Three Cheers For Barb Zvan, CEO of the Year!

The Report on Business magazine recently named University Pension Plan Ontario (UPP) CEO Barbara Zvan CEO of the year:

Each year, Report on Business magazine recognizes five leaders who’ve made outstanding contributions in the Canadian business realm. These past 12 months have been yet another wild ride, between spiralling inflation, the Pandemic That Never Ends, a brutal war and subsequent energy crisis, interest-rate shock—well, you get the idea.

Even amid all that turbulence, plenty of companies managed to accomplish amazing things. After much debate between reporters and editors from across The Globe and Mail, we selected five of them: Canada’s top innovator (a self-proclaimed fixer who’s transforming her heavy-equipment company for the digital age), global visionary (the man in charge of a $20-billion engineering empire that makes SNC Lavalin look tiny), corporate citizen (the head of a new pension fund that’s years ahead of its peers when it comes to having a net-zero portfolio), newcomer (who signed a massive deal that will keep the lights on in New York City for years to come), and strategist (a life-long insurance guy who pulled off the first property-and-casualty demutualization in the country—and has seen the stock continue to climb).

Then, we picked one of those finalists for the top honour. (The cover is a bit of spoiler—it’s Barbara Zvan of the University Pension Plan.)

Deborah Aarts of the Globe and Mail reports on the corporate citizen of the year, how University Pension Plan’s Barbara Zvan is at the vanguard of climate action:

On a hot and muggy Thursday this past summer, from deep within the sweltering concrete canyons of Toronto’s financial district, Barbara Zvan issued a stone-cold salvo.

On July 21, the University Pension Plan Ontario (UPP), which she leads, presented a report detailing its first operational year. With it came a new Climate Action Plan that committed the young organization to a net-zero portfolio by or before 2040—a full decade ahead of the 2050 deadline set out in the Paris Climate Agreement many in finance are using as a target—and promised to avoid investing in coal and other “companies that present significant climate risk.” Included were aggressive interim targets, detailed processes to encourage the decarbonization efforts of heavy emitters and a fleet of accountability metrics. It was an unexpectedly bold statement for a year-old plan to make, one that “unequivocally established [the UPP] as a climate leader in Canada’s pension sector,” according to Shift: Action for Pension Wealth and Planet Health, a charitable initiative dedicated to advancing sustainable pensions.

It was a little over a year since the UPP formally took responsibility for administering the pensions and investing the assets of three predecessor plans. And it was exactly two years, to the day, since Zvan formally became president and CEO.

In a tenure younger than the pandemic, Zvan built the operational infrastructure needed to support a new jointly sponsored defined-benefit pension plan that now supports more than 37,000 members, assembled an all-star team that now numbers more than 150 people, oversaw a seamless transition of assets now worth $12 billion, and successfully began an expansion campaign, all while the world reeled.

Good enough, right? Not for Zvan. “Barbara is always building; her brain operates five years down the line,” says former Ontario Teachers’ Pension Plan CEO and current UPP trustee Ron Mock, who worked with Zvan for nearly 20 years at Teachers. “She likes to make sure she’s seeing where things are going, and she likes to be out in front.” The UPP was created to better protect the futures of its planholders, and all the money in the world won’t do any good if the planet is on fire, so Zvan’s decision to incorporate an aggressive climate plan into the fledgling fund’s already long to-do list came as no surprise to her former boss: “She makes everybody look a little on the lazy side.”

Zvan is a visionary with a workback schedule, a diligent leader who understands both why her organization must address the climate crisis and what it’s best equipped to do about it. With the pragmatism of an actuary, the acumen of a veteran exec and the passion of a woman who has not, with the march of time and pay grades, forgotten what pension work is fundamentally all about, she is forging the UPP as an agent of sustainability and offering a model for how to move disparate stakeholders toward a common good. Where other CEOs might struggle to place the dots, Zvan is already connecting them.

“I don’t sit well,” Zvan offers, with a warmly wry smile. “How’s that?”

Few people are born with a passion for pensions, but some have the raw ingredients.

Zvan grew up in Stoney Creek, Ont., on the outskirts of Hamilton, in a family where education was valued and expected. A bright kid with a knack for numbers, she chose to study math at McMaster University in Hamilton, where she excelled but lacked a specific career goal. A chance conversation with a professor put it all into focus: Had she considered taking the actuarial exams? “I didn’t even know what an actuary did at that point,” Zvan laughs. “But it turned out to be a really great suggestion.” Actuarial science just made sense to her: It was math made practical, in a way that genuinely helped people. She aced the exams, landed a student job at Mercer, graduated and took a gig pricing currency options for a bank. That’s when an opportunity at the Ontario Teachers’ Pension Plan caught her eye.

It was 1995. Teachers was only a few years old and less than one-fifth of its size today. Zvan had been following its progress in the paper: The risk-meets-investments nature of its work appealed to her, and she found herself drawn to the zeal of founding CEO (and fellow actuary) Claude Lamoureux. “He was really focused on the purpose of providing retirement security,” Zvan says. “It’s really common for people to talk about purpose today, right? But it wasn’t that common then. And that was quite attractive.”

