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October 4, 2021

CANADIANS STILL LAG ON ESG FOCUS

Canadian investors have sharpened their focus on environmental and social issues due to the pandemic, but less so than the rest of the world, says the ‘Schroders Global Investor Study.’ The sustainability-focused findings found that 44 per cent and 40 per cent of Canadian investors, respectively, are now placing greater importance on social and environmental issues, compared to 55 per cent and 57 per cent of investors globally. More than half (54 per cent) of Canadian investors believe that data/evidence demonstrating that investing sustainably delivers better returns would encourage them to increase their allocations. A further 36 per cent of investors said that regular reporting that highlights the impact their investments are having would motivate them to increase their sustainable investments. While many Canadians are at ease with the prospect of embracing sustainability, they are slightly behind their global counterparts. Forty-three per cent would feel positive with their advisor moving their assets to an entirely sustainable portfolio, so long as the same level of risk and diversification was maintained, compared to 57 per cent of investors globally and 68 per cent of U.S. investors. Of that 43 per cent, three quarters said the opportunity to have a positive impact on the world was the most appealing factor, ahead of 41 per cent who were confident about returns.

October 4, 2021

STRATEGY NEEDED TO CURB MENTAL HEALTH CRISIS

While Canadian employers consider what the future of work looks like, Sun Life says that a mental health strategy must be part of the plan to help curb Canada’s mental health crisis. Its survey reveals that over half of Canadians continue to suffer from mental health challenges, 18 months into the COVID-19 pandemic. Yet despite this, companies and leaders are not stepping up enough with employee mental health support. It shows even while the majority of the country’s workforce (62 per cent) says emotional, mental, and physical fatigue is the top issue affecting them negatively, a third of Canadians (37 per cent) feel unsafe to talk about mental health at work. It also found that one in 10 working Canadians have left (11 per cent) or have considered leaving their job (10 per cent) due to a lack of employer mental health support. It is calling on Canadian companies to further invest in a workplace mental health strategy. Dave Jones, president of Sun Life Health, says, “A comprehensive mental health plan should consider leadership, communication, and education. Companies should review whether leaders talk openly about mental health, ensure employees know how to access resources, and equip managers to support teams.”

October 4, 2021

ESG METRICS TO BE STANDARDIZED

Leading global general partners (GPs) and limited partners (LPs) have created the ‘ESG Data Convergence Project’ to advance an initial standardized set of ESG (environment, social, and governance) metrics and mechanism for comparative reporting. The California Public Employees’ Retirement System (CalPERS) and global investment firm Carlyle lead the collaboration which includes CPP Investments, PSP Investments, and the Pictet Group. The group’s objective is to streamline the private equity industry’s historically fragmented approach to collecting and reporting ESG data in order to create a critical mass of material, performance-based, comparable ESG data from portfolio companies. This will allow GPs and portfolio companies to benchmark their current position and accelerate progress toward ESG improvements, which the group believes drives better financial outcomes. This will also enable greater transparency and provide more comparable portfolio information for LPs.

October 4, 2021

FUNDS ASKED TO DETAIL CLIMATE OBLIGATIONS

Canada’s biggest pension funds are being asked to detail how they are meeting their legal obligations on climate change. Letters from beneficiaries of 10 funds have sent letters requesting information about how mangers are fulfilling their fiduciary obligations amid the worsening climate change crisis. Signatories include working and retired people from healthcare, education, science, and elected officials. Union representatives including the presidents of CUPE Ontario and the Public Service Alliance of Canada have also signed the letters. The funds have been asked to provide information about how they are meeting their duty to act in the best long-term interests of their beneficiaries by December 31. The beneficiaries’ letters have been drafted in association with Shift: Action for Pension Wealth & Planet Health, Environmental Defence, and environmental law charity Ecojustice.

October 4, 2021

SOLVENCY IMPROVES SLIGHTLY

The median solvency ratio of the defined benefit pension plans was 101 per cent at September 30, a slight improvement from the ratio of 100 per cent at June 30, says the ‘Mercer Pension Health Pulse (MPHP).’ The investment returns for pension plans were mostly flat during the third quarter. Equity returns were mostly positive. However, bond yields increased in the quarter which resulted in negative returns on fixed income investments and in lower solvency liabilities. Of the plans in its pension database, just over half (53 per cent) are estimated to be in a surplus on a solvency basis, 31 per cent have solvency ratios between 90 per cent and 100 per cent, 11 per cent have solvency ratios between 80 per cent and 90 per cent, and five per cent have solvency ratios less than 80 per cent. As vaccination rates continue to increase, economies continue to re-open, and global supply chains re-establish, there is cause for optimism in the continued strength in equity markets and pension plan financial positions, it says. However, potential headwinds still exist, including stagnation of increases in vaccination rates, risk of new vaccine resistant strains of the COVID-19 virus, inflation, future levels of interest rates, and markets’ reactions to central banks’ approach to monetary policies as economies emerge from the pandemic.

