Ontario Teachers’ Pension Plan’s Talk About Responsible Investing
In its most recent Annual Responsible Investing and Climate Strategy Report, the Ontario Teachers’ Pension Plan (OTPP) says that its purpose is to “invest to shape a better future.”[1] Its investments in and seat on the Board of Managers of Stone Canyon Industries Holdings Inc. (SCIH) and its refusal to take meaningful action to bring the company in line with the values and standards of its shareholders, or divest if it won’t, brings into question what this means in practice.
In the report, the Plan’s Chief Investment Officer, Ziad Hindo, says that given the current investment environment, “it has never been more important to invest responsibly and with a clear sense of purpose.” He goes on to say, “We are increasingly evolving our thinking to consider how we can use our capital in a way that has clear and measurable real-world environmental and social benefits while creating value for our members. Thus, as part of our bold plan to reach $300 billion in net assets by 2030, our actions will expressly look to create a lasting, positive impact on the world. We believe doing this will result in better risk-adjusted returns over the long term and contribute to the stability of the plan’s funded status.”
Hindo says this can be accomplished in part by “leveraging our board seats” and that “we have used our influence on private company boards to drive progress on diversity, equity and inclusion (DE&I) issues.” In this respect, Hindo talks a lot about the issue of representation of women. He says that the OTPP’s intention is to have 30 per cent women across “all board seats we control,” which the plan says it has achieved. In fact, part way through the strike at Windsor Salt and after the revelation about the OTPP’s investments in Stone Canyon, it changed its member on the Board of Managers from a man to a woman. Around the same time SCIH deactivated the link on its website to its “Leadership” page where the membership of the OTPP on its Board of Managers was found, in what appears to be an attempt to shield its “Leadership” from accountability for its actions. What didn’t change, however, were the actions of Stone Canyon or the refusal of the OTPP to take a clear stand against the use of teachers’ pensions to finance union-busting. OTPP’s talk about diversity, equity and inclusion issues is all about having members of boards that look like the makeup of Canada’s population and to say nothing about what such individuals represent. In the case of its investments in SCIH, it is to hide that when it comes to the actions of these companies, they are in contempt of the values of Canadians who do not support union-busting and attacks on workers’ rights in the name of “flexibility.”
The report goes on to say that in the private portfolio companies that the OTPP invests in, of which SCIH is one, “we roll up our sleeves to help navigate these factors from selecting board members, to advising on operational issues or drawing on the expertise secured from our portfolio of over a hundred private investments.” For public holdings (i.e., those listed on the stock exchange and shareholders elect their boards of directors), they say that “we execute a corporate engagement program where we seek to speak with board members and key executives to understand how they are addressing important issues like climate change, diversity and human capital management, and offer suggestions, when needed.”
It states further that “Accountability for behaviour, decision-making and reporting [of boards of companies they invest in] are central aspects of our engagements with portfolio companies. Sustained, collaborative engagement with board members and management teams helps ensure the businesses we invest in stay aligned with our expectations.”
In a podcast interview on April 27, 2023, OTPP Chief Executive Officer, Jo Taylor, spoke about how a pension plan can both generate steady investment returns and make a positive environmental and social impact. He said: “[T]he question I always get asked is, are you willing to compromise your returns to be able to deliver impact, to which the answer is always no,” adding, “We take the view that we want to be able to influence the outcome on the investments that we’re involved with.” “We can only drive that if we’re a material investor in the business, either a control investor or a large minority investor.” Later in the interview he stated: “We’re trying to make the investments we make and the businesses we’re working with better companies as a result of our involvement.” Elaborating further, he said, “we can actually help them with their diversity and inclusion, we can help them with their climate footprint in terms of emissions, and we can help them really in terms of their social component in terms of really being a better business in terms of the communities and businesses they serve.”
Speaking about short-term versus long-term investing, Taylor stated: “We take the view that we want to be able to influence the outcome on the investments that we’re involved with. So that’s partly to make sure the returns shape up in the way we anticipated, or we wanted, but also to try and drive some of the things I mentioned a minute ago.” […]
“So we’re trying to say not only how do we deliver return for our members, but how can we build businesses that we’ll be proud of? To do that, you really have to be actively involved. […]
“We try to generally take a view, I would say, of trying to improve and influence businesses from the inside rather than try and sell them and leave the problem to somebody else.”[2]
For all the OTPP’s talk about responsible investing, or improving and influencing businesses, its open refusal to take meaningful action in addressing the union-busting and generally anti-social activities of Stone Canyon Industries Holdings Inc. – where the Plan actually has a seat on the Board of Managers – raises serious questions about what its commitment to responsible investing actually means. If it is to mean anything, it must live up to its statements and act decisively to stop the investment of teachers’ pension funds in the union-busting activities of SCIH.
Notes
- “Investing to Make a Mark – Annual Responsible Investing and Climate Strategy Report,” Ontario Teachers’ Pension Plan, 2022.
- “Canada’s Ontario Teachers’ Pension Plan — With Jo Taylor, OTPP CEO, ” Money Maze Podcast, April 27, 2023.