The Ontario Teachers' Pension Plan Board is among investors that issued a joint statement backing the reporting standards formalized by the International Sustainability Standards Board (ISSB).COLE BURSTON/The Canadian Press
The chief executives of 11 of Canada’s largest pension fund investors are throwing their support behind a new sustainability reporting standard, urging companies to embrace the rules to measure performance on environmental and social issues.
The CEOs issued a joint statement backing the reporting standards formalized on Monday by the International Sustainability Standards Board (ISSB). The measures aim to set a single, global baseline for reporting on carbon emissions and other environmental and social issues. They are designed to consolidate the array of existing standards used around the world and help protect investors from greenwashing.
The joint statement lends the considerable influence of the pension plan investors – they collectively manage more than $2-trillion in assets – to the new ISSB standards, giving the rules added credibility. The pension fund CEOs aimed their statement at “the companies in which we invest and those seeking our capital,” suggesting that adopting the standards could be an increasingly important factor in investment decisions, but stopping short of making it a requirement.
The CEOs say that the way companies address climate change, diversity and inclusion, governance and related issues “can significantly contribute to value creation or erosion.” The message is that measuring performance on these issues and disclosing it clearly is an imperative for major investors, who have to show their clients and beneficiaries that they are taking sustainability seriously in seeking long-term returns.
“To achieve this, we need companies to be transparent,” the joint statement says. “We believe widespread adoption of this new global baseline will spur companies to more closely examine and manage activities that are having an increasingly material impact on long-term value creation.”
All of Canada’s eight largest pension fund investors – commonly called the Maple Eight – are signatories to the statement. They are the Canada Pension Plan Investment Board, Caisse de dépôt et placement du Québec, Ontario Teachers’ Pension Plan, Public Sector Pension Investment Board, British Columbia Investment Management Corp., Ontario Municipal Employees Retirement System, Alberta Investment Management Corp., and Healthcare of Ontario Pension Plan.
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Investment Management Corporation of Ontario, OPTrust and University Pension Plan also added their support.
The new ISSB standards won’t necessarily be mandatory in Canada, or elsewhere in the world. Canadian businesses will have several months to prepare as a domestic standards body, the Canadian Sustainability Standards Board (CSSB) and financial regulators work out details about how the new rules will be adopted.
The CSSB will examine the standards and how they can be applied in Canada, recognizing that the country relies heavily on resource-based and export industries. It has representatives from the energy, fertilizer and mining industries, and will add professionals from the pension sector later this year.
The initial set of ISSB standards calls for disclosure of material information about sustainability-related financial, market and legal risks, in similar fashion to traditional accounting.
The pension CEOs also said they will “continue to strive to strengthen our own sustainability disclosures” in Wednesday’s statement.