She started a job as assistant portfolio manager, research and economics, investments, in the fall of that year, kicking off a nearly 25-year upward swing that saw her titles shorten and her responsibilities grow. A selective highlight reel: She developed, with former Teachers CIO Bob Bertram, the portfolio framework that inspired The Economist to dub Canadian public pension funds “maple revolutionaries.” After the global financial crisis of 2008, she led a six-year effort to retool the plan’s risk-measurement function. And after attending COP 15 in Copenhagen in 2009, she created the group that helped add an ESG lens to every investment decision Teachers made. “Where Barbara stood up and stood out at Teachers was her ability to operate in an environment that was not fully formed, where a lot of people questioned her because they couldn’t see it quite the same as she did,” says Mock, who joined Teachers in 2001 and was CEO from 2014 to 2019. “That takes a lot of skill and determination. It takes a lot of selling and getting believers on your side.”

When Mock announced his retirement from Teachers in 2019, many considered Zvan—at this point chief risk and strategy officer—a strong candidate for his replacement. The job instead went to fellow Teachers veteran Jo Taylor; weeks after he took over, Zvan resigned. “After 24 years somewhere, there comes a point where you say, ‘It’s time for a new challenge,’” she explains diplomatically. An inveterate workhorse, she was ready for a “nice, rich break” with her husband (also an actuary—they met at a Mercer student mixer, like a scene out of a risk-management romcom) and three teenage kids. She wanted to travel, to slow down and—eventually—evaluate what a career outside of Teachers, maybe even outside of pensions, might look like.

Her last day at Teachers was Feb. 28, 2020. Her break lasted about two weeks.

At the same time, a new pension plan for Ontario universities was finally hatching, long in gestation and—depending on who you talk to—long overdue.

For years, the fashion among institutes of higher education was to manage their own pension operations. The 2008 market crash battered that model; the University of Toronto’s pension portfolio posted investment losses of more than 29% the year of the financial crisis. In Ontario, the provincial government initially stepped in to help, but as purse strings tightened in subsequent years, many plans contemplated service cuts or higher premiums.

Union reps, faculty associations and others began to talk. “None of the options were really palatable,” says Alex McKinnon, a defined-benefit pension advocate and longtime research lead at United Steelworkers Canada who was involved in the conversations from the start. A jointly sponsored structure, in which employees and employers of several schools contributed equally to provide defined benefits to employees, seemed a more prosperous—and safer—opportunity.

It took a decade of stops and starts, regulatory and legislative hoops, and governance derring-do—”If I said there were some hurdles, that would be an understatement,” per McKinnon—to form what became known as the UPP, with the University of Toronto, the University of Guelph and Queen’s University, plus their associated unions and faculty associations, as founding participants. On Jan. 1, 2020, the plan officially came into being, legally administered by a 14-member board of trustees, appointed by the schools and their employees, and beholden to a clear deadline: to take over the disparate policies of participants by July 1, 2021. There was no staff. No office. Not even a bank account. And, most pressingly, no CEO.

The trustees had just engaged a search firm when COVID-19 arrived and upturned everything. The pandemic made recruiting a chief executive logistically tricky, so the trustees paused the search and pivoted to a more interim solution. “There was a lot of work to be done,” says Gale Rubenstein, a partner at Goodmans LLP and chair of the UPP’s board of trustees. “And Barb was right there.” Zvan was well known, having worked, sat on boards or acted on committees with several of the trustees. She was qualified, with a deep understanding of both defined-benefit plans and the jointly sponsored model. She was respected. And it just so happened she was available. So Rubenstein reached out with a simple plea. “I wasn’t asking for a commitment. I wasn’t making a commitment,” Rubenstein says. “I was just asking for help.”

Zvan wasn’t sure she wanted back into the pension game so soon. But with little else to do in lockdown life, and with the UPP’s needs so acute, she agreed to step in—on a voluntary, and temporary, basis. “And then, you know, I kind of caught the bug,” she says. “I got this notion that we could really make an impact. And I’m not afraid of a challenge.”

(Proof of that last point: Around this time, Zvan was tapped to lead a high-profile investigation into the poor performance of the Alberta Investment Management Corp., a.k.a. AIMCo, whose volatility trading strategy had recently yielded a $2.1-billion loss. A resulting report by the AIMCo board in June 2020 highlighted poor risk management processes and inadequate oversight, and advocated for a more collaborative culture between risk and investment departments.)

The UPP offered Zvan a chance to once again build a pension plan, as she had at Teachers—only this time from the ground up, with a blueprint of her own. Within a couple of months of volunteering, both she and the board wanted to make things permanent. In July, she agreed to become the UPP’s inaugural president and CEO.

Even in the relatively staid world of pensions, running a startup is intense work, a constant oscillation between right-now triage and blue-sky strategy. In this, an actuary’s skill set is invaluable.

