How BCI and La Caisse Are Navigating Sustainable Investing During Trump 2.0
Some of Canada’s largest institutional investors are looking for comprehensive and realistic climate transition plans from investees as part of an extensive due diligence process.
However, Jennifer Coulson, global head of environmental, social and governance at the British Columbia Investment Management Corp. says these plans aren’t yet the norm, adding investors are working directly with investee companies to align strategies.
“Energy transition plans are something that we want to see from carbon-intensive companies because they provide us with a kind of strategic roadmap.”
When the BCI conducts its due diligence, she adds, it looks for the company’s high-level commitments, its short term targets and the overall strategy.
The Office of the Superintendent of Financial Institutions’ B-15 guideline pushed investors to look more seriously at the importance of climate risk management. This push has been further supported by the issuance of international sustainability standards from the International Financial Reporting Standards Foundation, which have now been translated into Canada through the Canadian Sustainability Standards Board.
“There’s been a growing realization that [climate change] is very important and to us the it’s important because it’s an essential part of our fiduciary responsibility,” says Bertrand Millot, head of sustainability at the Caisse de dépôt et placement du Québec.
The Caisse started its climate policy journey following the Paris Agreement in 2015, he adds, gradually installing action through an earnest internal plan, including investment management. When engaging with companies, it used to ask for the firm’s carbon accounting but now he stresses the need for an entire business plan that takes climate change into account.
The considerations around climate change are here to stay, he adds. “To us, opportunities and risk are central to fiduciary responsibility. We want companies that are well aligned for the future and are aware of their vulnerabilities and potentially [know how to] mitigate them, if there are any.”
The BCI employs ESG considerations as part of its investment decisions and serves as an active owner engaging directly with portfolio companies to develop these critical plans, Coulson says.
“When it comes to integration, for any active investment decision that we’re making, we look at how exposed a company is to climate change — evaluating transition as well as physical risks and opportunities.”
Both organizations depend on communication with investee companies to engage. The BCI wants to be a resource and offer constructive responses to plans but it also has to operate within its own targets, Coulson notes.
“If a company has made a high-level, net-zero commitment by 2050, having a robust transition plan helps to ground that aspiration in reality and gives us a better sense of how they plan to navigate the various risks that we see playing out over the next decades.”
The review process includes an evaluation of the approach’s depth to reduce emissions within the context of a specific industry, Millot says.
“Our role here is to push companies to be ambitious. . . . We’re not asking them to do some things that will make them unprofitable, that is not the plan at all. The plan is to be prepared for the future.”
Excellent interview with BCI's Jennifer Coulson and La Caisse's Bertrand Millot.
We don't hear much about ESG since Trump was elected but as you can read, Canada's large pension funds remain committed to ESG and they haven't missed a beat.
To be honest, ESG is so embedded in their investment processes across public and private markets that it's part of their due diligence and they don't think twice about it.
If a company isn't serious about their transition plan, they will unlikely get capital from Canada's large pension funds.
Climate risks are important because they figure prominently in building a resilient long-term portfolio.
In short, no investor wants a company, an asset that carries significant sustainability risk.
Perfect example is in real estate where the schism between class A buildings with high sustainability scores and lower tier buildings with low sustainability has risen exponentially since the pandemic broke out. The former still command high valuations whereas the latter have fallen by the wayside.
Read more about BCI's approach to sustainability here.
Read the latest Sustainable Investing Report from La Caisse here.
Not much more to add except that Canada's large pension funds remain committed to sustainable investing no matter who is in charge of the White House.
Below, in this special bonus episode of WSJ’s Take On the Week, guest host Miriam Gottfried is joined by Rachel Robasciotti, founder and Co-CEO of investment firm Adasina Social Capital. Adasina runs an exchange-traded fund dedicated to it called “social justice investing” that holds Nvidia, Visa, Mastercard and Eli Lily, among many other companies. Robasciotti says the companies in the fund must check the box on more than 80 metrics the firm has assembled related to racial, gender, economic and climate justice.
Robasciotti shares her views on the financial advantages of social conscious investing and how Adasina measures a company’s social impact to provide investors’ portfolios with more transparency. Plus, she shares the importance of DEI principles in light of the Trump administration's policy changes to DEI.
Also, in this episode, Integrity365 Founding Financial Adviser, Debbie Packer, is joined by LGT Wealth Management Senior Portfolio Manager, Ben Palmer, to discuss key market themes across sustainable investments, particularly in light of the shifting political landscape in the US and what this could mean moving forward (this episode of the Integrity Financial Insights Podcast was recorded on 25th Feb 2025 and all information is relevant as of this date).
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