As a long-term and active investor, Power Corporation believes that value can be best achieved when environmental, social and governance (ESG) considerations are integrated into our investment process.
As part of our active ownership approach, we recognize that the effective management of ESG factors can have a positive impact on the Corporation’s profitability, long-term performance and ability to create value in a sustainable manner.
We view responsible investing as a means to mitigate potential risks and identify valuable investment opportunities. Responsible investing ensures we invest in quality companies that have sustainable franchises and attractive growth prospects, and that are managed in a responsible manner.
ESG factors we consider:
Ethics and Integrity
Robust Corporate Governance Framework and Practices
Anti-Corruption and Anti-Bribery
Data Privacy and Security
Lobbying Activities and Political Contributions
Biodiversity and Conservation
Health and Safety
Diversity and Inclusion
- Continued to engage with our group of companies and investments on ESG issues through our active ownership approach.
Highlights from our Group Companies
IGM Financial's operating companies, IG Wealth Management, Mackenzie Investments and Investment Planning Counsel, have all formalized their commitments through Responsible Investment Policies, which outline the approach taken to integrate ESG criteria in investment analysis and decision-making processes, and to enable active ownership through engagement and proxy voting. In March 2021, Groupe Bruxelles Lambert (GBL) also formalized its commitment to incorporate ESG considerations into the way it conducts business, including in its investment activities, through the adoption of its ESG Policy.
Many of our group companies are signatories to the Principles for Responsible Investment (PRI), including Putnam Investments, Irish Life Investment Managers, IG Wealth Management and Mackenzie Investments. They are integrating ESG factors into their investment processes as a way to identify both risks and opportunities to enhance long-term returns for investors. GBL is also signatory to the PRI, furthering its commitment to pursue the development of its responsible investment approach, as are our alternative asset investment platforms Sagard and Power Sustainable. In addition, IG Wealth Management and Mackenzie Investments are members of the Responsible Investment Association (RIA), and in 2020, they became founding signatories of the Canadian Investor Statement on Diversity and Inclusion, alongside other institutional investors representing a total of more than $2.3 trillion in assets, committing to take intentional steps to promote diversity and inclusion across their portfolios and within their organizations.
Sagard and Power Sustainable, through its platform Power Pacific, have also formalized, through a CSR statement and/or a responsible investment policy, their commitment to consider ESG factors into their investment analysis process.
In recent years, IGM Financial and its operating companies strengthened their responsible investment practices. For example, since 2019, IG Wealth Management requires all investment sub-advisors to be signatories to the PRI, which commits them to integrate ESG factors into their investment analysis and decision-making processes, alongside traditional financial analysis. Similarly, Investment Planning Counsel now evaluates ESG integration practices in selecting new sub-advisors and in the regular due diligence process for existing sub-advisors. Also, in 2020 it expanded its ESG principles to exclude companies that contravene ESG standards or whose operations involve anti-social business activities (e.g., controversial weapons, thermal coal mining and tobacco). In 2020, IG Wealth Management published its first Sustainable and Responsible Investing Report, which describes its approach in detail and includes case studies. In addition to training webinars and online modules for IG advisors, the company organized its first-ever sustainable investing webinar for clients, which attracted 275 people interested in hearing from experts from IGM, IG and one of its sub-advisors.
Mackenzie Investments mandates its investment boutiques to integrate factors material to risk and return, including ESG factors. In 2020, it established a Sustainable Investing Centre of Excellence (COE) led by its Head of Sustainable Investing who reports directly to the CEO. This centre provides centralized ESG research and expertise to investment teams, oversees and manages its sustainable products, and spearheads ESG advocacy efforts.
Great-West Lifeco’s subsidiary Putnam Investments is committed to including a focus on understanding how ESG factors may influence performance, generate alpha, and/or mitigate risk in client portfolios. Its Head of Sustainable Investing is the chair of Putnam’s ESG (PRI) committee, which also includes senior members of the firm’s operating committee. For its part, Irish Life Investment Managers, another one of Great-West Lifeco’s subsidiaries, established in 2020 a dedicated Responsible Investment (RI) team of three ESG specialists within fund management. The RI team has taken over the responsibility for developing Irish Life’s RI strategy and overseeing ESG integration methodologies, stewardship and thematic analysis. The company also formally appointed 16 ESG champions across the business, including 10 ESG champions within fund management. The champions will collectively lead the integration and implementation of ESG processes across the Irish Life business.