Step one: Assemble a team. Zvan recruited a crew of “Swiss Army knives”—utility players energized by the challenge of getting something new off the ground, including CFO Henry Kim (who had worked at CPP Investments earlier in his career) and former Teachers colleague Jacqueline Beaurivage (whom Zvan coaxed out of retirement to take a contract as acting chief of staff). “Barb is a magnet for talent,” says Rubenstein. “There’s no inconsistency in her leadership on ESG and her commitment to defined-benefit plans. I think that’s enabled her to attract some really wonderful people.”

Step two: Build an on-ramp. With less than a year until the handover of assets, the team had to quickly develop processes and systems to consolidate a hodgepodge of private equity funds, bonds, stocks and more into a single portfolio—without disruption to planholders. (Zvan’s motto: No surprises.) Her team set three priorities every week and systematically worked through all of them, such that as the clock ticked over from June 30 to July 1, 2021, everything unfolded without a hiccup. On the UPP Zoom party that night, glasses were raised, congratulatory emojis shared. “We celebrated the moment,” Zvan says. “And then it was back to work.”

Which leads to step three: Make it green. Having become something of a sustainability evangelist within Teachers, Zvan was always going to lean hard on ESG at UPP. And she knew, generally, that her progressive-leaning university constituency expected as much. But she didn’t want to operate on a hunch. So she commissioned a survey of members, which confirmed that ESG mattered to the majority, and that within that, climate change was the top concern. She hosted town halls. She engaged with members of all groups, including unions and faculty associations, and affirmed members were aligned with her push for sustainability. It also built trust among plan members. “She’s not pompous, and she’s not arrogant,” says USW Canada’s McKinnon, today a UPP trustee. “I’ve never heard a bad word said about her.”

There was a clear-eyed business strategy at play in developing UPP’s approach to climate, too. “We did it for the sustainability of the pension plan,” Zvan reasons. “As an investor, you always want to position your portfolio ahead of the changes that need to occur. So we look through the lens of sustainability to avoid risk and maximize opportunities,” she says. “And what better time to ingrain it in the organization than from the get-go.

A net-zero portfolio became the hero goal for the UPP. And the more Zvan thought about it, the more the 2050 target felt too far away. Why not 2040? Really, truly, why not? “Collectively, we haven’t been decarbonizing quickly enough,” she reasons. “People can argue about how fast or how slow, but just fundamentally, it’s not quick enough. So to stabilize things, we’re going to have to try to make up for that lost time.”

Finance professor Sean Cleary, who chairs the Institute for Sustainable Finance at Queen’s University’s Smith School of Business, confirms the UPP’s timeline is ambitious. But it’s not impossible, thanks to the details surrounding its execution. These include its “aggressive” interim targets to reduce the portfolio’s carbon footprint (by 16.5% by 2025, and 60% by 2030, from a 2021 baseline), and its commitment to report on progress on an annual basis via the rigorous standards of the UN-convened Net Zero Asset Owner Alliance. “Targets are targets,” Cleary explains, “but the process is also very important.”

Here’s where Zvan’s extracurriculars come to bear. For the better part of a decade, she has augmented her day job with task forces, committees and boards devoted to figuring out the practicalities of using finance as a tool for sustainability. In 2018, she was one of four experts tapped for the federal government’s Expert Panel on Sustainable Finance, chaired by Bank of Canada Governor Tiff Macklem (then dean of the Rotman School of Management); its 2019 report outlined 15 recommendations to make climate-friendly thinking “business-as-usual” in financial services. That spawned the Sustainable Finance Action Council (SFAC), where Zvan leads a taxonomy technical expert group; she also sits on the boards of the Institute for Sustainable Finance, the Global Risk Institute and the Responsible Investment Association. She chaired an advisory group of the multinational Sustainability Accounting Standards Board (now under the oversight of the International Sustainability Standards Board), whose members last year represented $52 trillion in assets, to establish the common definitions and standards needed for number crunchers to make better decisions at scale. This is the work—this painstaking, dry work—that fires Zvan up, because it bakes sustainability into the daily grind. “When you take something voluntary and put it under the accountants’ remit,” she says, her eyes alight, “things will change.”

More recently, Zvan helped launch Climate Engagement Canada (CEC), a coalition of more than 30 investment groups (including the UPP) and associations, which operates as a sort of CanCon spin on the global Climate Action 100+ network. The CEC’s goal is to use collective heft—its members manage more than $3 trillion in assets—to foster constructive decarbonization conversations with big emitters. It’s a power-in-numbers play: A company with a crummy eco-record might be able to rebuff pressure from one fund, but not from a group that might together own a quarter of its shares. “Engagements are most impactful when you do it together,” Zvan says. “So that’s how we’re approaching it.”

Zvan is a different sort of change agent. She’s not an activist or a provocateur; she’s not wild about speeches or photo ops. But her enthusiasm is impossible to deny. She speaks quickly, sometimes elliptically, with clear expertise, a sheepish grin punctuating endearingly wonkish asides. Every one of her past and present colleagues interviewed for this story lauded her passion for this work, and after a few hours in conversation, you feel it, too. It’s infectious.

