BCI's 2020 ESG Annual Report
The British Columbia Investment Management Corp. (BCI) is becoming “more intentional about” its ongoing environmental, social and governance efforts in the wake of the coronavirus pandemic, says Jennifer Coulson, vice-president of ESG and public markets for the investment manager.
Its 2020 annual report highlights the BCIs’ expansion of its carbon footprint reporting to include all asset classes and the growth of measured exposure to climate-related investment opportunities to $3 billion.
The BCI also increased its cumulative historical participation in sustainable bonds to $888 million — up from $356 million in 2019 — and it estimated its strategies in fixed income will lead to a cumulative participation of $5 billion in sustainable bonds by 2025, according to a press release. In addition, the QuadReal Property Group, which manages the BCI’s real estate program, released its green bond framework and closed its $350-million inaugural green bond senior note offering.
Coulson says the investment manager is also increasing its allocation to sustainable bonds amid a maturing market, including an increased focus on social investment factors. “We felt it was a good time to become more intentional about it. We’ve been participating in the sustainable bond market over the years — we were more pure green in the early days but with the pandemic, we’re also seeing more on the social side as well, so there’s a mix of green and social bonds. We want to facilitate the development of that market and we’re seeing a lot of value from being more active within that space.”
The BCI also completed more than 225 detailed ESG reviews across private and public markets and participated in seven collaborative engagements in public markets, covering 633 companies on ESG-related matters. It also jointly established the SDI Asset Owner Platform — alongside the AustralianSuper pension fund and Dutch pension funds APG and PGGM — to provide a globally-consistent standard for investing in the United Nations’ sustainable development goals.
“In speaking with our peers, we wanted to support the development of a global standard,” says Coulson. “As asset owners and managers become more familiar with the goals and want to show to what extent they’re aligning [with the goals], there’s a consistent way of doing that.”
BCI put out a press release on its 2020 ESG annual report:
Today, British Columbia Investment Management Corporation (BCI) published our 2020 ESG Annual Report, an in-depth look at how we capture investment opportunities and manage long-term financial risks associated with environmental, social, and governance (ESG) matters on behalf of our clients.
This year’s report demonstrates progress made in implementing the four components of our corporate-wide ESG Strategy: Integrate; Influence; Invest; and Insight; and on achieving the goals of our Climate Action Plan. It provides updates on our reporting in line with the Task Force on Climate-related Financial Disclosures (TCFD). The report further showcases examples of our ESG-related activities across the corporation and our work with our investment companies and the broader capital markets.
Over the past six years, BCI has transformed into an active, in-house asset manager and increased the capabilities of our internal team. Our longstanding commitment to ESG has also evolved into a coordinated and consistent approach that integrates ESG across the corporation.
“BCI exists to deliver the long-term returns our clients require to fulfill their mandates,” said Gordon J. Fyfe, CEO/CIO of BCI.
“Factoring environmental, social, and governance (ESG) into our investment decisions across all asset classes is an integral part of helping meet those goals.”
Highlights from the 2020 ESG Annual Report include:
- Expanding our carbon footprint reporting to include all asset classes
- Growing our measured exposure to climate-related investment opportunities to $3 billion
- Introducing updated proxy voting guidelines raising our expectations on addressing climate change risk and disclosure
- Leading or co-leading on engagement with four North American companies in the oil and gas and mining industries as part of the Climate Action 100+ initiative
- Completing more than 225 detailed ESG reviews across private and public markets
- Developing an in-house framework to assess the potential impact of long-term systemic ESG opportunities and risks, such as climate change, on the total portfolio and potential investments
- Participating in seven collaborative engagements in public markets, covering 633 companies on ESG-related matters
- Joining Canadian and global peers to advocate for ESG disclosure, diversity and inclusion, and sustainable capital markets
- Increasing our cumulative historical participation in sustainable bonds to $888 million, up from $356 million in 2019. BCI’s strategies in fixed income will lead to an estimated cumulative participation of $5 billion in sustainable bonds by 2025
- Jointly establishing the SDI Asset Owner Platform alongside APG, AustralianSuper and PGGM to provide a globally consistent standard for investing in the UN Sustainable Development Goals.