ESG aspects are embedded at all stages of GBL’s investment process, including the assessment of investment opportunities and the due diligence phase, and of the monitoring carried out on participations of the portfolios. As part of its engaged ownership approach with the companies in which it invests, GBL ensures through direct engagement with the companies’ governance bodies that they are managed in a manner consistent with its responsible management philosophy, including its Code of Conduct and ESG Policy. All of GBL’s employees involved in the investment process and portfolio monitoring participated in an annual ESG awareness training in 2020 to ensure proper integration of its ESG strategy.
ENGAGEMENT ACTIVITIES AND PROXY VOTING
IGM Financial’s approach to active management of its investments includes engagement with company management as well as proxy voting, which are important value-added practices within the investment processes employed by its investment funds. The company generally adopts a policy of engagement over divesting a holding, believing that ownership, rather than divestiture, enables it to contribute positively to its investee companies’ ESG progress. IGM Financial also ensures that its internal managers and sub-advisors have appropriate policies to vote proxies in the best interests of its investment funds.
At Mackenzie Investments, engagements are undertaken by both its internal investment teams and through a partnership with a third-party engagement specialist, in effect since 2018. Under this arrangement, Mackenzie Investments’ voice is combined with those of like-minded shareholders to exert greater influence over ESG issues. In 2020, Mackenzie Investments greatly expanded its company engagements. In fact, its engagement partner alone engaged with 979 companies held in its accounts on 3,405 environmental, social, governance, strategy, risk and communication issues.
Investment Planning Counsel works with a leading provider of corporate governance and responsible investment solutions for proxy voting and engagement. Through this provider, IPC also participates in a pooled engagement service, which target companies that have identifiable ESG risks in their business or that are laggards in their industry on key ESG themes.
Putnam and its sustainable investing team are helping to advance the sustainability field through an engaged ownership, leadership and collaboration. As long-term investors, the company believes active managers have a particular role to play in working with company management teams and, through its fundamental research process, they are already in regular dialogue with company leadership about strategy and execution. In addition to ongoing research-related conversations, Putnam sends annual, individually tailored letters to the CEOs of all companies held within Putnam Sustainable Leaders Fund and Putnam Sustainable Future Fund, acknowledging efforts to date and encouraging future progress on key sustainability issues specific to each company, including improved disclosures. The voting process for Putnam’s mutual funds is overseen by the funds’ Board of Trustees, and the team collaborates closely with their governance experts on relevant proxy-related issues.
Voting and engagement activities are the two core components of Irish Life Investment Managers’ (ILIM) active ownership approach. The company has appointed an expert in proxy voting to provide advisory and proxy-voting services, and, since 2019, has adopted the Institutional Shareholders Services’ Socially Responsible Investment (SRI) Voting Guidelines. ILIM is an engaged asset manager and will generally vote in favor of social and environmental proposals that seek to promote good corporate citizenship, where the proposal is well framed and reasonable. In 2020, there were 4,938 meetings voted, representing 94 per cent of the meetings.
ILIM has also engaged an expert in ESG research and engagement activities to provide advisory and research services to support its own internal resources to help identify ESG risks and support engagement activity with the companies in which they invest. During 2020, it worked hard to further enhance its engagement program by aligning actions with ESG voting topics, refocusing long-running dialogues for maximum impact and integrating the thematic elements of emerging green and sustainable finance regulations. One output from this development process was the launch of its new anti-discrimination sub-theme and the launch of new controversy driven (reactive) engagements. The company also defined in its Engagement Policy the escalation process steps to be applied to companies not willing to engage. ILIM’s engagement program has now been operating since 2015. During this time, Irish Life has recorded 156 individual engagements with companies globally on subjects such as climate change, water, human rights, supply chain labour standards, bribery & corruption, and ESG risk management, with 98 successful engagements by which a company has improved in relation to their area of concern.