BCI Responsible Investing Newsletter

BCI Responsible Investing Newsletter - May 2017

Issue link: https://uberflip.bci.ca/i/833049

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3 bcIMC RESPONSIBLE INVESTING NEWSLETTER CDP Water The United Nations has predicted a 40 per cent global shortfall of water supply by 2030; groundwater is being depleted to the extent that regional water needs are being threatened; and through our participation in CDP Water, we know that in 2014 over two-thirds of Global 500 companies reported facing substantive water risks. The CDP Water program was created in 2009 and annually surveys the largest public companies taken from the MSCI All Country World Index. The program collects comprehensive, self-reported data on environmental performance as it pertains to water. b c I M C i s a n i n v e s t o r m e m b e r o f CDP and this allows us full access to CDP analytics, which we use for benchmarking companies in order to fully understand their exposure to the risks that water can pose to a company's long-term performance. Since bcIMC joined the water program i n 2 0 0 9 , t h e n u m b e r o f i n v e s t o r signatories has gone up 318 per cent. More importantly, response rates w e r e u p 4 8 p e r c e n t f r o m 2 0 1 5 t o 2 0 1 6 ; o f t h e 1 , 2 5 2 c o m p a n i e s approached in 2016, 607 responded (in 2015, 405 out of 1,073 responded). Public Equities As an active owner, bcIMC believes that the effectiveness of share ownership lies not in divesting from companies that are exposed to ESG risk but in being an active owner and raising awareness of how effectively managing those risks can contribute to a company's long- term financial value. Through proxy voting and other engagement with portfolio companies, we advocate for improvements on ESG disclosure and practices, where necessary, to enhance company performance and shareholder value. bcIMC focuses on three engagement priorities: climate change and water; human rights; and shareholder rights. Water was added to the climate change theme in 2016 because we recognize that the two go hand-in-hand; physical changes in our climate can have serious effects on a company's water needs. More and more companies are starting to address water as a strategic issue with severe economic impacts. As of March 31, 2016 bcIMC holds $57.9 billion in public equities in Canada and around the world and our portfolio includes sectors that rely heavily on water, including the oil and gas sector. Given the strategic importance of water, especially as it relates to oil and gas and fracking, it was important to us to engage with these companies in a collaborative way. Along with our fellow PRI signatories, bcIMC encourages companies to monitor and report on water use, availability, and quality. We expect companies to be transparent about what issues they face, the processes they have in place, what standards are tied to operations, and their plans to successfully manage the reality of water scarcity.

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