the responsibility of shareholders include: • The CCGG's Principles for Governance Monitoring, Voting and Shareholder Engagement (2010). • The ICGN's Statement of Principles for Institutional Investor Responsibilities. These documents provide a useful summary of the benefits of active ownership with the companies that institutional investors own. This document should be read in tandem with BCI's Proxy Voting Guidelines document which provides details on the ESG principles and practices on which we frequently vote. Context The engagement activities of BCI's Public Equities department are intended to help protect and increase the long-term returns of the funds we manage on behalf of our clients by actively raising a company's awareness of the importance of managing long-term environmental, social, and governance (ESG) risks.

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