COMMITMENTS
Several Power group companies have formalized their commitments through responsible investment or sustainability policies outlining their approaches to integrating ESG criteria in investment analysis and decision-making processes, and to enabling active ownership through engagement and proxy voting. These include IGM Financial’s subsidiaries IG Wealth Management and Mackenzie Investments, as well as GBL, Sagard and Power Sustainable.
In addition, many of our group companies are signatories to the Principles for Responsible Investment (PRI), including Irish Life Investment Managers, IG Wealth Management, Mackenzie Investments, GBL, Sagard and Power Sustainable. 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.
Finally, IG Wealth Management and Mackenzie Investments are members of the Responsible Investment Association (RIA).
ESG INTEGRATION
In recent years, IGM Financial and its operating companies strengthened their responsible investment practices. For example, IG Wealth Management partners exclusively with asset managers and sub-advisors who are also signatories to the PRI and share their commitment to sustainable investing through ESG integration, active ownership and collaboration efforts. Sub-advisors are selected through a rigorous due diligence process that evaluates their ESG integration and active ownership practices. The ongoing oversight includes an annual comprehensive sustainable investing assessment and a thorough competencies review.
IG Wealth Management and Mackenzie Investments are members of Climate Action 100+, an investor-led initiative to ensure the world’s largest corporate GHG emitters take necessary action on climate change. In addition, IG Wealth Management encourages its sub-advisors to join the Net Zero Asset Managers (NZAM) initiative, Climate Action 100+ and Glasgow Financial Alliance for Net Zero.
For its part, Mackenzie Investments prioritizes net-zero engagements with the 100 companies contributing to 70% of its aggregated financed emissions in listed equities. By the end of 2023, Mackenzie’s stewardship and investment teams had met with 93 companies. Going forward, they plan to meet with each of these companies annually. Mackenzie also has dedicated staff through the Sustainable Investing Centre of Excellence (COE), a team of experienced professionals who work to increase sustainable investing capabilities across Mackenzie. The COE provides oversight of sustainable investing practices, thought leadership and disclosure, training and more. Moreover, the company has expanded its suite of funds investing to directly support the transition to a low carbon economy through its acquisition of Greenchip, an investment boutique which is exclusively focused on thematic investing to combat climate change; the launch of the Betterworld Team in 2021, which invests in companies making a positive impact on the people and the planet; and funds prioritizing sustainability and ESG-labelled debt, including green bonds.
Great-West Lifeco subsidiary Irish Life Investment Managers also integrates ESG considerations into itsr investment processes.
As for GBL, it believes that the integration of ESG factors at different steps of the investment cycle and management of its participation supports its investment decisions and contributes to achieving better risk-adjusted returns. Since 2020, GBL licenses and applies the SASB Materiality Map® General Issue Categories to support its responsible investment strategy and integration process, allowing ESG issues to be incorporated into investment practices. 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.
Considering the nature of its core business and its long-term investment horizon, GBL’s ESG integration process encompasses each of the following elements: investment universe definition supported by its exclusion policy focusing in particular on exposure to UN Global Compact controversies as well as sectorial exclusions; pre-investment identification of ESG risks using the GBL Proprietary ESG rating framework and an in-depth ESG risk assessment and due diligence; post-investment ESG integration and ongoing portfolio monitoring; voting and stewardship; and transparency and reporting in accordance with internationally recognized sustainability reporting frameworks.
ENGAGEMENT ACTIVITIES AND PROXY VOTING
IGM Financial oversees its investments through an active ownership approach where its executives sit on the boards of directors of the companies it controls or in which it strategically invests. Through regular interaction with the senior management and boards of these companies, IGM Financial engages on ESG issues to ensure that its investments are aligned with its responsible management philosophy. In addition, all of its operating companies have formalized their commitment through sustainable 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.
IGM Financial’s subsidiary, Mackenzie Investments, believes that stewardship and active ownership require both a corporate and a portfolio-level focus to be most effective. At the portfolio level, investment teams engage with companies or issuers on material ESG risks and opportunities that may impact the value that they are able to deliver to clients. From a corporate perspective, Mackenzie’s Sustainable Investing Steering Committee sets the agenda for stewardship priorities that present the greatest risks to its overall investment exposure, and where it can make the most significant impact. Mackenzie’s current priorities are focused on diversity, climate action and good governance. Through proxy voting and engaging with these companies and issuers, Mackenzie Investments is able to highlight material ESG risks and opportunities that may impact an entity’s long-term performance. In 2023, Mackenzie engaged with 172 unique companies on 862 topics on environmental, social, governance and strategy, risk and communication issues.
Voting and engagement activities are also the two core components of Irish Life Investment Managers’ (ILIM) active ownership approach. In 2022, ILIM created a bespoke custom voting policy, with focus on board independence, board diversity and climate change. Its 2022 global proxy voting guidelines were created by taking into consideration best practices, its engagement efforts, the Net Zero Asset Management initiative, and ISS’s Climate Proxy Voting Guidelines. The company’s voting in 2023 was in line with its four thematic priorities: climate change, natural capital, human rights and corporate governance. It voted on 5,564 meetings and 55,425 resolutions, with ILIM supporting 76% of environmental, 92% of natural capital, 89% of human rights and 76% of governance related shareholder related resolutions.
Regarding engagement, ILIM has continued to enhance and expand its engagement program during 2023. The company engages directly with companies on the topics of net zero, climate change (transition and physical risks), environmental disclosures, biodiversity, water, waste management, human rights, supply chain/modern slavery, racial equality/civil rights audits, lobbying disclosure/political spending, diversity, anti-discrimination, anti-corruption, ESG risk, and executive remuneration. In 2023, ILIM conducted 144 direct engagements with investee companies. Its engagement approach involves different forms of communication with investee companies, including calls, in-person meetings and written communications. In addition, ILIM participated in 198 collaborative engagement activities, including written communications and meetings, with 129 companies.
ILIM has been expanding its participation in collaborative engagements over recent years. The Stewardship Team has open discussions with peers and works closely with policy makers, different industry participants and non-governmental organizations to improve behaviours around sustainability. In 2023, ILIM joined two new collaborations on the topic of net zero. ILIM also played an active role in the CDP Non-Disclosure Campaign in 2023, leading on engagements with 44 companies in the topics of climate, water and forests, on behalf of the CDP investor signatories. With respect to its participation in natural capital focused engagements, in 2023 ILIM joined Nature Action 100 and, through this initiative, is a lead participant in engagements with seven companies. ILIM also joined a fixed income collaboration on the deforestation topic, focused on government bonds, engaging with the government of Brazil as part of the Investor Policy Dialogue on Deforestation. Additionally, regarding the theme of corporate governance, at the beginning of 2023, ILIM acted as a founding investor of the 30% Club Ireland Investor Group as an additional action to improve gender representation at board and management levels in the Irish market. Participating in this group, with other Irish asset managers and asset owners, will generate further collaborative engagement opportunities with Irish companies on the topic of diversity, equity and inclusion.