It’s this quality that makes Zvan a “wonderful role model for a CEO,” according to former Co-operators Group CEO Kathy Bardswick, who now works with Zvan as chair of SFAC and sits as a UPP trustee. “Barb truly gets the ‘why,’ and then figures out the ‘whats’ and the ‘hows’—and that’s what engages people around her,” Bardswick explains, citing an impressive list of examples from their work together. “Quite frankly, I don’t know where she gets the energy.”

Two and a half years into the job, Zvan shows no signs of slowing. The UPP is entering expansion mode: Earlier this year, Trent University, based in Peterborough, Ont., joined, and the organization is in talks with other schools. She continues her relentless committee and board work. She makes connections.

For Zvan, who has made future-proofing her life’s work, climate change is an existential threat, a risk that needs immediate mitigation. And so, back to the ongoing calculus of changemaking. “We have to start somewhere,” she explains. “So, how do you start? You start with the high-level principles and definitions. You get alignment. And then you move forward.”

This is a great article on Barb Zvan, UPP's inaugural President & CEO.

The cover featured at the top of this post describes her as one part pension wonk, one part climate crusader but she's a lot more than that.

What is there to say about Barb Zvan? She's a really, really smart lady with tons of excellent experience and a stellar reputation in the pension industry. 

She's also very nice and works extremely hard.

The last time I spoke to Barb was in July when she and Brian Minns, UPP’s Managing Director of Responsible Investing, discussed their inaugural Annual Report and Climate Action Plan which sets a clear target of reducing the carbon footprint of its portfolio by 16.5% by 2025 and 60% by 2030 from a 2021 baseline. 

You can read my in-depth comment here and I provide a sample of my discussion with her below:

We then went over some performance highlights for the period covered in the annual report. I noted most of the assets are still managed externally (73%) and that inflation-sensitive assets are minimal compared to peers. Barb replied:

"We have done work on our initial asset-liability study and are looking at bringing that capability in-house. We have identified key changes we want to put in place. You pointed to one of them, we are very low on inflation-sensitive assets. If you go to our website, you'll see we already brought in a Head of Private Markets, Peter Martin Larsen, and he's building a team and the first priority for him is real estate and infrastructure. When we brought the portfolio together, you see what we received, it's a very low amount and the funds are in the decreasing phase of where they are at. A key priority for us, a lot of what we are building is the capability of when that network of interesting partners that are aligned with our investment beliefs and responsible investments, building capabilities to do that due diligence, building capabilities to do co-investments because we can at this size. This is a key priority area for investments."'

She added: 

"There's work to do, this is a pension plan serving members for the long term, so looking through what is the interest rate sensitivity mismatch, and how we think about that going forward especially as rates move up. Also, when you bring the three organizations together, we spent a lot of time last year reviewing every manager from an investment due diligence point of view, RI perspective and operations due diligence including tax to give us an informed assessment of what we want to do going forward. But you are correct, right now it's significant external managers and then the rest is total return swaps which you'll see in the financial statement."

I remarked that they already have a team to bring these assets internally but right now, it's still a new plan in a build out phase:

"You're right and this transition will take years. Private assets, there is a liquidity profile associated with them we have inherited. It's no different than other pension plans, when they first started, we at year 1 of that journey."

I asked her about their key focus areas right now:

"It's really across the board. For investments, we have the overall strategy for the organization but bringing forward these strategies within each asset class to the investment committee and board. Teams are making new relationships as well as bolstering the ones we received through managers. When you look at the pension administration side, right now a large part of that is operating through agency agreements. So, the universities provide us with continued support of doing pension administration but we a very focused on getting that capability internally because that's a key enabler. Not every university will want to keep doing their pension administration, so we need to get that sorted and that means we need to start working on cyber, data, all those things that facilitate that. Building relationships with the universities is another key area of focus. We are all knew to this sector, we are very focused on building relationships with the universities, faculty associations, the union groups and the administrations.We recently brought in a new Chief Engagement & Strategy Officer and a Senior Director (Kathy Johnson and Andrew Naples) to help us with engagement with a very complicated stakeholder map. It will really take years to form all those relationships." 

I noted that UPP takes engagement very seriously and it comes out in the annual report. Barb added:

"We are going to continue member engagement and inspiration comes from members. Brian can talk about the RI survey. We did a a survey on types of member services, on what's important to them,  including selecting vendors. It came out really clear that they want clear communications. They want information and tools and time to make their own decisions. So how do we help them with that. And then there is a lot of work on building the resilience of our infrastructure. It takes a while to bring in all the systems you become depended on (risk system, AL system, etc.). And culture and hiring, we need people to do this, we are meeting people to hire talent. And on the climate side, a lot of work went into the Climate Action Plan to bring it together, to get buy-in, get everybody behind it, and then working externally because part of it is engagement with companies and advocacy and making sure we have the capabilities to do all that."

Anyway, I am not the least surprised that Barb Zvan was named CEO of the year.