October 4, 2021

EQUITABLE PARTNERS WITH PERSONALIZED PRESCRIBING

Equitable Life of Canada has partnered with Personalized Prescribing Inc. to provide easier access to pharmacogenomic testing for plan members with mental health conditions. “Patients suffering from mental health conditions often need to try several medications before they find one that works for them,” says Maureen Long, group claims, administration and disability, vice-president at Equitable Life. “This is frustrating and can result in negative side-effects. Pharmacogenomics can help plan members avoid this treatment trial and error.” Through the partnership, plan members diagnosed with a mental health condition can purchase a pharmacogenomic test for a discounted price. Equitable Life is also introducing the option for plan sponsors to add coverage of pharmacogenomic tests for their plan members suffering with mental health conditions.

October 4, 2021

LARSEN HAS NEW ROLE

Peter Martin Larsen is senior managing director of private markets at the University Pension Plan. He is responsible for developing its private market strategy and building internal knowledge of global private marketplaces and emerging industries.

October 1, 2021

ATTENTION ON ESG DEEPENS

As sustainable investing becomes more mainstream, institutional investors deepen their attention on environmental issues and increase their focus on social issues, says Mercer’s European asset allocation insights. While the environment remains at the fore of institutional investors’ environmental, social, and governance (ESG) concerns, investors are starting to broaden their emphasis to include social factors such as human capital and labour rights issues over the next year. Asset owners also plan to deepen their focus on the environment, looking at biodiversity and natural capital. The growing importance of sustainability within portfolios is reflected in the survey results, with a large increase in investors using low carbon or climate-related indexation compared to last year (26 per cent versus six per cent). The research shows that a large majority of European investors integrate ESG into all aspects of their operations including investment manager selection (83 per cent), investment manager monitoring (88 per cent), reporting (79 per cent), and asset allocation (64 per cent). It also indicated that investors are moving from a more reactive position to a proactive one, with regulatory drivers decreasing in significance as a motivator for considering ESG risks.

October 4, 2021

PSYCHOPHARMACIST APPROACH EXAMINED

Mark Faiz, CEO of Personalized Prescribing Inc., will discuss ‘How Psychopharmacists Utilize a Novel Approach to Manage Mental Illness Disability’ at a Benefits and Pensions Monitor Meetings & Events webinar. In the session, he will discuss a real-life journey that an employee took from full productivity to disability due to mental illness. It takes place October 12. Information is at https://register.gotowebinar.com/register/7478842224845147152

October 1, 2021

EXCLUSION IMPROVES CDPQ POSITION AS CLIMATE LEADER

The Caisse de dépôt et placement du Québec’s (CDPQ) move to exclude investments in oil producers from its portfolio by the end of 2022 is a welcome and significant move that improves the CDPQ’s position as a climate leader among Canada’s major financial institutions, says Shift Action for Pension Wealth and Planet Health. It says it is amazing that it took until 2021 for a Canadian pension fund to finally recognize that protecting retirement savings from the worsening climate crisis inevitably requires abandoning market exposure to high-risk fossil fuels. However, it should be acknowledged that if oil is too risky for the climate and Quebecers’ pensions, then so are ongoing investments in fossil gas. While gas may be less polluting than coal when burned, it remains a major source of climate pollution across the production supply chain. To achieve climate safety, investment in fossil gas production and infrastructure must also be urgently phased out. The CDPQ’s massive fossil gas infrastructure investments mean that it has not yet reckoned with this reality.

October 1, 2021

ETF ESGS GATHER INFLOWS

Environmental, social, and Governance (ESG) ETFs and ETPs listed globally gathered net inflows of US$11.24 billion during August, says ETFGI. This brings year-to-date net inflows to a record US$108.73 billion which is much higher than the US$41.47 billion gathered at this point last year. Total assets invested in ESG ETFs and ETPs increased by 6.1 per cent from US$308 billion at the end of June 2021 to US$327 billion and 69 per cent in 2021.

October 1, 2021

CGIB PARTNERS WITH BBD

The Canadian Group Insurance Brokers (CGIB) has partnered with Benefits by Design (BBD) Inc., a People Corporation Company, to create a group benefits plan that solves the lack of group insurance solutions employers have faced for years. The ‘CGIB Catastrophic Hybrid Insurance Plan’ helps employers resolve the issue of rate volatility especially when high-cost drug claims are involved. Transparency comes through sharing the pool’s premiums and claims paid with advisors and their clients. Dave Patriarche, founder of CGIB, says, “Employers don’t have a problem with high-cost drugs. They have a problem with the lack of insurance solutions to maintain coverage and reduce rate volatility. This solution is aimed at minimizing the cost increases to their plan when they encounter that big claim.” The plan features catastrophic coverage, combined with a healthcare spending account to offer flexibility, while providing protection to plan members.

October 1, 2021

AIMCO IN VIRESCENT INVESTMENT

Virescent Infrastructure, a renewable energy platform in India sponsored by global investment firm KKR, has set up the country’s first renewable energy infrastructure investment trust. Virescent Renewable Energy Trust has raised US$62 million from a group of foreign and domestic investors including the Alberta Investment Management Corporation (AIMCo). KKR set up Virescent in October 2020 to acquire operating renewable energy assets in India. Its initial portfolio is comprised of nine operational solar projects, with an aggregated capacity of approximately 395 MWp. The assets are located in Maharashtra, Tamil Nadu, Uttar Pradesh, Gujarat, and Rajasthan.

