A flare stack lights the sky from a refinery in Edmonton on Dec. 28, 2018.JASON FRANSON/The Canadian Press
Among Canadian institutional investors, the commitment to combating climate change is broad: Dozens of pension and money managers have signed pledges or joined groups to encourage companies to reduce their emissions. But when it comes time to vote in annual corporate elections for shareholders’ climate-change proposals, many of those institutional investors fail to live up to their ideals.
A review of voting records of 35 public pension plans and private-sector asset managers by Canadian climate group Investors for Paris Compliance (I4PC) shows 15 voted in support of fewer than half of the shareholder proposals they faced in 2023. In contrast, of the remaining 20 investors, 14 voted for at least 75 per cent of the climate proposals they considered.
I4PC, which tries to hold companies accountable for meeting their climate promises based on the Paris Agreement reached at the 2015 UN climate change conference, studied voting records of asset managers that have either signed the Climate Action 100+ pledge or are a member of Climate Engagement Canada.
The group looked at their votes on 26 shareholder resolutions, filed at 21 companies, that involve corporate disclosure of climate risks and opportunities, or the adoption of climate-change policies. In order for an institutional investor to vote on a shareholder proposal, it needs to own shares in the company.
“At no point do we say you have to vote for every single one, but if you’re voting against most of them, it indicates climate change is not a priority for you,” says I4PC’s director of research and policy Kyra Bell-Pasht, who produced the report in collaboration with senior analyst Michael Sambasivam.
Five institutional investors did support every climate-related shareholder proposal they considered, led by the Canada Post Pension Plan, which voted for 25. Gestion FÉRIQUE and Bâtirente, both based in Montreal, as well as Genus Capital Management Inc. and Vancity Investment Management, both based in Vancouver, were the other four.
On the flip side, many private-sector money managers voted against a majority of the climate-based shareholder proposals. Beutel, Goodman & Co. Ltd. ranked last in I4PC’s survey, voting against all seven it considered.
RBC Global Asset Management, which manages money for clients and operates Royal Bank of Canada’s RY-T branded mutual funds, voted in favour of one proposal, opposed 16 of them, and had what IPC calls a “split” vote on nine others, meaning that some of RBC’s retail funds voted for a proposal, while others voted against. In seven of the nine split votes, 88 per cent or more of the RBC-affiliated managers cast votes in favour of the climate proposals.
Scotia Global Asset Management, the wealth-management arm of Bank of Nova Scotia BNS-T, voted for one, against seven and had a split vote on 15. The bank did not respond to The Globe and Mail.
All of the asset managers aligned with Canada’s five largest banks – which also include TD Asset Management, CIBC Asset Management and BMO Global Asset Management – voted in favour of less than half the proposals they considered.
Institutions with a largely negative voting record told The Globe they opposed some shareholder proposals because they felt they were too prescriptive – the proposals attempted to order a company to do something that’s the purview of management. In other cases, they felt a company was already largely doing the things the proposal called for.
“We review all shareholder proposals on a case-by-case basis,” Melanie Adams, managing director and head of responsible investment for RBC Global Asset Management, said in a statement. “Where proposals relate to enhanced disclosure in an area that represents a real risk or opportunity for the company, we will generally support it. In other cases, for example, if a proposal requests action or disclosure we believe is already sufficient at the issuer, we may oppose it.”
Sue McNamara, Beutel Goodman’s senior vice-president of fixed income and its head of responsible investing, says her firm engages directly with company management on climate matters. “There may be some things that we feel we are better off just directly continuing the conversation with management. So I think proxy voting is a very narrow way to look at it, and to say that we don’t support climate change or initiatives like that just by our track record on proxy voting, I don’t think is accurate.”
I4PC ranked institutions by the proportion of votes they supported, meaning the “split” vote designation counted against them. Ms. Bell-Pasht of I4PC says that irked some asset managers that had mutual funds or ETFs managed by subadvisers from outside investment firms, who have the power to vote the shares.
“As much as I think the firms mean well and say they’re committed to engage on climate, the problem is the other funds are voting in the name of that manager, and the climate risk remains with the investor,” Ms. Bell-Pasht says.
Canada’s major public pensions generally supported the climate proposals. In addition to Canada Post Pension Plan, the Caisse de dépôt et placement du Québec, the Toronto-based University Pension Plan, British Columbia Investment Management Corp. and Investment Management Corp. of Ontario all voted for at least three-quarters of the climate proposals they considered.
Ontario Municipal Employees Retirement System, Montreal-based Public Sector Pension Investment Board and Ontario Teachers’ Pension Plan all voted for about half of the proposals.
Teachers spokesperson Dan Madge pointed to his plan’s proxy voting guidelines, which say Teachers will “generally not support proposals that in our view place arbitrary constraints on the company, its board or management, duplicate existing practices and/or hinder the creation of long-term shareholder value.” Teachers publishes rationales for all its votes, he added.
OMERS spokesperson Don Peat made a similar statement and added that OMERS will consider withholding votes from the chair of a board committee if OMERS believes the company is not taking steps to mitigate climate-change risks or not disclosing information required for investors to make this assessment. “OMERS is committed to achieving net-zero greenhouse gas emissions across its total portfolio by 2050,” he said.
PSP did not respond to requests for comment.
I4PC did not include Canada Pension Plan Investment Board, the largest pension asset manager in Canada, in the study because it is neither a signatory to the Climate Action 100+ pledge nor a member of Climate Engagement Canada.
Alberta Investment Management Co. voted in favour of seven but against 15, the lowest proportion of any public-sector manager.
“Any time a ballot has a shareholder proposal or proxy contest … we do evaluate it, word for word,” says Carmen Velasquez, AIMCo’s managing director of sustainable investing. “And one of the things we think about a lot is you can vote in the spirit of a proposal – generally, are you for climate – or you can vote for the language that’s in it. And we take that latter stance.”