When she left Ontario Teachers' after Jo Taylor was appointed CEO, some people were wondering where she would end up.

It turns out Teachers' Board -- and again this is my opinion -- made the right decision in placing Jo Taylor at the helm and UPP's inaugural Board definitely made the right decision hiring Barb as its inaugural CEO.

Jo Taylor is exactly what Ontario Teachers' needs over the next 5 to 10 years to expand its global brand and Barb Zvan is exactly what UPP needs to ramp up its administrative, risk, finance and investment operations during this build-out phase.

In fact, if you look at everything Barb has done while at UPP over the past year, it's methodical and analytical, she's building incredibly solid foundations in all facets of the pension plan, foundations that will steer this organization on the right path for generations to come.

That might sound like a grandiose statement but I'm dead serious, I really don't think UPP could have picked a better inaugural CEO who knows how to hire the right team and build solid foundations.

Her expertise in addressing climate risks and opportunities is an added bonus. She's part of an elite group of experts who really understand sustainable investing extremely well which is why she hired Brian Minns and is setting ambitious but practical targets from the get-go.   

She is also part of an elite and small group of women who are running a major pension plan or fund.

It's so small, I can name them off the top of my head:

• Deborah (Deb) Orida, President and CEO of PSP Investments
• Barbara (Barb) Zvan, President and CEO of UPP
• Nathalie Palladitcheff, President and CEO of Ivanhoé Cambridge (CDPQ's real estate arm)
  
• Marcie Frost, President and CEO of CalPERS
• Cassandra Lichnock, CEO of CalSTRS (first female CEO, she started work on July 1, 2021).
• Marlene Puffer, President and CEO of CN Investment Division
  

And you can add Nicole Musicco, another OTPP alumnus, who is now the CIO of CalPERS and Rossitsa Stoyanova who is CIO of IMCO.

That's pretty much it although I know there are other women leading large public and private pension plans in Europe (especially Sweden). 

I'm sure there are a few others (don't know them all) but it's fair to say the top positions (CEO & CIO) at large Canadian, American, European and Asian pension funds are still dominated by men.

That's not going to change any time soon, it is changing but at a snail's pace.

But as more and more women take on senior roles, and this is key, they will be considered for top jobs.

The thing is women need to work a lot harder and have top qualifications to attain these top jobs.

"Oh come on, Leo, stop pandering to women and stop with this gender diversity crap already!"

I call it like I see it, check out the qualifications of a Barb Zvan, Deb Orida or Marlene Puffer, they have to be perfect on paper and have the right experience to have been considered for these top jobs.

I'm not saying their male counterparts aren't qualified or good -- of course they are -- but let's call a spade a spade here, it's a lot tougher for a woman to climb the corporate ladder just like it's nearly impossible for persons with severe disabilities to get a job at our public pension funds.

Again, I call it like I see it and you can disagree with me but the stats support my contention.

This is why it's critically important to support and celebrate the achievements of these ladies.

I'm not giving them a free pass, far from it, I'm equally tough on all CEOs, but I think we need to be honest, the finance industry in general and the pension industry in particular, is still a male dominated world (unlike other fields, it's changing but a lot slower). 

That's also why there's added pressure on female leaders to be at the top of their game, they are few but represent many aspiring young female leaders.

Anyway, I'm rambling, let me get back to Barb Zvan.

I recently had dinner with a close friend of mine, a radiologist, and we were talking about his eldest son who I baptized.  

He told me that "he's more introverted, analytical, loves math" and that he's pushing him to become a pharmacist or maybe an actuary.

I told him "actuary" and "tell him to get an MBA after, that's a great combination."

Nothing wrong with pharmacists, both are difficult disciplines and you need top marks, but I was thinking of Claude Lamoureux and Barb Zvan when I gave him that advice. 

However, I also told him that kids need to read a lot more and get a solid foundation in liberal arts to develop critical thinking skills and be more effective writers, communicators and more informed citizens (he wasn't too thrilled about this advice, thinks it's a waste of time). 

[Note: Some the most important courses I took at McGill University weren't in economics and math, my major and minor, but in political philosophy with Charles Taylor, the greatest intellect in Canada who blessed the minds of many students at McGill].

My point is simple, I've run across many CEOs and CIOs and the best ones continuously read across various fields to be very knowledgeable. 

I'm not saying you have to be like Leo de Bever who devours five books a month (if not a week), but reading is essential when you are a leader who needs to grasp the complexities of the global economy and how we are going to transition to net zero.

Alright, let me end with a recent Seeing Beyond Risk podcast where Barb joined Chris Fievoli, Staff Actuary, Communications and Public Affairs, at the Canadian Institute of Actuaries, to discuss her winning CEO of the year and her journey leading to this leadership role:

The creation of the new University Pension Plan of Ontario was a significant challenge, but the leadership of CEO and CIA member Barbara Zvan led to a successful launch – and resulted in her being named overall CEO of the Year by Report on Business Magazine. Barbara joins us on this special episode to discuss her experiences as both an actuary and a business leader.