- QuadReal Property Group releasing its Green Bond Framework and closing its $350 million inaugural green bond senior note offering
- Leveraging and sharing information from our global private equity portfolio to support pandemic response across the portfolio
- Developing human capital guidance to provide investment companies near-term clarity and long-term expectations related to the pandemic
Looking to the future, BCI will continue to develop investment strategies that create sustainable value in a changing world. This includes proactively using ESG to create value while managing risk.
Last week, BCI released a press release stating Jennifer Coulson, vice president of ESG in public markets, has been announced as an inaugural member of the federal government’s Sustainable Finance Action Council (SFAC):
SFAC brings together 24 key representatives of the financial community to provide input on the foundational market infrastructure needed for a stable and reliable sustainable finance market in Canada.
The federal minister of finance and the federal minister of the environment and climate change launched the SFAC in May 2021, with a commitment of $7.3 million in funding over three years. The creation of the council was one of the recommendations included in the 2019 Final Report of the Expert Panel on Sustainable Finance.
The principal mandate of SFAC is to make recommendations on the critical market infrastructure needed to attract and scale sustainable finance in Canada. This includes strengthened assessment and disclosure of climate risks and opportunities, better access to climate data and analytics, and common standards for sustainable and low-carbon investments. Early emphasis will be on climate disclosure, taxonomies, and data and analytics, including diversity data.
SFAC Chair, Kathy Bardswick, invited BCI to join the initiative. We determined that BCI’s participation provides an opportunity to advise the federal government in alignment with our corporate priorities of climate action and diversity and inclusion. It also complements policy work BCI has done over many years relating to capital markets regulation.
Jennifer Coulson has nearly 20-years of experience in the field of responsible investing. As a senior member of BCI’s public markets team., she oversees ESG risk analysis for portfolio companies; engages with companies to manage ESG risk; develops public policy submissions on ESG matters of broad relevance to the investment industry; and oversees BCI’s proxy voting program.
Congratulations to Jennifer Coulson, she will make a great member to the federal government’s Sustainable Finance Action Council (SFAC).
As far as BCI's 2020 ESG annual report, you can view it here. It is very readable and well done, so I encourage you to read it.
You should also read my previous comments on how BCI set a commitment to five-year climate-related targets for its
public markets program and the four "I"s of BCI's ESG strategy.
Here are the highlights from the 2020 ESG annual report:
I also encourage you to read the message to clients from Gordon Fyfe, President and CEO:
Interestingly, BCI posted a breakdown of its assets across public and private markets (as at March 31, 2020):
So, as at March 31, 2020, $122.8 billion (66%) of the total assets were in public markets, $36.2 billion (21%) were in private equity and infrastructure and another $32 billion (19%) were in real estate and mortgages managed by QuadReal, BCI's real estate subsidiary.
By the way, in terms of QuadReal's ESG approach, I note this in the report:
In terms of case studies, I did like reading about how Puget Sound Energy is going beyond net zero:
And this one on Summit Digitel:
Also worth noting, BCI is creating an ESG culture with members from public and private markets:
Anyway, take the time to read BCI's 2020 ESG Report, it's excellent and covers a lot more in-depth.
Lastly, let me wish Mihail Garchev, my former colleague at PSP and current VP and Head of Total Fund Management at BCI a lot of success as he resumes his role there (started working today).
Mihail is excited to get back to work at BCI and people there are glad he's back.
Below, a recent conversation on banking and sustainability in the 21st century featuring Mark Carney, UN Special Envoy for Climate Action and Finance and Prime Minister Johnson’s Climate Finance Advisor for COP26. He is introduced by Richard L. Sandor, Aaron Director Lecturer in Law and Economics.
Also, an RSM Pension Week panel session on ESG and what your pension scheme should be doing, the continuous increase of regulation and how to combat your environmental impact. This session included panelists such as: Mike Clark - Founding Director at Ario Advisory Services; Carolyn Saunders - Pension Partner at Pinsent Masons; and Marcin Gorecki, ESG expert at RSM.
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