Plan members who have a topic that is not addressed here can email Communications@otpp.com
Click the questions to see the answers.
1. Does your responsible investing approach consider environmental, social and governance factors?
Absolutely, our principled approach encompasses a careful consideration of the material environmental, social and governance (ESG) risks and opportunities facing the companies and other assets we own. We take these into account because we believe these issues can affect investment returns, as well as Teachers' hard-earned reputation.
2. Is your approach to responsible investing different from other pension plans?
Responsible investing interpretations and practices can differ. At Ontario Teachers', our five responsible investing principles guide our actions. Our integrated approach considers all material factors that could affect the investment risks we take, the returns we earn, and the good reputation we've built over 25 years. We are also committed to continuous learning about ESG risks and opportunities.
3. What law governs the pension plan's investing activities? What does the law say?
The plan's investing activities are governed by the Ontario Pension Benefits Act, the federal Income Tax Act and other laws in jurisdictions where we invest. The Ontario Pension Benefits Act says that, as employees of a pension plan, we have a duty to care for the plan's investments as we would our own personal investments. In practical terms, our duty is to help the plan meet the cost of pensions now and over the long run.
4. Are Ontario Teachers' responsible investing principles consistent with its fiduciary duty and the Ontario Pension Benefits Act?
Yes, our principles are entirely consistent with our obligations. Integrating ESG factors into our investment process, being engaged owners, evolving our practices, seeking information and collaborating with like-minded peers: these principles form our responsible investing framework. They enhance our ability to assess various long-term risks and opportunities. It is generally accepted that maximizing long-term returns using a reasonable level of risk meets the level of care required.
5. Do you exclude investments on the basis of environmental, social and governance factors?
No. We have a duty to consider a range of investments and carefully weigh material risks against potential returns. Our investment decisions are rarely made on the basis of a single factor, financial or non-financial. We consider every investment on a case-by-case basis and make decisions based on a range of factors, and we consider environmental, social and governance factors in the context of the risk or opportunity they represent.
6. With thousands of investments, why can't you exclude specific investments that some members find offensive?
We understand that not all plan members will support every investment decision we make. We also know that members hold varying and sometimes conflicting views of what's acceptable, with concerns ranging from labour relations and the environment to health and job creation. Taking into account the individual preferences of more than 300,000 members would severely limit our investment choices and impact the plan's overall performance, thereby preventing us from fulfilling our duty to all members. We must prudently invest, which means balancing returns for all plan members with a reasonable level of risk.
7. Climate change is a serious threat. Will you divest the plan's investments in fossil fuel companies and support clean energy companies instead?
While climate change risks to our portfolio are real, the implications of climate change go beyond a single sector or industry. That's why we consider every investment on a case-by-case basis and make investment decisions based on a range of factors. We believe solutions to climate change will involve companies as well as governments and consumers. Engaging with companies directly is more effective and constructive than divestment, because we can use our influence to encourage changes in corporate practices. We have invested in alternative energy assets, such as Calgary-based BluEarth Renewables and Cubico Sustainable Investments, an international portfolio of renewable assets. We consider clean energy investments in the same way we consider all potential investments: we will invest if they're good long-term opportunities that meet the overall needs of the pension plan.
8. Who should I talk to if I want social investment screens applied to Teachers' investments?
Any change to Ontario Teachers' mandate would require plan members to work through the Ontario Teachers' Federation (OTF) to agree on what investments are acceptable to all members and then work with the Ontario Government – the plan's other sponsor – to give Ontario Teachers' new instructions. Any change would also need to be consistent with the Ontario Pension Benefits Act, otherwise a change in the Act would be required.
9. Responsible investing encompasses your approach to corporate governance. How do I know where you stand on governance matters?
We consider voting to be one of our most effective tools for promoting good corporate governance. Our objective is to vote every share of every company we own at every meeting of that company's shareholders in a manner that is consistent with our principles. To help members and the companies we own understand our positions, we created our Corporate Governance Principles and Proxy Voting Guidelines and, for complete transparency, we post our guidelines and our voting intentions on this website.
10. What efforts are made to ensure investee companies respect human rights and the environment?
As a responsible investor, we assess all material risks in all of our investments and how a company is managing its risks. We balance those risks (including environmental, social and governance issues) against the impact they could have on the company's financial performance and against impacts to Ontario Teachers' professional reputation. If our assessment shows a company is an appropriate investment for the plan, we invest and continue to monitor the risks.
11. I understand Ontario Teachers' is a signatory to the Principles for Responsible Investing (PRI). What exactly is this?
Yes, we are part of a network of international investors working together on the Principles for Responsible Investment initiative. These voluntary principles reflect the view that environmental, social and governance risks and opportunities can affect the performance of investment portfolios and must be given appropriate consideration by investors if they are to fulfil their fiduciary duty. Learn more about PRI.
12. What are the benefits of being a signatory to the PRI?
Taking part in this initiative improves our knowledge and understanding of the financial implications of environmental, social and governance factors, provides for greater depth and breadth of analysis, and ultimately helps us to become better asset owners on behalf of our members. We also stay current with the evolution of responsible investing in the international community through research and discussions among our peers and other bodies. Our involvement in the PRI underlines the importance we attach to responsible investing.
13. How can I get an answer to my question, or present a concern?
We welcome comments and questions about Ontario Teachers' responsible investing practices via email to Communications@otpp.com. If you are a member of the plan, you can contact the Ontario Teachers' Federation on responsible investing issues through the OTF Website.