Climate Change Data

Environmental Metrics

ESG Focus Areas

• climate change
• health and safety
• equity, inclusion and diversity (Ei&D)
• governance
• diversity and inclusion

Environmental Achievements

• Approximately 6% of our total assets under management were green assets, which represented about $12.6 billion as of March 31, 2021.
• Developed and launched a robust asset-level data gathering tool to facilitate benchmarking and analysis of our real estate assets across ESG KPIs, including energy, greenhouse gas (GHG) emissions, water, waste and building certification.
• Enhanced our ability to measure and manage our positive and sustainable social impact by engaging with partners on tools and methodologies for assessing impact, and discussing their stakeholder reports.

Social Achievements

• Employees rallied around our COVID-19 Emergency Relief Initiative in the spring of 2020 and the PSP Gives Back campaign in the fall. These initiatives raised $1.17 million for non-profits serving our local communities and most vulnerable citizens.
• Introduced a Veteran Integration Program pilot to create opportunities for veterans to leverage their wide-ranging skill sets in the business world.
• Hosted an Economic Reconciliation roundtable discussion which included three special guests from Fort Nelson First Nation, the First Nations Major Projects Coalition and First Nations Finance Authority who shared their perspectives on developing ESG investment standards, improving environmental practices, and increasing access to capital and ownership or involvement of First Nations in major projects on their lands.
• Launched an illuminating We Are PSP initiative, which encouraged employees to share on our intranet the unique experiences that shaped their lives and identities.

Governance Achievements

• PSP has a gender balanced board of five men and five women.
• Developed our corporate governance dashboard, a collaborative tool that transforms our approach to using traditional proxy voting data into a dynamic process for monitoring portfolio company governance over time and sharing insights with our Capital Markets group.
• Enhanced our approach to monitoring corporate governance practices and engagement with a focus on board effectiveness in overseeing material ESG risks and opportunities, including climate change, and our proxy voting priorities.

Climate Goals & Targets

Environmental Challenges

• The COVID-19 pandemic impacted global commercial activity and contributed to significant ongoing volatility and unpredictability in the global financial markets.
• Gaining access to comparable and reliable data will remain a priority as we seek to drive value by extracting deeper insights from ESG information.
• Not all data is relevant, and the amount of data is still too limited to base firm conclusions on. Moreover, a lot of data covers public equity markets, but not necessarily private assets.

Mitigation Strategies

• Developed innovative and proprietary tools to monitor the ESG profile of our portfolio companies and partners on a total fund basis, throughout the entire investment cycle.
• Exploring how artificial intelligence can help us to overcome these challenges.
• Developed climate change toolkits for our investment professionals, which provide guidance and resources for identifying and assessing potential material climate risks and opportunities at the investment level.

Supply Chain Management

Responsible Procurement

• monitoring its suppliers and offering support

Climate-Related Risks & Opportunities

Physical Risks

• extreme weather events
• long-term shifts in climate patterns
• flooding
• sea level rise
• wildfires
• droughts

Transition Risks

• shifts in policy, legislation, technology and markets resulting from climate change mitigation and adaptation measures

Opportunities

• transition to a low-carbon economy is driving innovation and growth in low-carbon solutions
• resource efficiency and energy source improvements

Reporting Standards

Frameworks Used: TCFD, SASB

UN Sustainable Development Goals

• Goal 5
• Goal 7
• Goal 12

Its investment operations and the activities of its Responsible Investment group indirectly addressed 3 of the goals: gender equality (Goal 5), affordable and clean energy (Goal 7), responsible consumption and production (Goal 12).

Environmental Metrics

ESG Focus Areas

• Climate Change
• Diversity, Equity, and Inclusion (DE&I)
• Responsible Investing

Environmental Achievements

• Issued first green bond
• Developed a comprehensive climate strategy with targets to reduce portfolio GHG emissions intensity by 20% to 25% by 2026 (using a 2021 baseline)
• Increased investment in green assets to $70 billion from a 2021 baseline of $40.3 billion
• Grew exposure to transition assets to $7.5 billion from a 2021 baseline of $5.1 billion
• Decreased holdings of carbon-intensive assets that lack transition plans by 50% from a 2021 baseline

Social Achievements

• Raised close to $500,000 for local communities through PSP Gives Back campaign
• Donated $139,000 to the Ukraine Humanitarian Crisis Appeal
• Launched a hybrid workforce model
• Continued virtual leadership training, graduating 30 directors and senior directors
• Supported Veterans through the Veteran Integration Program
• Sponsored three Nuffield scholars