Fievoli: Welcome to Seeing Beyond Risk, a podcast series from the Canadian Institute of Actuaries. I’m Chris Fievoli, Staff Actuary, Communications and Public Affairs, at the CIA.

From time to time, we like to feature actuaries who have gone on to fill interesting and important roles. Today, we’ll be speaking with Barb Zvan, a CIA member who also serves as president and CEO of the University Pension Plan of Ontario.

Thanks very much for joining us on the podcast today.

Zvan: Thanks for having me here, Chris, and it’s great to be here.

Fievoli: That’s great. Well, let’s start off by giving us a brief overview of your actuarial career. How did you get into actuarial science? And you also spent some time with the Ontario Teachers’ Pension Plan, so talk to us about your experience from getting into the career to where you were recently.

Zvan: So if I go back, as a young person I really enjoyed math and the sciences, but in particular, I really enjoyed the math.

I didn’t actually know where that was going to lead me, but I figured a combo of hard work and education will kind of figure itself out. And I didn’t go to a traditional university with an act sci program at the time. I was at McMaster and a professor just kind of said, “Hey, you should think about writing these exams.” And I did.

And I appeared on some list, and I ended up being a student at Mercer, which was a great experience. You know, the first real business experience. And then during my master’s program, I started getting interested in investments and finance. And at that time, the actuarial exams started to bring in the investment track.

And post master’s, I ended up at one of the banks and I started pricing currency options. So this was the early days of financial mathematics, and it just didn’t feel like the right fit for me. It was a very narrow topic, and you were trying to solve very particular problems.

And then I started seeing Ontario Teachers’ in the newspaper. And if you recall, the first CEO was  Claude Lamoureux, and he was talking about what he was doing, and it kind of checked all the boxes. It enabled me to leverage my actuarial interests and my investment interests, and Claude spoke truly as a visionary about what he was trying to do at Teachers’.

So I kind of jumped at the chance of going there for my first junior role, and it was around 1995, which will date myself, and I started as an assistant portfolio manager in a team called Research and Economics. And I have to say, it was absolutely great journey. I was always working on really interesting challenges, and I would say a common thread in the type of work I did, without getting into the long list, was big-picture issues.

The first effort was to internalize their asset-liability model, which, with my background, was a dream first assignment, which led me initially contributing to the development of the annual investment plans to, years later, leading the development of those investment plans.

And everyone thinks of Ontario Teachers’ as it is today. But I have to tell you, in the 1990s, when it first started, it was seeded with 100% bonds, and these bonds were deemed nonmarketable, so you couldn’t sell them. So that was a huge constraint, which brought a lot of creativity – I think this is the benefit.

And eventually we got the portfolio into new asset classes, and they were globally diverse, including real assets. We had liability-driven programs, and we started incorporating leverage, which was unique for many pension plans. I got to work on things like a risk-budgeting framework that spurred active management strategies. I got to work with the partners, the Ontario Teachers’ Federation and the Ontario government, who are a key part of the governance.

And they made the big-picture decisions on the contribution rates and the benefits, which really impacts the long-term sustainability of the plan. And then you think, “I was there through the global financial crisis,” and I was asked to serve as the chief investment risk officer afterwards.

And if you think of the financial institutions after 2008, we had significant projects in place to enhance the risk measurement capability, the advancement of the risk culture. I was asked to join the executive leadership team at that time. And then with all the big-picture issues and the risk lens, we started understanding the environmental, social and governance, or ESG, issues and started getting involved in sustainability and climate change.

And through all that, the great part was also that there was a great community of pension plans, locally and globally, that you got to network with and share and learn from. So just a fabulous journey through that organization.

Fievoli: Great, and now you’re currently the president and CEO of the University Pension Plan of Ontario. You’ve been in that role for a couple of years.

Can you share with us some of the challenges you faced in that role, both personally and also in your day-to-day activities, and some of the things that have been happening with the University Pension Plan?

Zvan: Sure. So just a brief history of the University Pension Plan, or UPP for short. It’s relatively new, as you know. It’s a jointly sponsored defined benefit pension plan.

So the employer and employees share the governance and share the risk. It’s relatively new – it started July 1, 2021 – but the process of creating it with those employer and employee groups started about 10 years ago, actually. And when you looked at the university sector – it was probably post 2008 – and when you were looking at their pension plans, they were in different financial states, they had different designs and some universities did and still do have more than one.

And so what’s amazing is discussions began through university administrators, the faculties and unions saying, “If we had a white sheet of paper, what might we look for in a pension plan?”. And that’s what they created UPP to be, and they really tried to emulate the best of the Canadian model, but I would say the mid-size.

So we have three founding universities that went live on July 1, 2021, which are Queen’s, the University of Toronto and the University of Guelph. And today we have 16 participating organizations from four universities. They’re all related to the university sector. We have about 37,000 members and about $12 billion in assets.

When you look, that was a lot of perseverance and courage to do that. And so we try to honour that spirit, and our goal at the end of the day is we want to build this pension plan for scale, we want members to be proud, and we want to give other universities a reason to join to give more and more retirement security and stability to more groups of people.