October 1, 2021

PARTHIBAN JOINS OPB

Vijay Parthiban is a senior pension policy strategist at the Ontario Pension Board (OPB). Most recently, he was a pension policy analyst at OMERS.

October 1, 2021

FUTURE OF BENEFITS EXAMINED

‘The Future of Benefits’ will feature industry leaders from Canada Life and RBC Insurance as they share their knowledge and insights. In the Benefits and Pensions Monitor Meeting & Events webinar, Chris Jansen, assistant vice-president, plan member guidance and solutions at Canada Life, will discuss supporting the needs and wants of Canadians. Julie Gaudry, head of group insurance at RBC Insurance, will provide insights to help employers attract and retain younger workers in a competitive job market. It takes place October 7. Information is at https://register.gotowebinar.com/register/8836721493662220558

September 30, 2021

SEC OFFERS ESG RULES INSIGHTS

It appears the U.S. SEC (Securities and Exchange Commission) is trying to ensure asset managers claiming to use ESG (environment, social, and governance) data in security selection are actually using that data and can explain it clearly to consumers, say Paula Glick and Liz Simmie, co-founders of Honeytree Investment Management. Citing remarks Gary Gensler, the SEC Chair made in July before the Principles for Responsible Investment ‘Climate and Global Financial Markets,’ they say insights were provided into what fund managers might expect from enhanced SEC disclosure rules. He said that a growing number of funds market themselves as ‘green,’ ‘sustainable,’ and ‘low-carbon’ and indicated that SEC staff are considering more robust disclosures from fund managers regarding the criteria and the underlying data used in the investment process. This is particularly interesting, they say, because many managers, especially large managers, claim that they integrate ESG across all their products. There is no doubt that all managers making ESG claims feel the heat of potential litigation, say Glick and Simmie. Those that are exaggerating their actual commitment to ESG and impact will have to either up their game by doing what they say they are doing or answer to the regulators.

September 30, 2021

RECORDKEEPERS INCREASE CYBERSECURITY STAFF

Nearly one-third of recordkeepers expect to increase their cybersecurity staff, responding to an increased threat of retirement account fraud, says Cerulli Associates. Implementing an effective cybersecurity program will be essential to fostering a sustainable recordkeeping business and retaining defined contribution plan sponsor clients for the long term, it says. More than three-quarters (79 per cent) of retirement specialist advisors indicate cybersecurity is a very important factor when selecting a recordkeeper. Yet, less than two-thirds of small-to-mid-sized plan advisors have a formal written process for conducting due diligence on recordkeepers’ fraud prevention practices. Plan fiduciaries without the in-house expertise to properly evaluate recordkeepers’ cybersecurity programs and practices should seek to leverage their plan sponsor’s IT specialists or consider working with a third party to aid them through this component of the request for proposal process. To stay current with cybersecurity best practices, it recommends recordkeepers evaluate their cybersecurity measures within the context of the guidance issued by the U.S. Department of Labour and the Spark Institute.

September 30, 2021

UNIT FOCUSES ON CLIENT HEALTH

Sun Life has created Sun Life Health, a business unit focused on empowering clients to live their healthiest lives no matter where they are in their health journeys. Dave Jones, senior vice-president, group benefits, at Sun Life, is president of the new unit which brings together group benefits and Lumino Health. Sun Life is the largest group benefits provider in the country, delivering products and wellness solutions to more than 3.4 million employees and their dependents.

September 30, 2021

FRANKLIN ACQUIRES CREDIT TEAM

Franklin Resources, Inc. has acquired Aviva Investors’ U.S.-based investment grade credit team, including senior portfolio managers Josh Lohmeier and Michael Cho. They will join its fixed income (FTFI). The investment grade credit team currently manages over $7.5 billion in institutional AUM (assets under management) at Aviva, across its suite of investment grade credit strategies, including U.S. investment grade credit, U.S. long duration credit, U.S. long duration government/credit, and U.S. intermediate credit, with additional customized versions of each strategy for various institutional clients. Franklin Resources, Inc. is a global investment management organization operating as Franklin Templeton.

September 30, 2021

CPP INVESTMENTS TAKES FULL OWNERSHIP

The Canada Pension Plan Investment Board will become the 100 per cent owner of Ports America, North America’s largest marine terminal operator, through the acquisition of an interest from funds managed by Oaktree Capital Management, L.P. It has been an existing minority investor in Ports America since 2014 and will continue to support the business with long-term capital and continuity of ownership as the company deepens its focus on providing safe, secure, and efficient service for all of its shipping line and beneficial cargo owner customers. Ports America has diversified operations across the U.S., including 70 locations in 33 ports on each of the three coasts.

September 30, 2021

GLEESON JOINS AON

Karen Gleeson (CEBS, CHRP, MIRHR) is vice-president, health and benefits, at Aon. Most recently, she was a senior benefits consultant for the Ontario Treasury Board Secretariat. Prior to that, she was a senior consultant at Eckler.