Governance Achievements

• Board renewal with increased female representation (six women and five men)
• All four Board’s standing committees chaired by women in fiscal 2023
• Clarified expectations with respect to the inclusion of Indigenous rights in economic decisions

Climate Goals & Targets

Environmental Challenges

• Global pandemic disruptions
• Return of inflation
• Armed conflict in Ukraine
• Cybersecurity risks
• Competitive talent market

Mitigation Strategies

• Disciplined investment approach focused on long-term horizon, inflation-sensitive assets, and diversification
• Developed a hybrid workforce model
• Implemented special training to facilitate the transition to a new way of working
• Continued virtual leadership training
• Implemented mandatory vaccination
• Divested from all Russian Federation investments

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events

Transition Risks

• Regulatory changes
• Market shifts

Opportunities

• Investments in green and transition assets

Reporting Standards

Frameworks Used: TCFD

Awards & Recognition

• Best Sustainable Pension Fund Manager Canada 2021
• One of the 30 most responsible asset allocators globally
• One of Montréal’s Top Employers for a fifth consecutive year
• Excellence in Diversity and Inclusion award

Environmental Metrics

ESG Focus Areas

• Climate change
• ESG factors
• Sustainable investing
• Corporate governance

Environmental Achievements

• Launched a new firm-wide climate strategy with corresponding actions and targets
• Updated Sustainable Investment Policy and Corporate Governance and Proxy Voting Principles, enhancing expectations on climate change risks and opportunities
• Completed a detailed inventory of carbon emissions on about 80% of Natural Resources AUM

Social Achievements

• Named one of Montréal’s Top Employers for the sixth consecutive year
• Enhanced health and well-being benefits with increased virtual and mental health support
• Continued to foster inclusivity in the workplace and raise awareness around equity, inclusion and diversity (Ei&D)

Governance Achievements

• CEO transition and management succession planning successfully executed
• Board is now comprised of six women and four men, with women chairing all four standing committees
• Annual review of the Board’s skills, competencies and diversity matrix

Climate Goals & Targets

Environmental Challenges

• Exceptionally volatile financial markets
• Inflation
• Geopolitical tensions
• Rising interest rates
• UK liability-driven-investment (LDI) funds crisis
• Recent banking crisis

Mitigation Strategies

• Diversification by geography, sector, and investment products
• Inclusion of inflation-sensitive assets (inflation-linked bonds and real assets)
• Further diversified fixed-income portfolio to better protect against rising interest rates
• Prudent use of leverage to enhance returns and manage liquidity
• Active portfolio management

Supply Chain Management

Climate-Related Risks & Opportunities

Opportunities

• Offshore wind investments

Environmental Metrics

ESG Focus Areas

• Climate change
• Sustainable investment
• Diversity & Inclusion

Environmental Achievements

• Integrated climate considerations into portfolio construction activities to increase the robustness of the Policy Portfolio in the transition to a low-carbon economy.
• Increased exposure to renewable energy assets (e.g., Hydroméga acquisition)
• Mosaic Forest Management issued its first carbon credits under the Verified Carbon Standard, deferring nearly 40,000 hectares of private land for carbon sequestration.

Social Achievements

• Launched Know the Business series to foster employee innovation and diverse perspectives.
• Piloted a mentoring program for mid-level female employees.
• Indigenous awareness and training initiatives (Four Seasons of Reconciliation, cultural teachings).

Governance Achievements

• Developed a new three-year Strategic Plan.
• Continued Board succession planning.
• Established a proper governance model for the Canada Growth Fund.

Climate Goals & Targets

Environmental Challenges

• Fluctuating macroeconomic conditions, geopolitical shifts, rapid technological advancements, the whole economy transition required by climate change, and significant demographic and societal changes.
• Structural changes in the office sector and supply-demand dynamics in certain real estate regions.
• Higher interest rates impacting real estate valuations.

Mitigation Strategies

• Developed a new strategy for the next three years, building on strengths and focusing on areas where better risk-adjusted returns can be generated.
• Refreshed Real Estate investment strategy to improve investment decision agility.
• Focused on active portfolio management and realizing value created over the years in several investments (Private Equity).

Supply Chain Management

Climate-Related Risks & Opportunities