But your question was about challenges. I started one year before launch, in July 2020, so right at the start of COVID. It was me, myself and I. There was no office, there was no phone, there was not a stapler. We hadn’t even gotten all the regulatory approvals yet. So it was really a clean sheet of what to do, and I can honestly say it’s really incredibly hard to get a bank account without a lawyer, a CFO, an office phone number. But we managed to get that started.

It was in the middle of the pandemic, so just like the rest of the world, myself, my team that was starting to grow, we had to learn how to do everything virtually. But what was a little bit unique for UPP is that teams that left organizations and went home kind of knew each other.

We actually had a whole new group of people that didn’t even know each other that had to work virtually. To put that in perspective, I did a Globe and Mail article, and my comment was that I didn’t know who was the shortest and who was the tallest. So the group at the time went to a park, placed themselves six feet apart, and took a photo to let me know who was shortest and who was tallest. So just interesting that we had never met in person before.

Another thing was we had an unmissable deadline of July 1, 2021. So as I said, we had one year to get ready, which was quite the feat, making sure that everyone stayed focused on what were the most important things we had to do to be ready. So those are kind of organizational.

And then when it comes to individuals, when you move from being in a role to becoming a CEO, the one thing I would say is you move from having one boss to having a full board. So you end up spending a lot of time with your whole board. And for us, they were also brand new, and they also had to work through the fact that everything was new – absolutely everything. We didn’t have one policy written, one framework, any controls.

In 2021, to give you a sense, we had almost 80 board meetings, and this year there will be about 60. And hopefully next year there will be a lot fewer now that we have a really strong foundation in place. They too had to work barely knowing each other, and they had to work virtually.

And I would say another challenge which became obvious over time is that we had this brand-new team, and they came with a variety of professional backgrounds. Some came from large plans, some came from smaller organizations, and we had to figure out how to do things.

It ended up meaning that we had to be, as leaders, really accessible to get everyone figuring out, “OK, this is the way that we’re going to do it.” So a lot more time maybe than expected at the beginning, but again, totally a fun journey, really bringing the early days of Ontario Teachers’ to UPP, but I would say with the fast-forward button on.

Fievoli: It certainly was an interesting time to launch a new initiative like that. And of course, now we’re feeling the after-effects of the pandemic with inflation and not knowing how the economy is going to react to that. How do you and your team respond to disruptions like that in managing your activities?

Zvan: As a pension fund, you have to take the longer view of risk and opportunity. Fortunately, the fund is quite well diversified to help withstand volatility in the shorter term, which was great in the assets that we inherited from the founding universities.

And the framing that we have placed around our investment strategy is not about predicting for the future, it’s really about trying to build resiliency into the portfolio, and trying to think of whether the things that worked for the last 15 years or something will apply for the next 15.

So that’s a big theme when you’re trying to manage pension plans, and so through this program, we did a deep dive into everything that we inherited, we went through all the external managers, we did an A-L study pretty much starting as soon as I began.

And we got some really good insights about how you move from a single employer pension plan to a jointly sponsored pension plan, we made some changes that hopefully were for the better.

And then, on a longer-term front again, one being the opportunity to increase our private market exposure. So knowing the role of this asset class for so many pension plans, we decided to invest in those capabilities early, and hopefully we’ll have some announcements in the not-too-distant future about that in terms of opportunities, and really trying to scale up our inflation hedging as well. So lots of things that I can’t mention in very specific detail, but really trying to take advantage of the scale that we have, and we have a nice-sized team to focus on these challenges.

And the other thing we could do, because we inherited three portfolios that we immediately took advantage of, is cost savings. We had sometimes three of something that we only needed one of, and we can negotiate better fees, which is also benefitting our members.

Fievoli: Well, let’s take a step back and talk a little bit about your actuarial training. I’d like to get at how you feel that’s been an asset to you throughout your career, and at the same time, can you talk a bit about how actuaries are perceived amongst the people you work with who are outside of the profession?

Zvan: I’ll relate it back to why I chose the actuarial path.

I like the fact that as an actuary, you’re solving real-world problems that affect society. If you think about an individual, by providing a pension plan, we’re providing retirement security. Someone in insurance helps them not to worry if something happens in their life in terms of being able, for example, to take care of themselves or loved ones.

And if you can provide these things well, as a society, it just makes the society better and richer. So the purpose-driven nature of it is really attractive. If you combine that with the actuarial training – I think the one thing it does superbly is naturally making you think long term.

When you think about life insurance, when you think about pensions, it’s all about the long term. When you’re back in school, you’re doing present values for long into the history, and then you start thinking about risk, and risk in terms of the long term. So, I think that mindset, and instilling it early in someone’s career, is really important, and it never leaves you.

Now actuaries, I would say, definitely are a smart group, and definitely a group with integrity and purpose, going back to where I started. I would say a very committed group that’s not scared of hard work or rolling up the sleeves.

It’s evident by the fact that to get into this profession, you have to pass quite a few exams. I think my first boss called me masochistic for doing all those, and I think people often would have images of actuaries in a meeting. And I’ve seen this myself where everyone is whipping out their calculators, that type of thing, but generally as a group, they’re seen as a smart group, as a group that has a lot of integrity and purpose.

Fievoli: That’s good. A few minutes ago, you mentioned that you had something like 80 board meetings in the first year of setting up the pension plan, but I do know that you’ve worked on other boards of directors.

I’m just curious what skills you think you were able to develop by having that experience, and for the other actuaries who would like to get into that, what suggestions do you have for them?

Zvan: With a board member, it’s really a shift. Because a board member’s primary role is oversight, not doing, right? So it’s a clear shift from a management role, and sometimes it does take a bit of practice and training.

And when you think about a board, it’s a group of people generally from diverse backgrounds and skills. And I think one thing that’s really important around being on a board is the ability to bring together those different skills to really listen to what your other board members are saying and adding. Helping build the C, which often means it’s not 100% “everybody agrees,” but where can you get to a consensus and get to a decision to help and support management, because you really do want to enable management to move forward.

As a board member, you have to contribute, you have to be in there actively and be very positive. And as a chair in particular, which I’ve had the privilege of being, is about navigating that boardroom, kind of being the conductor to help orchestrate that consensus. So I think that ability to listen and figure out how do we get to a consensus to support management is a really important part of what a board does. And one thing I often say is that as a board member, your most powerful tool is the questions that you ask.

When you’re in a management role, you can ask lots of questions. But as a board member, it’s really key to think, “OK, what are those key questions at the board meeting that I’m going to ask that will make a difference?” And if you’re preparing for a board meeting, that’s a good way to think about the material. Honestly, governance isn’t a topic you typically get trained on as an actuary. But fortunately, there’s a lot of great material out there – best practices and things like that.

So good resources, like the Canadian Coalition for Good Governance. That’s a mouthful, so look for CCGG. It has guidance on high-performing boards and The Directors’ E&S Guidebook.

And you also can take courses. There’s The Directors College or ICD, and they’re really helpful because they provide you with the theory and the foundation behind a board and how it works. They’re usually based off peer learning off of cases, so it’s a great peer learning environment.

And I would say the best way to start is to pick a volunteer board. The first one I started on was the Pension Investment Association of Canada. So, a friendly board, lots of great peers, a topic that you know well, and it really helps you start building those board skills. And then after getting a little bit of experience, you can start taking some of the courses and just work your way up into more complex organizations.

Fievoli: Before we wrap up, I wanted to mention that recently The Globe and Mail announced that you were selected as one of the top five CEOs of 2022. Can you give us a little bit more information about that honour?

Zvan: Yes! I was really surprised, because I found out through an email. I’m really honoured.

It was really an acknowledgement of all the hard work and dedication of everyone at UPP to build our organization with a clear and committed purpose.

We were building from the ground up, as you know, through COVID, through some rough times, and I was pleased that we were able to bring a team together and align them on a system-level sustainable investing approach, which is also an area I’ve dedicated a lot of my time to, which I think they also picked up on. It really demonstrated the power of collaboration.

The Globe notes that the one award I have out of the five is the Corporate Citizen Award. It’s about the idea that businesses can do well by doing good, and I truly believe that. And everything we do at UPP is about funding a secure pension for members into the future.

On the sustainability side, that means there needs to be a planet and economy for the members to retire into, and we just see all these topics as interrelated, and I think that’s where the citizen aspect comes in.

We’re hoping to create unique value for members and hopefully work with like-minded peers to amplify that impact. So, kind of a long answer, the award is about the idea that businesses can do well by doing good, and I think pension plans are well suited for that.

Fievoli: That’s great. Congratulations on that and thank you very much for coming to speak to us on the podcast today.

And just a quick postscript: subsequent to the recording of this episode, it was announced that Barbara was named Overall CEO of the Year, so congratulations on that honour.

If you enjoyed today’s conversation, please subscribe to our podcast and catch up on prior episodes. As well, if you have any ideas for future episodes or would like to contribute to our Seeing Beyond Risk blog, we’d love to hear from you. Contact information can be found in the show description.

Until next time, I’m Chris Fievoli and thank you for tuning in to Seeing Beyond Risk.

I congratulate Barb Zvan for being named CEO of the year and those that know her well, like Kim Thomassin, Executive Vice-President and Head of Québec at CDPQ, aren't surprised in the least.

Barb is humble, really smart and a hard worker. She celebrates this achievement by recognizing and sharing it with her team at UPP and it doesn't go to her head. As Ron Mock, former Ontario Teachers’ Pension Plan CEO and current UPP trustee states, Barb is always thinking five years ahead. 

Below, take the time to listen to the recent Seeing Beyond Risk podcast where Barb joined Chris Fievoli, Staff Actuary, Communications and Public Affairs, at the Canadian Institute of Actuaries, to discuss her winning CEO of the year and her journey leading to this leadership role.